Minnesota first-time homebuyer grants and down payment assistance (2026)

Start Up versus Step Up: the three-year ownership test

Start Up is for first-time homebuyers. Minnesota Housing defines that as someone who has not had an ownership interest in a principal residence in the last three years ⁠¹. It is a 30-year fixed-rate purchase loan and can be an FHA, VA, USDA Rural Development, Fannie Mae HFA Preferred or Freddie Mac HFA Advantage loan ⁠⁷. Eligible homes are single-family houses, townhomes, condos, duplexes, modular homes and double-wide manufactured homes taxed as real property. Single-wides, co-ops, triplexes and fourplexes are not eligible ⁠⁷.

Step Up is for repeat buyers. It also covers first-time buyers whose income or price is too high for Start Up, and it can refinance an existing mortgage ⁠¹. The difference matters for down payment help: Step Up borrowers can use only the Monthly Payment Loan, while the two 0% deferred loans are Start Up only ⁠⁵⁠⁷.

Minnesota Housing’s MCC program ended on Dec. 31, 2017. The agency no longer issues Mortgage Credit Certificates ⁠¹.

DPL, DPL Plus or the Monthly Payment Loan: how each is repaid

You can take only one of the three loans, and only one Minnesota Housing first mortgage and one of these loans can be open at a time. You can add community second mortgages from other funders on top ⁠⁵⁠⁷.

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Funds may pay the down payment, buyer closing costs and mortgage insurance ⁠⁵.

Neither deferred loan is ever forgiven. You repay all of it when you sell, transfer title, stop living in the home, refinance or pay off the first mortgage. If none of those happens first, you repay it at the end of the mortgage term. One exception: if you refinance into Step Up, Minnesota Housing can approve subordination ⁠¹⁠⁵.

Two DPL rules catch buyers off guard. First, after closing you may hold no more than $13,000 in checking, savings, CDs, stocks, money market accounts, tax refunds or virtual currency. Retirement accounts, HSAs and 529 plans are excluded. You may pay down your own debts before closing to get under the limit ⁠⁵. Second, your monthly housing payment must be at least 25% of your gross monthly income ⁠⁵⁠⁶. On every Minnesota Housing assistance loan, you must also put in at least $1,000 or 1% of the price, whichever is less, from your own funds. Gift money does not count ⁠⁷.

Who qualifies for the $18,000 DPL Plus

DPL Plus follows all of the DPL rules. At least one of these four must also be true ⁠⁶:

• Your household has four or more people.
• A household member has a disability.
• At least one borrower is a first-generation homebuyer: neither the borrower nor their parents or prior legal guardians ever owned a home in any country, or they lost it to foreclosure. You must sign a First-Generation Homebuyer Affidavit.
• You are a sole head of household, the only adult who is not a dependent, with at least one dependent who is under 18, has a disability or is 62 or older. This is Minnesota Housing’s own definition, not the IRS one.

Minnesota Housing tells lenders to use DPL Plus only when the buyer needs more than the standard DPL provides ⁠⁶.

2026 income and price limits by Minnesota county group

Minnesota Housing does not set limits county by county. It uses three groups: the 11-county Twin Cities metro (Anoka, Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Washington and Wright); Dodge and Olmsted counties; and the other 74 counties ⁠². The figures below apply to loans locked on or after July 1, 2026 ⁠²⁠³.

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DPL limits for 3, 5, 6 and 7 people are $106,500, $127,800, $137,200 and $146,700 in the metro and Dodge/Olmsted. In other counties they are $96,300, $115,500, $124,100 and $132,600 ⁠².

For Start Up, income counts every borrower, a spouse who will live in the home, and any co-signer who will live there. A co-signer who will not live in the home is left out of this test ⁠²⁠⁷. Step Up looks only at loan qualifying income ⁠⁷. Start Up’s acquisition-cost cap is $515,200 for one unit and $659,550 for two units in the metro. Elsewhere it is $472,030 and $604,400. Step Up allows up to $498,257 for one unit outside the metro ⁠³.

Credit scores, DTI caps and the posted Oct. 19 rates

Minnesota Housing sets minimum scores and DTI caps by loan type. These are the automated-underwriting figures. Manual underwriting has separate rules in the U.S. Bank HFA Division guides ⁠⁴.

Minnesota Housing publishes daily rates for its lenders. On Oct. 19, 2026, a 30-year Start Up FHA, VA or RD loan was 7.250% if the lender charged a 1% origination fee or discount point, or 7.500% with no origination fee. Conventional Start Up loans were 7.625% and 7.875% ⁠⁸. The same rate applies with or without a downpayment loan, so the DPL does not raise your rate ⁠⁸.

Approved classes and the participating-lender rule

If every borrower is a first-time buyer, at least one of you must finish an approved course before closing. Minnesota Housing accepts four: Framework, Freddie Mac CreditSmart Homebuyer U, Home Stretch and Realizing the American Dream. It does not accept Fannie Mae HomeView ⁠⁹. Home Stretch is taught in person or live online by certified educators around the state. Framework is a self-paced online course; both are offered through the Minnesota Homeownership Center. Every Minnesota Housing loan goes through a participating lender. The agency’s Find a Lender directory returned 1,389 lender and loan officer listings on Oct. 20, 2026 ⁠¹.

The forgivable first-generation fund run by MMCDC

Minnesota Housing’s own First-Generation Homebuyer Loan Program ran out of one-time funds and closed on Dec. 19, 2024 ⁠¹⁰. The separate First-Generation Homebuyers Community Down Payment Assistance Fund is still open. The Legislature created it in 2023, and MMCDC runs it with partner lenders ⁠¹². It offers up to 10% of the price, capped at $32,000, as a 0% loan forgiven 20% a year over five years while you live in the home ⁠¹¹.

To qualify, you and your parents or legal guardians must never have owned a home anywhere, or have lost one to foreclosure, and you must live in Minnesota. Any co-borrowers must be first-time buyers. Combined income for all buyers is capped at $118,900. After closing, you can hold no more than $50,000 in liquid assets. Price caps match Start Up’s ⁠¹¹. Every buyer and spouse must finish Home Stretch or Realizing the American Dream within 12 months and before making an offer. You can use any lender, including for ITIN or Sharia-compliant mortgages ⁠¹¹. Through Dec. 31, 2025, the fund had closed 2,200 loans with a median of $29,902. About 16% of funds remained, and the portal had closed mid-2025 to clear a backlog ⁠¹². On Oct. 20, 2026 the site said it was accepting applications, first come, first served ⁠¹¹.

Minneapolis and Saint Paul city loans

• Saint Paul, Citywide Downpayment Assistance Program. Buyers at or below 60% of area median income can get up to $40,000. Buyers at or below 80% can get up to $20,000, and first-generation buyers can get $10,000 more. The loan is 15-year deferred at 0% and is forgiven one-fifteenth each year. The asset limit is $25,000, not counting retirement accounts. The 80% AMI limit is $105,200 for four people. You need a HUD-standard homebuyer education certificate. As of Sept. 8, 2026, the city said program capacity had been reached and applications were closed ⁠¹³.
• Minneapolis, down payment assistance loan. Up to $20,000 as a 0%, 30-year deferred mortgage for low-income first-time buyers. The amount depends on income and the funds the city has at the time. You apply through Build Wealth or NeighborWorks Home Partners ⁠¹⁴. The city’s rules page shows $20,000 below 60% AMI and $10,000 at or below 80% AMI, and it requires a homebuyer class. That page still listed 2024 income limits, so ask the partner agency for current figures ⁠¹⁵.

Getting a Start Up loan with DPL Plus, step by step

1. Check your county group and household size

   Compare your income with the DPL/DPL Plus table. If you are over it but under the Start Up limit, plan on the Monthly Payment Loan instead ⁠².

2. Take an approved class early

   Home Stretch or Framework satisfies Minnesota Housing. If you might also apply to the first-generation fund, take Home Stretch or Realizing the American Dream before you make any offer ⁠⁹⁠¹¹.

3. Pick a participating loan officer

   Search the Find a Lender directory by ZIP code and say you want Start Up with a Deferred Payment Loan ⁠¹.

4. Gather documents

   Bring pay stubs, W-2s, tax returns, and statements for every checking, savings, investment and crypto account. Lenders use these to apply the $13,000 asset cap and the 25% housing-ratio test ⁠⁵⁠⁶.

5. Prove DPL Plus targeting

   Have your lender complete the DPL and DPL Plus Eligibility Worksheet, with a household size statement, disability documentation or the First-Generation Homebuyer Affidavit ⁠⁶.

6. Bring your own contribution

   Set aside at least $1,000 or 1% of the price, whichever is less, from your own funds ⁠⁷.

7. Layer other help if it is open

   Apply separately to FirstGenDPA.org or your city program, since community seconds can be combined with Start Up ⁠⁷⁠¹¹.

If a lender turns you down, you can apply with another participating lender. A free homeownership advisor can also help you work on your credit before you reapply ⁠⁹. Other states’ programs are on the first-time homebuyer grants page, and other Minnesota guides are on the Minnesota page.