Discovering Better Loan Options Through the Step Up Program

Discovering Better Loan Options Through the Step Up Program

Minnesota homebuyerswho have previously owned a home often face limited options when it comes to affordable mortgage solutions. That’s where the Step Up Program, offered through Minnesota Housing, can make a significant difference. Designed for repeat homebuyers and refinance borrowers, the Step Up Program provides access to competitive interest rates, stable loan terms, and down payment or closing cost assistance—all with support from approved lenders across the state.

This guide explains how the program works, who qualifies, and how it can help buyers discover better loan options.

What Is the Step Up Program?

The Step Up Program is a state-backed mortgage programfrom Minnesota Housing that supports:

• Repeat homebuyerswho no longer qualify for first-time buyer programs 
• Current homeownerslooking to refinance for better loan terms 

It offers 30-year fixed-rate loans, competitive interest rates, and optional down payment assistance up to $17,000.

Who Is the Step Up Program For?

Unlike first-time buyer programs, Step Up is designed for:

• Homeowners who are upgrading, relocating, or downsizing 
• Borrowers refinancing an existing mortgage 
• Moderate-income households who may not qualify for other programs 

The program is especially helpful in tight housing marketswhere affordability is a challenge for move-up buyers.

Benefits of the Step Up Loan Program

Here’s what makes Step Up a standout option:

• Fixed-rate 30-year loansfor stable, predictable payments 
• Conventional, FHA, VA, and USDAoptionsavailable 
• Down payment and closing cost assistanceup to $17,000 
• Refinance optionsfor better terms or lower payments 
• Works with local approved lendersfamiliar with Minnesota Housing programs

Step Up vs. First-Time Homebuyer Programs

Key differences between Step Up and first-time buyer loans include:

Eligible Loan Types Under Step Up

Borrowers can choose from multiple loan types:

• Conventional Loans(HFA Preferred™ or HFA Advantage®) 
• FHA Loans 
• VA Loans 
• USDARural Development Loans 

All are fixed-rate and eligible for down payment assistance pairing.

How Step Up Refinancing Works

Refinancing through Step Up is available to current homeowners with eligible existing loans. Benefits include:

• Replacing an ARMwith a fixed-rate loan 
• Lowering monthly mortgage payments 
• Removing mortgage insurance if equity allows 
• Resetting loan terms for better financial planning

Income and Purchase Price Limits

The Step Up Program includes income limits, but they’re higher than typical first-time buyer programs. As of 2025:

• Metro counties (e.g., Hennepin, Ramsey): Up to $145,000 
• Non-metro counties: Slightly lower, depending on location 
• Home price limits: Generally up to $515,200, depending on loan type and location 

These limits are updated annually, so be sure to check current guidelines with your lender.

Minimum Credit Score and Requirements

To qualify for Step Up, most borrowers will need:

• Credit score of at least 640(680 preferred for some conventional loans) 
• Debt-to-income ratiounder 50% 
• Proof of stable income and employment 
• Homebuyer educationfor those using down payment assistance

What Is the Monthly Payment Like?

Monthly mortgage payments under Step Up are generally lower than market-rate loansbecause:

• Interest rates are reduced through Minnesota Housing 
• Private mortgage insurance (PMI) is often discounted or not required 
• Down payment assistance reduces the loan balance 

Your monthly payment will depend on your loan amount, interest rate, property taxes, and insurance.

Down Payment and Closing Cost Assistance

Borrowers can access two main options:

• Monthly Payment Loan: Up to $17,000 repayable over 10 years 
• Deferred Payment Loan: Up to $12,500 due only when you sell, refinance, or pay off the loan

These funds can be used toward:

• Down payment 
• Closing costs 
• Prepaid taxes and insurance

Can Step Up Be Used in Rural Areas?

Yes. Step Up loans are available statewide, including rural communities and small towns across Greater Minnesota. When paired with a USDA loan, it’s a strong option for buyers outside major metro areas.

How to Apply for the Step Up Program

Follow these steps:

1. Work with an approved Minnesota Housing lender 
2. Get pre-approved for a qualifying loan 
3. Check income and property eligibility 
4. Take homebuyer education (if needed) 
5. Complete your application and close with down payment assistance included 

Frequently Asked Questions About the Step Up Program

Q: Can I use Step Up if I sold my last home recently?

Yes. Step Up is designed for non–first-time buyers, regardless of how recently you sold.

Q: Can I use Step Up to refinance a loan from a different lender?

Yes. As long as the refinance meets the program’s guidelines, it’s eligible.

Q: Is Step Up only for low-income buyers?

No. It serves moderate-income households and has higher income limits than other programs.

Take the First Step Toward a Better Loan Option

Ready to explore your next move in Minnesota? The Step Up Program could give you the flexibility, affordability, and support you need—without starting from scratch.

Connect with First Class Mortgage todayto find out how Step Up can improve your loan options. Your next home—and better financing—might be closer than you think.