Key Takeaways
- Minnesota offers several powerful programs for first-time homebuyers, including Start Up and Step Up.
- Down payment assistance can significantly reduce upfront costs.
- Many buyers qualify even with moderate incomes and credit.
- Local cities and counties may offer additional grants you can combine with state programs.
- Always work with an approved lender and complete homebuyer education early.
Minnesota First-Time Homebuyer Programs: Step Up, Start Up & More
Buying your first home is a major milestone, and Minnesota offers a range of programs to help you get there. From down payment assistance to reduced interest rates, the state’s offerings can make the path to homeownership far more affordable than most people realize.
This guide walks you through the most important first-time buyer programs in Minnesota—including Start Up, Step Up, and additional statewide and local options you should know about.
Who Qualifies as a First-Time Homebuyer in Minnesota?
In Minnesota, a “first-time homebuyer” is typically defined as:
- Someone who hasn’t owned a home in the past 3 years
- Someone purchasing their first-ever property
- Some programs waive this requirement if buying in targeted areas
What Is the Start Up Program?
The Start Up Program from the Minnesota Housing Finance Agency (MHFA) is designed specifically for first-time homebuyers. It includes:
- Affordable fixed-rate mortgages
- Down payment and closing cost assistance
- Access to monthly or deferred loan options
- Credit score requirements as low as 640
What Is the Step Up Program?
The Step Up Program is ideal for:
- Repeat homebuyers
- First-time buyers who exceed Start Up income limits
- Homeowners seeking to refinance
Benefits include:
- Higher income limits
- Flexible credit guidelines
- Down payment loan options
Types of Assistance Offered by Start Up and Step Up
Depending on eligibility, buyers can receive:
- Monthly Payment Loan (up to $18,000)
- Deferred Payment Loan (up to $16,500, no monthly payments, due when home is sold)
- Deferred Payment Plus for lower-income borrowers
Income and Purchase Price Limits
To qualify for Start Up or Step Up, buyers must stay under:
- Income limits based on county and household size (ranging from $80,000–$150,000+)
- Purchase price limits that vary by region (generally up to $372,600–$515,200 in 2025)
These limits are updated annually by MHFA.
Credit Requirements for First-Time Buyer Programs
Most programs require:
- A credit score of at least 640
- A DTI (debt-to-income) ratio under 45%
- No recent bankruptcies or foreclosures
Some lenders may allow non-traditional credit history if documentation is solid.
Local First-Time Homebuyer Grants in Minnesota
Beyond state-run programs, many Minnesota cities and counties offer grants or zero-interest loans, such as:
- City of Minneapolis Homebuyer Assistance
- St. Paul Down Payment Assistance Program
- Rochester First-Time Homebuyer Program
- Hennepin County and Dakota County grants
These may be stackable with Start Up or Step Up programs.
VA, USDA, and FHA Options for First-Time Buyers
Federal loans can also help:
- FHA loans: Low down payment (3.5%), easier credit standards
- VA loans: No down payment for eligible veterans
- USDA loans: No down payment for eligible rural homes
Many Minnesota buyers pair these with state assistance.
The Homebuyer Education Requirement
Minnesota Housing requires Homebuyer Education through:
- Framework® (online course) or
- Home Stretch (in-person)
This is typically required before closing, especially when using down payment assistance.
How to Apply for Start Up or Step Up in Minnesota
- Find an approved lender through Minnesota Housing’s website
- Get pre-approved for a qualifying mortgage
- Complete a homebuyer education course
- Submit your application with your loan officer’s help
- Close on your new home with down payment assistance in place
Documents Needed to Apply
Typical documentation includes:
- Proof of income (W-2s, pay stubs)
- Tax returns
- Credit report
- ID and Social Security number
- Bank statements
How Much Can You Save With These Programs?
With these programs, Minnesota buyers may save:
- $10,000–$18,000 in upfront costs
- Thousands in interest over the life of the loan
- Reduced monthly payments due to better rates or deferred assistance
Common Mistakes First-Time Buyers Should Avoid
- Skipping pre-approval before house hunting
- Not comparing multiple lenders
- Ignoring credit score impact
- Missing deadlines for assistance applications
Schedule a Call With Us at First Class Mortgage
If you’re ready to explore Minnesota first-time homebuyer programs, our team at First Class Mortgage can guide you through every option.
Schedule a call with us today and let’s find the best path to your first home—complete with expert help, program insights, and custom guidance.
First Class Mortgage
First-class service. First-class knowledge. A first-class experience. We are staffed and operated by people who understand that each customer is special and individual attention is necessary to satisfy each unique financial situation. That’s why at First Class Mortgage, we have simplified the mortgage process.
Locally owned. Connected nationwide.
