The Good, The Bad and The Quirky

An Update of the Bloomington “Homebuyer Mortgage Assistance” Program (“HMA”).

Overview

Buying a home in Bloomington? The City of Bloomington has a forgivable loan down payment assistance program for buyers purchasing a home within its city limits. The program offers $10,500 of financial aid if you meet the 80% of area median income guidelines.

Eligible Borrowers

• You do NOT need to be a first-time homebuyer.

• Income cannot exceed 80% of area median income (as adjusted for family size). The income limits were increased in June, so if you thought you were ineligible before, check again before you rule out this program as an option for you.

• The home that is being purchased must be a primary owner-occupied home. And, you must move into the home as your primary residence within 30 days of closing.

• All household income will be included in calculating eligibility.

• The purchase can be a single-family home, townhome, condo, or duplex.

Having now worked with this program for a few buyers, we wanted to share with you our thoughts and, hopefully, make using this program as seamless as possible for you.

The Good

• The HMA loan is 100% forgivable as long as you are still living in the home in January 2027. If not living in the home, you will need to repay the loan.

• The HMA program can be combined with other programs to provide even more help with your purchase. For example, you can add assistance money from the Minnesota Housing Finance Agency (“MHFA”) first-time home buyer funds and the Community Keys program funds. Each of these programs has their own qualifying criteria that must be met for eligibility.

• The City of Bloomington program has no purchase price limit.

• The assistance funds are borrowed at zero percent interest.

• There are no monthly payments required to be made.

Overall, a very good program!

The Bad

• The necessary approval processes can be lengthy. In general, this assistance program is not able to accommodate a quick closing.

• Regardless if you have owned a home in the past, you must take an 8-hour homebuyer education class.

• You must also complete a one-on-one financial homeownership capacity counseling session with a financial counselor. Upon completion, you will receive a completion certificate. The completion date of the certificate must pre-date the home purchase closing date by at least 30 days.

• It is critical you complete the class requirements before finding your home. If not, the required time frames to receive the assistance funds can become prohibitive. And most sellers will not accommodate closing delays to allow completion of these requirements.

The Quirky

• The Bloomington HMA program is the only assistance program we know of that requires a 30-day wait period from the completion of the class and counseling to the closing date. The City of Bloomington is currently inflexible on this requirement and does not make exceptions.

• All of the approval processes and document requirements for the HMA program go through NeighborWorks Home Partners including the program application and the program approval. NeighborWorks Home Partners does offer the required classes and one-on-one counseling. But, a buyer can use other organizations to complete those requirements, too.

• NeighborWorks Home Partners only offers classes on limited dates. And, their one-on-one counseling is often booked out 2-3 weeks in advance. And, you can’t complete the application for the Bloomington HMA program until you have a signed purchase agreement.

Solution

The Bloomington program is a great program if you know how to work it. Even though you are not allowed to fill out an application to use HMA until you have a finalized purchase agreement, you can complete the classes and one-on-one counseling ahead of time. This same class will also fulfill the homebuyer education class requirement for other city and state buyer assistance programs. It is strongly suggested you first complete the homebuyer’s education class and one-on-one counseling (completion certificates are good for one year from the date of completion) and then find your home. Doing these steps in this order will help you avoid disappointment and frustration and make home ownership more affordable!

If you have questions or need more information about the HMA program, and to help you learn if you qualify to use HMA funds, please contact us for a no-obligation conversation.