This spring (2024) there will be two new buyer assistance programs coming out which will be specifically targeted at first generation home buyers. These programs are specifically designed to help first generation Minnesotans achieve homeownership which is the #1 way most families build wealth in the United States.
First Generation Homebuyers Community Down Payment Assistance Fund
This assistance program was created via collaboration between the Minnesota Homeownership Center, the Minnesota Association of Realtors®, Midwest Minnesota Community Development Corporation, a cross-sector industry advisory group and numerous community members. The Minnesota State Legislature funded the program with $100 million in 2023.
The program definition of a first-generation home is someone who has never owned a home nor have their parents (unless they lost it due to foreclosure). It also applies to those who grew up in the foster care system. If there is more than one home buyer on the loan, only one person needs to meet the first generation definition. Any other buyer on the mortgage would need to be a first-time home buyer (not had any interest in a home for the last 3 years).
Criteria to qualify for this program
- A current resident of Minnesota and buying a home in the state.
- The maximum combined of all buyers listed on the mortgage cannot exceed $124,200 for the 11-county metro area.
- The first generation Buyer on the loan must complete an approved education workshop within the last 12 months. If there are additional buyers on the loan, it is also recommended they complete the class, too.
- MUST be preapproved for a mortgage before applying for the assistance fund.
Benefits of the program
- This fund provides up to 10% of the home’s purchase price (not to exceed $32,000) in down payment to eligible buyers.
- This loan is at 0% interest and completely forgiven over 5 years if the first generation buyer continues to reside in the home.
- Assistance can be used to purchase a single family home, condo, townhome, co-op or land trust home.
- Combined income can not exceed 124,200 in the 7-county metro area and less in other counties.
Based on the $100 million funding and the $32,000 maximum assistance amount, this program could potentially help at least 3,125 first generation buyers.
First Generation Home Buyer Loan Program
This program is through Minnesota Housing and is somewhat different than the First Generation Homebuyers Community Down Payment Assistance Fund described above. A buyer qualifies as a first-generation homebuyer if they and their parent(s) or legal guardian(s) have never owned a home in any country. A buyer will also qualify if the buyer or the parents/legal guardians owned a home but lost it to foreclosure. In cases where a buyer does not know about these conditions for their parent/legal guardian, they may still be eligible for the program.
Benefits of the program
- This fund provides up to $35,000 towards down payment and closing costs.
- You must use the Minnesota Housing Start Up First Mortgage loan to purchase the home.
- This assistance loan is a deferred, 0% interest and forgivable. Half of the loan is forgiven after 10 years and the rest after 20 years. In addition, you must reside in the home through the forgiveness date.
- You can also combine this program with the standard Minnesota Housing down payment and closing cost loan options with additional assistance up to $18,000. Total possible assistance monies could be as much as $53,000.
The Minnesota Housing program will also be requiring buyers to attend an approved homebuyer education class. And, this program cannot be combined with the First Generation Homebuyers Community Down Payment Assistance Fund described above.
Don’t Wait!
As of this writing, the program terms, guidelines and related details are not yet finalized for both programs and likely won’t be for at least another month. That said, it is anticipated that both programs should be available to homebuyers this spring. They could look slightly different than what is outlined in this blog once the final terms come out. We normally wait until a program is officially available before sharing details. But based on expected demand, we suspect the required homebuyer education classes will fill up quickly. To utilize both of these programs, at least the first-generation buyer will need to attend and complete a Home Stretch or Framework class, potentially meet with a homebuyer advisor and obtain a certification. The class and certification is good for one year.
If you, or someone you know, are interested in these programs, we suggest you get a head start. Call, text or email our team now and we can refer you to lenders who are working with these programs and direct you towards the homebuyer education classes that will work for you.
Real Estate | Your@HomeTeam 