The city of Minnetonka has just rolled out a very generous down payment assistance program. It is one of the most generous city programs available helping to make Minnetonka more affordable for first time homebuyers. The amount of assistance available will depend in part on the buyer’s need. The lower the household income, the more aid will be made available – up to $75,000! A quick closing, however, is not likely in the cards as a qualifying buyer must have the assistance application and a fully executed purchase agreement submitted to the city a minimum of 4 weeks prior to the closing date.
Here are the various qualifying criteria to be an eligible buyer for this assistance program:
Program Eligibility
- First time home buyer
- Single family, townhomes, or condos within the city limits of Minnetonka
- Purchase price must be at or below $465,000 (as of April 2024)
- Must have a credit score of 620 or higher
- Must complete a Homestretch buyer education course and financial counseling prior to closing
- Homebuyers must contribute at least $1,000 of their own money towards down payment and closing costs
The down payment assistance monies are secured by a second mortgage on the home and do not need to be paid back until sale, refinance, or transfer of title on the home. The assistance funds have an interest rate of 0% and, best of all, the aid is forgiven by 5% each year until totally forgiven after 20 years!
Eligible buyers are also subject to income limits. Also, maximum income limits increase as household size increases. For example, a one-person household is eligible if their income is under $104,916; a 2-person household is capped at $119,984. It escalates up to an 8-person household where household income cannot exceed $197,841.
The amount of the assistance loan available to a buyer is based on the household’s income and the purchase price. The greater the need, the more assistance is available (but you still must qualify for the loan):
- Households with an income below 50% area median income (“AMI”) can receive 25 % of the purchase price in assistance not to exceed $75,000.
- Households earning an income between 51%-60% of AMI can receive up to 20% of the purchase price not to exceed $70,000.
- Households with incomes between 61%-to 80% AMI can receive up to 20% of the purchase price not to exceed $63,000.
- Households earning between 81-120% AMI can receive up to 10% of the purchase price not to exceed $50,000.
Generous assistance programs like this don’t come around often. And if they aren’t used, they will expire and disappear… usually forever. If an assistance program is popular and used, it could very well be funded for future years, too. Are you interested in this fantastic program or know someone who might be? Have more questions? Get in touch with us and we can explore available options!
Real Estate | Your@HomeTeam 