First-time home buyer programs in Minnesota and Minneapolis

What the state offers: Start Up and Step Up

Minnesota Housing, the state housing finance agency, does not lend directly. Buyers apply through a participating lender, as for any other mortgage, and the agency sets the program rules and interest rates. It offers two first-mortgage programs for buyers:

• Start Up is for first-time buyers, defined as someone who “has not had an ownership interest in a principal residence in the last three years.”
• Step Up is for repeat buyers, and for first-time buyers whose income or purchase price is above the Start Up limits.

Both require that you live in the home, and a minimum credit score applies; the agency’s page does not give the number, so ask a participating lender. If every borrower is a first-time buyer, at least one must complete an approved homebuyer education course before closing.

Income and price limits for Hennepin County

Minneapolis is in Hennepin County, one of the 11 counties the agency counts as the Twin Cities metro area (Anoka, Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Washington and Wright).

Source: Minnesota Housing, “Homeownership Income Limits” and “Buy a Home & Refinance,” read October 13, 2026.

For comparison, the 2024 median value of owner-occupied homes is $368,300 in Minneapolis (see Minnesota home prices). The $515,200 cap is well above it.

Down payment and closing cost loans

When you qualify for Start Up or Step Up, you may also get a second loan for the down payment and closing costs. Minnesota Housing says these are loans, not grants, and they can only be used with a Minnesota Housing first mortgage.

Source: Minnesota Housing, “Buy a Home & Refinance” and “Homeownership Income Limits.” The agency lists a limit for each household size from 1 to 8 or more; ask a lender for 3, 5, 6 and 7 people.

The agency also notes that the Mortgage Credit Certificate program has not been available since December 31, 2017. Its one-time First-Generation Homebuyer Loan closed on December 19, 2024 after the funds ran out.

What Minneapolis adds

The City of Minneapolis offers a down payment assistance loan to low-income first-time buyers. According to the city:

• It is a 30-year deferred mortgage with no interest, up to $20,000.
• You can receive $10,000 if your income is at or below 80% of the area median income (AMI), and $20,000 if it is below 60% of AMI.
• The funds can go toward a down payment and standard closing costs on a home you will live in.
• You must complete a homebuyer class before you use the funds, and you cannot combine funds from more than one City program to buy the same house.
• You apply through one of the City’s partner organizations listed on its page, not directly with a city office.

The city’s rules page lists these income limits, labeled “2024” and based on HUD figures that HUD updates each spring:

Source: City of Minneapolis, “Down payment assistance rules” (page last updated April 22, 2025). Confirm the current table with the City before you rely on it.

The amount you receive also depends on the funds the City has available when you ask. For repairs after you buy, the City separately helps homeowners find financing of $2,000 to $75,000 for one-to-four-unit homes you own and live in.

How to apply

1. Take a homebuyer education course. Minnesota Housing lists four approved courses, including Freddie Mac’s CreditSmart Homebuyer U; Fannie Mae’s HomeView is not approved. The City of Minneapolis lists local providers on its homebuyer education page.
2. Talk to a homeownership advisor. Minnesota Housing says an advisor can tell you whether you are ready to buy without affecting your credit.
3. Choose a participating lender from the agency’s Find a Lender tool and tell them you want a Minnesota Housing program.
4. Read your Loan Estimate. It shows your estimated closing costs and the cash you need at closing. Our closing costs guide and the home buying steps explain what comes next.
5. For city help, apply through one of the City’s down payment assistance partners.

Other loan types have their own rules: see our guides to FHA loans and VA loans. For a look at the city itself, read buying a home in Minneapolis.