The Step-Up Program From MHFA

Traditionally, there have been special programs provided through the Minnesota Housing Finance Agency that have been designed only for MN first time home buyers. Last December, however, all of that changed! While there is still a wide array of great programs for MN first time home buyers, MHFA has now expanded their product selection to those who have owned a home in the past as well.

These new programs will really help our local Cottage Grove real estate market. In short, if a Cottage Grove home seller nets very little upon the sale of their home, now they have a way of being able to afford a new home purchase as well. With the guidelines as provided through MHFA, a Twin Cities home buyer who has owned a home in the past needs only as little as $1,000 of their own money in order to buy their next home.

The first thing you need to understand is that the Cottage Grove home seller will need to be able to qualify for a traditional first mortgage. This means that lenders need to follow the guidelines for Conventional, FHA, VA, or USDA loans in order to make sure that you can afford to repay the loan.

If Cottage Grove home buyers qualify in every other way except for down payment, then you may want to tap the down payment assistance resources available at MHFA. Their program allows you to borrow as much as 5% of the sales price towards your down payment and closing costs. On a $200,000 home purchase, example, you can borrow up to $10,000 to use. The thing I like about this program is that the rate on the down payment assistance loan is the same low rate as on the first mortgage.

What Are Some of The Qualifications?

Aside from the normal qualifications for the underlying first mortgage, there are 2 basic things that your lender will consider when determining if you qualify.

1) Your total household income (varies based on family size)

2) The purchase price of the new home

MHFA loans today are only good on purchases up to a little over $295,000 in the Twin Cities metro area. Maximum income guidelines vary based on family size, starting at $83,900 for a household size of 2 or less

Where Can I Get More Information?

For the remainder of the qualifying factors I would suggest talking to a local Minnesota mortgage lender who specializes in first time home buyer products. These programs can be a bit tricky from the lenders side so it's important that you work with someone who has a lot of experience.