First-Generation Loan Programs Launch

Lieutenant Governor Peggy Flanagan today joined Rep. Esther Agbaje and Sen. Clare Oumou Verbeten to announce the opening of applications for two Minnesota first-generation homebuyer downpayment assistance programs. The programs will play a critical role in addressing Minnesota’s homeownership gap for households of color.  

“I want people who don’t have a family history of homeownership to know that they may be eligible for substantial help with their downpayment so they can establish a legacy of homeownership,” said Lieutenant Governor Flanagan.  

With these funds, Minnesota Housing and the Midwest Minnesota Community Development Corporation (MMCDC) project they will help 4,500 first-generation households purchase their first homes. They anticipate a majority of the homebuyers will be households of color, making the effort an important tool in closing the homeownership gap. 

“I’m so proud that we were able to put $150 million toward helping first-generation homebuyers as part of the legislature’s historic investments of $1.3 billion for housing last year,” Rep. Agbaje said. “This is an incredible commitment.” 

“The rising housing costs and interest rates have might make some Minnesotans hesitant to buy a home,” said Sen. Oumou Verbeten. “This investment in the first-generation homebuyers downpayment assistance program will help those who have never thought purchasing a home was an option, leveling the playing field and creating opportunities for more people across Minnesota.” 

In May 2023, the Governor Walz signed legislation creating two first-generation homebuyers downpayment assistance programs as part of the omnibus housing finance bill (HF 2335). The goal of both programs is to help more first-generation homebuyers access homeownership.  

The state program is managed by Minnesota Housing. The community program, managed by MMCDC, is supported by a coalition of organizations including Minnesota Realtors®, Minnesota Homeownership Center, and Twin Cities Habitat for Humanity.  

“We know that targeted assistance for first-generation homebuyers is particularly effective for individuals who do not have access to generational wealth,” said Julia Nelmark, president of MMCDC. “But for this assistance, many households would not be able to achieve homeownership. MMCDC is proud to be playing a role in this important initiative.” 

First-Generation Homebuyer Loan Program
Minnesota Housing’s program is available to Minnesota households in which the applicant and their parent(s) or legal guardian(s) never owned their primary residence in any country, or owned a home but lost it due to foreclosure, and meet income requirements. Eligible recipients can receive up to $35,000. Half of the deferred, interest-free loan is forgiven after 10 years and the rest after 20. Homebuyers may be able to combine this program with a standard Minnesota Housing downpayment and closing cost loan program, qualifying buyers for up to $53,000 in loans. The program has $50 million available. 

First-Generation Homebuyers Community Down Payment Assistance Fund
The community program is available to Minnesota households in which the applicant and their parent(s) or legal guardian(s) never owned a home in any country, or owned a home but lost it to foreclosure and meet income requirements. Eligible recipients can receive up to 10 percent of a home’s purchase price, capped at $32,000. The zero-interest loan is fully forgiven after five years of owner occupancy (20% forgiven annually). The program has $100 million available. 

The programs cannot be used together.  

First-generation homebuyers seeking downpayment assistance are encouraged to talk to a housing counselor or a mortgage lender about which program may work best for them.