Mortgage Loan Programs Downpayment and Closing Cost Loan Comparison

This is a summary of program requirements and does not contain all the information needed to originate Minnesota Housing loans. Lenders should refer to Minnesota Housing’s Start Up and Step Up Procedural Manuals and the underlying product guidelines for complete information.

Questions? Email the Partner Solutions Team (PST) at mn.housing.solution@state.mn.us

Loan Information

Parameters	Monthly Payment Loan	Deferred Payment Loan Options: Deferred Payment Loan (DPL) and Deferred Payment Loan Plus (DPL+)
Eligible First Mortgage Programs	Available with Start Up or Step Up through participating lenders See Start Up and Step Up Program Description	Only available with Start Up through participating lenders See Start Up Program Description
Loan Amount (must be in whole dollar amounts)	Up to $14,000	DPL: Up to $14,000 DPL+: Up to $18,000
Geographic Availability	Available Statewide	Available Statewide
Interest Rate	Equal to the first mortgage rate	0%
Loan Term	15-year term	Equal to first mortgage term
Repayment	Fully amortized loan with monthly payments	Deferred, balloon payment loan. Repaid when the property is sold, title is transferred, home is no longer the primary residence, when the first mortgage loan is refinanced (unless with the Step Up program), or the first mortgage loan is paid in full (prior to or at the end of the loan term).
Monthly Payment Required	Yes	No
Subordination	Allowed if refinancing with Step Up. Lender must submit a subordination request and receive Minnesota Housing approval.	Allowed if refinancing with Step Up. Lender must submit a subordination request and receive Minnesota Housing approval.
Layering downpayment assistance (DPA) from external sources	Allowed	Allowed
Layering Minnesota Housing DPA	Only one MPL/DPL/DPL+ loan allowed to be open at one time.	Only one MPL/DPL/DPL+ loan allowed to be open at one time.
Eligible Use of Funds	Funds eligible for downpayment, buyer closing costs, and mortgage insurance costs.	Funds eligible for downpayment, buyer closing costs, and mortgage insurance costs.

Borrower Eligibility

Parameters	Monthly Payment Loan	Deferred Payment Loan Options: Deferred Payment Loan (DPL) and Deferred Payment Loan Plus (DPL+)
Income Limits	For Start Up: Use Start-Up Income Limits For Step Up: Use Step Up Income Limits	DPL and DPL+ Income Limits
First Time Homebuyer	Start Up: Required Step Up: Not required. First-time homebuyers may use Step Up if they are not eligible for Start Up. Step Up is open to repeat homebuyers.	Required
Homebuyer Education	Start Up: Yes. Step Up: Yes, if all borrowers are first-time homebuyers	Yes. At least one borrower is required to complete an approved homebuyer education course prior to closing.
Minimum Borrower Contribution	Lesser of $1,000 or 1% of purchase price	Lesser of $1,000 or 1% of purchase price
DPL+ Targeting Criteria	N/A	DPL: N/A DPL+: See DPL and DPL Plus Eligibility Worksheet for details
Housing Ratio Minimum	N/A	25% Minimum Housing Ratio. See the DPL and DPL Plus Eligibility Worksheet for details.
Maximum Post-Closing Liquid Assets	N/A	$13,000 Post Closing Liquid Asset Limit Include: Checking, Savings, CDs, Stocks, Bonds, ESOP/ESPP, Money Market, Tax Refunds, Virtual Currency Exclude: Retirement Accounts, Federal Stimulus Pmts., Front Line Worker Pay, 529 College Savings, HSA Accounts Review account statements for account activity indicating undisclosed debt, income, and assets. Borrowers cannot manipulate accounts (e.g. transfer funds into a retirement or other account, etc.) to meet minimum post-closing liquid reserve limits. The asset limit must be met unless the underlying loan program guidelines require greater reserves. Contact PST for clarification on accounts not listed above.
Post-Closing Liquid Assets Spend Down Guidance	N/A	Borrowers may spend down excess liquid assets to meet the post-closing liquid asset limit, provided the following requirements are met: Funds must be used to pay down a borrower’s own existing debt(s). Payment transaction(s) must be completed prior to or at loan closing. Documentation of the debt(s) and the payment transaction(s) must be included in the loan file.
Minimum Post Closing Liquid Reserves	Defer to underlying product guidelines. For manual underwriting: Follow U.S. Bank HFA Division overlays.	Defer to underlying product guidelines. For manual underwriting: Follow U.S. Bank HFA Division overlays. If the underlying loan program guidelines require greater reserves than allowed with the DPL/DPL+ asset limit, follow the underlying product requirement.

In connection with Single Family Division loan programs, Minnesota Housing does not make or arrange loans. It is neither an originator nor creditor and is not affiliated with any Lender. The terms of any mortgage finance transactions conducted in connection with these programs, including important information such as loan fees, the annual percentage rate (APR), repayment conditions, disclosures, and any other materials which are required to be provided to the consumer are the responsibility of the Lender.