First time home buyer in Minnesota? Here's how to do it right
Buying your first home comes down to good preparation: the right team, the right loan and a plan for competing offers. Here is what I walk my first-time buyers through.
Build your team before you fall for a house
Start with a free, no-obligation buyer consultation. I go through the major steps in the process and some key terms to know so you feel educated and prepared when the time is right. Tell me what you want in a home and which areas you're considering, and we'll look at what's actually selling there.
From there we line up the rest of your team: a mortgage lender, a title company and a home inspector. If you already have people you like, I'll reach out to them and get things moving. If not, I've built relationships with lenders, title companies and inspectors since 2017 and I'm happy to make introductions.
Having this in place early is what lets you move fast when the right house shows up.
Loan options to ask your lender about
Programs and rules change, and every one has its own limits. Your lender is the final word on what you qualify for.
Low down payment conventional
Some conventional programs allow as little as 3 percent down for first-time buyers.
FHA loans
Federally insured loans with a minimum of 3.5 percent down and more flexible credit standards.
VA and USDA loans
Zero down payment for eligible veterans (VA) and for eligible buyers in qualifying areas (USDA).
Minnesota Housing Start Up
The state's first-time buyer program, offered through participating lenders. It has income and purchase price limits and can be paired with down payment assistance.
Down payment assistance
Minnesota Housing and some cities and lenders offer loans or grants toward your down payment and closing costs.
City programs
Some cities run their own help for buyers. Minneapolis, for example, has had programs for eligible first-time buyers. Ask your lender what applies where you're buying.
Plan a good, better and best scenario
Ask your lender to lay out three financing scenarios: a comfortable payment, a stretch and a maximum. Compare the down payment, monthly payment and cash to close for each. That tells you where to shop, and it keeps you from finding out the hard way that the house you love is out of reach.
Then get a pre-approval letter. When you make an offer, especially against other buyers, sellers look for that letter first.
Not sure you can afford it yet? Talk to me anyway. Down payment assistance and the right loan program can change the math more than people expect.
"I did not think we would be able to afford a home after speaking with a lender but Mike had some good ideas to help get us cash for the downpayment and into a home with a lower interest rate."
The steps from first call to closing
Get pre-approved
Your lender confirms your price range and gives you a letter to send with offers.
Search and tour
I set up saved searches with instant alerts and tour homes with you, pointing out issues as we go.
Make an offer
I find out whether the seller has other offers and help you write one that competes without overpaying.
Sign the purchase agreement
I negotiate price and terms. Once it's accepted, I send it to your lender.
Home inspection
You'll have a short window, often a few days. Inspections commonly run about $400 to $800.
Appraisal, underwriting and title
Your lender orders an appraisal (often around $500) and finishes underwriting. The title company confirms clear ownership.
Final walkthrough and closing day
We confirm the house is in the agreed condition, you sign, pay closing costs and get your keys.
Grants can make a real difference
My listing at 4258 Islemount Pl in Robbinsdale, listed at $299,900, could qualify for a $15,000 first-time buyer grant through Old National Bank. Ask me which homes and grants fit your situation, and confirm eligibility with the lender.
Be flexible on where and what
Good homes in the most popular price ranges can draw several offers. Two things help first-time buyers win:
- Widen your map. Expanding your search by a 20 to 30 minute drive can open up newer construction and more homes in your budget.
- Consider a townhouse. They often cost less to buy and maintain. Browse townhouses for sale in Maple Grove, and I'll help you read the HOA documents.
Ready to see what's out there? Search Maple Grove homes for sale.
Frequently asked questions
How can I take advantage of first time home buyer programs to help me buy a home?
Down payment assistance and other similar programs help you come up with the cash needed to buy a home. They can come in the form of grants or loans and you have to qualify based on your income and a few other factors. Reach out to me and I can connect you with a lender that knows these programs well.
Who counts as a first time home buyer in Minnesota?
Most programs, including Minnesota Housing's, generally treat you as a first-time buyer if you haven't owned a home in the past three years. Some programs have exceptions, so confirm with your lender.
What is the Minnesota Housing Start Up program?
Start Up is Minnesota Housing's loan program for first-time buyers, offered through participating lenders. It has income and purchase price limits and can be combined with down payment assistance. A participating lender can tell you if you qualify.
How much money do I need to buy my first home in Minnesota?
You need a down payment, which can be anywhere from zero to 3.5 percent or more depending on the loan, plus closing costs and money for the inspection and appraisal. Down payment assistance can cover part of it. Ask your lender for a cash-to-close estimate.
What credit score do I need to buy a house in Minnesota?
FHA allows 3.5 percent down with a credit score of 580 or higher, and many conventional loans start around 620. Individual lenders and programs can set higher minimums. A lender can review your credit and tell you where you stand.
Can my first home be a townhouse or condo in Maple Grove?
Yes, and many first-time buyers start there. Before you offer, review the HOA fees, rules, reserves and any planned assessments. I'll gather and summarize those documents for you.
Let's map out your first purchase
Call or text me at 612-655-3309 for a free, no-pressure buyer consultation.
612-655-3309