Lenders and Realtors

Lenders and Realtors® will play a crucial role in helping the First-Generation Homebuyers Community Down Payment Assistance Fund to achieve its goal of helping to reduce Minnesota’s racial homeownership gap.

Learn more about how the Fund works below.

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Download this Program Fact Sheet to share in hard-copy form with your clients.

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Pre-Approval Letter Requirements
This form outlines the requirements for the Pre-Approval Letter.
Note: Borrowers are required to have a fully underwritten conditional pre-approval to apply for the funds. Desktop Underwriting is not accepted.

Mortgage Underwriter Pre-Approval Attestation
This form is used to verify that the underwritten pre-approval was completed before the borrower applied for the funds. The form is sent to the First Mortgage Lender once the borrower has been assigned to a DPA Lender. The First Mortgage Underwriter must complete the form within 10 business days.

Timeline for Mortgage Lender
This form details the timeline and requirements for the First Mortgage Lender to follow from the point of borrower application to loan closing.

Term Sheet
Product Terms for the First Generation Homebuyers Community Down Payment Assistance Fund

Mortgage and Note Forms
Conventional Mortgage
Conventional Note
FHA Mortgage
FHA Note

Questions: [email protected]

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Amount of Assistance
  • 10% of purchase price, up to $32,000 per transaction. 
  • Borrower includes all borrowers who are obligated to the first mortgage. Assume requirements apply to all borrowers unless noted.
Eligible Borrower
  • At least one borrower self-attests they meet the definition of First-Generation Homebuyer:
    • Borrower and their parent(s) or legal guardian(s) never owned a home in any country OR owned a home but lost it due to foreclosure.
  • All co-borrowers must be first-time homebuyers. Having no ownership interest in a principal residence during the previous three-year period.
  • Borrower income is equal to or less than the income guidelines for Start Up as published by MN Housing for 1-2 person regardless of household size.
    • $124,200 11-County Twin Cities Metro
    • $117,200 Dodge and Olmsted Counties
    • $111,800 All Other Counties
  • At least one borrower who is a first-generation homebuyer is a current resident of the State of Minnesota.
  • At least one borrower who is a first-generation homebuyer has met the homebuyer education requirements.
  • Borrower can document that they have an underwritten preapproval for a Qualified First Mortgage.
  • Non-occupant co-borrowers and co-signors are not allowed.
Homebuyer Education
  • First-generation borrower completed an approved homebuyer education workshop in the last 12 months, and it was completed PRIOR to submitting a Purchase Agreement.
    • Option 1: Borrower completes one of the following workshops either Instructor-led, in person or live virtual.
    • Option 2: Borrower completes the self-guided online course Framework Homeownership
  • Not accepted: Fannie Mae HomeView and Freddie Mac CreditSmart Homebuyer U
Use of Fund
  • Down payment based on first mortgage requirement.
    • Funds cannot be used for the 3.5% FHA Minimum Required Investment.
  • Buyer settlement costs as determined by the loan closing disclosure.
  • Principal buy-down.
  • Secured zero interest loan forgiven over 5 years.
  • Loan has no monthly payment and does not accrue interest.
  • Loan is forgivable at a rate of 20%​ per year on the day after the anniversary date of the note. There is no monthly pro-rate or other partial year credit.
  • Prorated balance of the Loan is​ repayable if the property converts to nonowner occupancy, is sold, is subjected to an ineligible​ refinance, an unauthorized transfer of title, or a completed​ foreclosure action within the five-year loan term.
  • Recapture can be waived in the event of​ financial or personal hardship with the approval of the Administrator.
Eligible Properties
  • Owner-occupied principal residence only. Borrower must occupy the home within 60 days following the closing.
  • 1-2 units detached and townhomes, condominiums, co-ops, and manufactured homes titled as real property.
  • Shared equity, community land trusts, and other resale restrictions.
  • Limited to properties within the State of Minnesota.
First Mortgage
  • Mortgage must be a fixed rate, fully amortized, first mortgage loan that meets CFPB “Qualified Mortgage” definition or is originated in compliance with the nonprofit exemption to the Ability to Pay rule.
    • Sharia compliant products that meet above standards.
    • ITINs (Individual Taxpayer Identification Numbers) products that meet the above standards.
  • Not allowable: Adjustable-Rate Mortgages (ARMs), Negative Amortization, Balloons, Interest Only.
Fund Reservation & Commitment Period
  • Funds are reserved for 90 calendar days for approved borrowers. A one-time 60 calendar day extension may be allowed. Subject to approval by the DPA Lender.
  • Once a Purchase Agreement has been executed, a commitment letter is issued and allows 60 calendar days for closing.
    • Renovation Loans may be eligible for a one-time 30 calendar day extension.
    • New Construction commitments are valid for 180 calendars days.
  • Borrowers are not subject to reapplication if the mortgage lender rejects the purchase contract, through no fault of the buyer, or if the buyer opts to call the inspection contingency. Borrowers are reissued an updated reservation letter.
Qualifying Ratio
  • Determined by first mortgage.
Borrower Minimum Investment
  • Determined by first mortgage.
  • Funds cannot be used for the 3.5% FHA Minium Required Investment.
  • First mortgage lenders cannot charge additional fees for this Fund.
  • Pricing determined by first mortgage.
Cashback Allowances
  • Cash back is not allowed unless verified Earnest Money deposits exceed the borrower’s out of- pocket settlement costs requirements and/or the fees paid in advance to the first mortgage lender are allowed to be included in the financing.
  • Can be layered with other Down Payment Assistance.
Lien Position
  • Allows for any lien position.
Disbursement Process
  • Funds are wired to the Title Company by the DPA Lender.
  • Borrower signs the Fund loan documents at the first mortgage loan closing.


The First-Generation Homebuyers Community Down Payment Assistance Fund is different from Minnesota Housing’s First-Generation Homebuyer Loan Program. The programs cannot be used together. Both are funded by the state, and the goal of both programs is to help more first-generation homebuyers access homeownership.

For the latest information, visit Minnesota Housing First-Generation Homebuyer Loan Program.

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First-Generation Homebuyers Community Down Payment Assistance Fund

Minnesota Housing’s First-Generation Homebuyer Loan Program

Amount of Funding Available $100 million $50 million
Expected Launch of Program Spring 2024 Spring 2024
First Generation Homebuyer Definition At least one borrower and their parent(s) or legal guardian(s) never owned a home  (in any country) OR owned a home but lost it due to foreclosure. (All co-borrowers must be first-time homebuyers, meaning that they haven’t owned a home within the last 3 years.) Borrower and their parent(s)or legal guardian(s) never owned a home (in any country) OR owned a home but lost it due to foreclosure. 
Maximum Loan Amount 10% of purchase price, up to $32,000 Up to $35,000
Loan Terms and Repayment
  • Deferred Forgivable Loan
  • No Interest, No Payment
  • 20% Forgiven Annually
  • Fully Forgiven After 5 Years
  • Owner Occupancy Required
  • Deferred Forgivable Loan
  • No Interest, No Payment
  • 50% Forgiven at 10 Years and Remaining 50% Forgiven at 20 Years
  • Fully Forgiven After 20 Years
  • Owner Occupancy Required
Income Limits Start Up income limit for 1-2 persons regardless of household size Start Up income limit adjusts according to household size
Minimum Housing Ratio 20% 28%
Purchase Price Limit None Start Up purchase price limit
First Mortgage Requirement Any eligible first mortgage can be used Must use Minnesota Housing’s Start Up loan product
Program Layering Allowed, but these two First-Generation programs cannot be layered together Allowed, but these two First-Generation programs cannot be layered together



Minnesota’s First-Generation Homebuyers Community Down Payment Assistance Fund defines a first-generation homebuyer as someone who has never owned a home in any country, or who owned a home at one point and lost it due to foreclosure AND whose parent or prior legal guardian never owned a home in any country, or owned a home and lost it due to foreclosure.

Here are two scenarios where the buyer would NOT qualify as a First-Generation Homebuyer:

  • If the buyer or any of the buyer’s parents/legal guardians owned a home at any time, they are not a first-generation homebuyer, regardless of whether their parents/legal guardians are living or not.
  • If the buyer or any of the buyer’s parents/legal guardians married someone who owned a home, they are not a first-generation homebuyer. Marrying someone who owns a home means that you have ownership interest, even if you are not listed on the mortgage.

The only exceptions to the two scenarios above are if the buyer or their parents/legal guardians previously owned a home that was lost due to foreclosure, and they/their parents/guardians have not owned a home since the foreclosure.

When an individual applies for the First-Generation Homebuyers Community Down Payment Assistance Fund, they will be required to a sign a First-Generation Homebuyer Affidavit, which is a legal document confirming they meet the qualifications laid out above. If someone knowingly misrepresents their eligibility, they are committing mortgage fraud.

Simply due to current homeownership demographics, it is anticipated that the majority of buyers participating in this program will be Black, Indigenous, and people of color (BIPOC).

Existing down payment assistance (DPA) programs are not designed with the needs of first-generation homebuyers in mind, and create barriers for those buyers:

  • Often, the amounts of DPA available are too low to be impactful.
  • Most DPA programs don’t allow funds to be reserved, and thus the funds may no longer be available when the buyer reaches the closing table.
  • Application and origination requirements and processes are inflexible and inefficient.
  • Existing DPA resources are often limited to a specific geography, are tied to specific mortgage products, or are only available in small pools that are highly competitive which severely limits access for homebuyers.
  • This new DPA program will be administered and originated by local organizations experienced in serving their communities.

Community Development Financial Institutions (CDFIs), which include institutions such as some banks and credit unions, loan and venture capital funds, are adept at providing financial services specifically to those who lack access to traditional financing. Minnesota’s CDFIs are mission focused, with the experience, capacity, and flexibility to originate and close DPA loans. They have the relationships, connections, and trust in their communities to more effectively deploy funds. Similarly, Minnesota’s tribal entities are uniquely situated and prepared to support tribal members. Community based nonprofits with DPA experience may also participate. Importantly, from a consumer standpoint, access to these funds will be available through all normal real estate transaction channels.

In 2020, Minnesota Realtors® and the Minnesota Homeownership Center launched a down payment assistance research project with the goals of identifying ways to remove barriers facing homebuyers with limited savings, and reducing the racial homeownership gap. The proposal also builds upon the work of the Homeownership Opportunity Alliance – a 100+ organization strong coalition.

An advisory group of nonprofits, down payment assistance providers, lenders, and governments provided input and leadership, including: City of Lakes Community Land Trust; City of Minneapolis; Midwest Minnesota CDC; NeighborWorks Home Partners; Summit Mortgage Corporation; Three Rivers Community Action Partnership; Twin Cities Habitat for Humanity; and many others.

When it comes to working with lower-income buyers, there are some persistent myths that can cause unfounded concerns for industry professionals.

Here are the facts around five of the most common industry myths out there as gathered by the Homeownership Opportunity Alliance.

No matter your organization or role, homeownership industry professionals can make an impact as we all work together to increase equitable access to homeownership in Minnesota. The Minnesota Homeownership Center has some specific suggestions to help guide you as you think about the ways you can make a difference.