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.

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.

This First-Generation DPA program is having a measurably positive impact on our community, as was hoped would be the case. In light of this, our coalition of supporters is actively pursuing permanent funding from the Minnesota Legislature. For more information, see our Legislative Overview document.

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 the programs is to help more first-generation homebuyers access homeownership.

A homeownership advisor can help you determine which program is best for you. Find a homeownership advisor.