More About This Fund

The newly enacted forgivable statewide First-Generation Homebuyers Community Down Payment Assistance Fund will help reduce Minnesota’s racial homeownership gap – one of the worst such gaps in the country.

Targeted assistance for first generation homebuyers is particularly effective for individuals who do not have access to generational wealth, and ‘but for’ the assistance would not be able to achieve homeownership. The $100 million commitment is a strong start, and will help to build momentum for continued investment as this strategy proves its value.

Minnesota's racial homeownership gap 1950-2019. A horizontal bar chart showing percentages of homeownership by race in 1950 and 2019.

Homeownership is the #1 way families build wealth in America. But too many Minnesotans have been shut out of this opportunity. It is well documented that Minnesota has stark racial wealth and homeownership gaps that are among the highest in the country. And the homeownership gap is continuing to grow. Notably, Minnesota’s Black homeownership rate peaked in 1950.

Nearly 70 years later, the ownership gap between White and Black households has more than doubled.

Who is Eligible? How Does it Work?

Open to all prospective first-generation homebuyer households in Minnesota with earnings at or below 100 percent Median Income and regardless of race, the forgivable First-Generation Homebuyers Community Down Payment Assistance Fund provides eligible buyers with up to ten percent of a home’s purchase price (capped at $32,000).

These funds will be structured as a loan, which is forgivable over five years of owning the home as the buyer’s primary residence.


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.

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.

Proposing Organizations

  • Minnesota Homeownership Center
  • Twin Cities Habitat for Humanity
  • Minnesota Realtors

Supporting Organizations

  • Builders Association of Minnesota
  • Bell Bank Mortgage
  • Center for Economic Inclusion
  • City of Bloomington
  • City of Golden Valley
  • City of Lakes Community Land Trust
  • Habitate for Humanity® of Minnesota
  • Homeownership Minnesota
  • Housing First Minnesota
  • Local Initiatives Support Corporation (LISC)
  • Minnesota Area Realtors®
  • Minnesota Community Action Partnership (MinnCAP)
  • Minneapolis City of Lakes
  • Minnesota Credit Union Network
  • Minnesota Bankers Association (MBA™)
  • Minnesota Business Coalition for Racial Equity
  • MN CDFI Coalition
  • Minnesota Mortgage Association
  • MPLS Regional Chamber
  • National Association of Real Estate Bankers (NAREB) Twin Cities
  • NeighborWorks Home Partners
  • Saint Paul Area Association of Realtors® (SPAAR)
  • Summit Mortgage Corporation
  • Urban Homeworks
  • Wells Fargo