Is There Such a Thing as First-Time Homebuyer Support for Down Payments?
*Please Note: We are not professionals in mortgage lending or home financing. We do not make any recommendations to you based on this article, and we ask that you consult a professional before making any decisions regarding home or down payment financing.I
f you’re looking to buy a duplex, but aren’t sure how to come up with the massive amounts that are necessary for a typical down payment, then you’ve probably started to hear about down payment assistance programs here and there. Maybe someone has told you that both Minneapolis and Saint Paul have down payment assistance programs, or maybe you've even heard that these cities offer down payment assistance programs that are neighborhood specific.
Is any of this true? Currently, we would argue that the most easily accessible program available in the state of Minnesota for down payment assistance is being offered by the Minnesota Housing Finance Agency rather than either of the Twin Cities. However, keep in mind that these kinds of programs may come and go. Just a few years ago, for instance, the city of Minneapolis was offering their own program for first-time homebuyers.
Currently, we would argue that the most easily accessible program available in the state of Minnesota for down payment assistance is being offered by the Minnesota Housing Finance Agency.
But enough about that. We know what you’re really wondering. Is a down payment assistance program really as great as it sounds?
Down Payment Assistance from the Minnesota Housing Finance Agency
At first glance, a down payment assistance program sounds like a one-sided deal. Free money for a down payment that you couldn’t otherwise afford? Is that really what’s being offered?
Not exactly. In reality, utilizing this program offered by the Minnesota Housing Finance Agency is sort of like taking out a second mortgage on your home. Essentially, the MHFA will offer you the opportunity to pay back the total amount that you received over a ten-year period at the same interest rate as your mortgage.
Utilizing this program offered by the Minnesota Housing Finance Agency is sort of like taking out a second mortgage on your home.
They’re willing to offer up to $12,000 of total assistance, but they necessitate that a buyer bring a minimum of $1,000 to closing.
This opens doors for people who never thought that they’d be able to buy a home. Even without massive amounts of cash reserves, savings, and other liquid assets, down payment assistance is making it possible to buy a house or duplex in Minneapolis.
However, there are both pros and cons to accepting down payment assistance. While down payment assistance does allow for the ability to buy a home when you might not have been able to otherwise, utilizing down payment assistance also adds on to your monthly payment, and if you’re trying to create cash flow from a duplex, this makes your profit margin just a little bit slimmer.
We’re not mortgage lenders or professionals within the home financing industry, so we’re not going to tell you whether or not you should accept down payment assistance from the Minnesota Housing Finance Agency. However, we’d encourage you to do more research regarding the program and decide whether or not it’s right for you.
Remember, additional limitations to this program do apply and not everyone is eligible to receive down payment assistance.
If you think that now might be the right time to buy your first duplex, but you don’t know where to start with mortgage lenders, government programs, or anything else, we’d be happy to sit down and chat about the options that are available to you. We’d love to share more about how buying a duplex can be a great investment and how we can help you to be successful in your search. Feel free to contact us today.
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