How much down payment do I really need in Minnesota?

FHA allows 3.5% down and certain conventional programs allow 3% down for first-time buyers. On a $400,000 home that's $12,000 to $14,000, not the 20% most people assume. Minnesota Housing assistance can cover part of even that for eligible buyers.

What counts as a first-time homebuyer in Minnesota?

For Minnesota Housing's Start Up program, a first-time buyer is someone who has not had an ownership interest in a principal residence in the last three years. If it's been more than three years since you owned, you may qualify again.

What is the Minnesota Housing down payment assistance?

Eligible Minnesota Housing borrowers can access down payment and closing cost loans — up to $18,000 in combined assistance. Some of it is deferred, meaning you don't make payments on it until a triggering event like selling or refinancing.

Do I have to take a homebuyer education class?

If you use a Minnesota Housing program, at least one borrower must complete an approved homebuyer education course before closing. It's a few hours online, it's genuinely useful, and Brian will point you to a good course.

Should I use FHA or conventional?

It depends on your credit score, down payment, and how long you plan to keep the mortgage. FHA is easier to qualify for but carries mortgage insurance for longer. Conventional pricing is better at 620+ credit. Brian will run both side by side and show you the real numbers.

First-Time Home Buyer Guide for Bloomington, MN (2026)

The 20% down payment is a myth

The single most common reason people think they can't buy is the belief that a 20% down payment is required. It hasn't been true in decades. FHA allows 3.5% down, several conventional programs allow 3% down, and VA allows 0% down for eligible veterans. On a $400,000 Bloomington starter home, 3.5% is $14,000 — and Minnesota Housing assistance can cover part of even that for eligible borrowers.

The trade-off for a low down payment is mortgage insurance, which protects the lender, not you. It adds to your monthly payment until your equity and loan type allow it to be removed. That's a cost worth understanding, not a reason to stay out of the market.

The programs available to Minnesota first-time buyers

FHA — 3.5% down, flexible credit

The workhorse for buyers with limited savings or newer credit. You can qualify with a credit score of 580 and 3.5% down (and below 580 with more down payment in some cases). FHA carries an upfront mortgage insurance premium of 1.75% of the loan amount, which is typically financed, plus an annual premium. Full details are on the FHA loans guide.

Conventional — 3% down for first-time buyers

Fannie Mae's HomeReady and Freddie Mac's Home Possible programs offer 3% down options with income limits tied to the area median income. If your credit is 620 or better, conventional pricing is usually more competitive than FHA, and conventional mortgage insurance can be removed once you reach 20% equity — FHA insurance generally cannot. See the conventional loans guide.

Minnesota Housing — assistance of up to $18,000

Minnesota Housing's Start Up program is built for first-time buyers — defined as anyone who has not owned a principal residence in the last three years. Eligible borrowers can access down payment and closing cost loans totaling up to $18,000, some of it deferred payment. There are income limits that vary by county, a purchase price limit, an owner-occupancy requirement, and a homebuyer education requirement. See the full Minnesota Housing guide.

The five steps, in order

Talk to Brian before you shop. A 20-minute conversation establishes your budget, your credit picture, and which programs you actually qualify for.
Get pre-approved. The secure online application takes about 15 minutes. A pre-approval letter strengthens your offer in this market.
House hunt with a realtor you trust. Brian works alongside agents across Bloomington, Richfield, Edina, and the southwest metro.
Make the offer and lock your rate. Brian will explain when a rate lock makes sense and what happens if rates move during the process.
Close. Most purchases close in 30 to 45 days from an accepted offer. You'll know every cost before signing, in writing.

What a comfortable payment actually looks like

Lenders qualify you on ratios; you live on cash flow. Brian will show you several scenarios — purchase price, down payment, and monthly payment side by side — so the number you choose is the one that fits your life, not just the one you were approved for. That includes planning for property taxes in Hennepin County, homeowner's insurance, and the maintenance reality of owning versus renting.

Bloomington specifics for first-time buyers

Bloomington and neighboring Richfield offer some of the best starter-home inventory in the southwest metro: well-built 1950s–1970s ramblers and split-levels, city services that are a decade ahead of many suburbs, and light-rail access along the 35W and 494 corridors. The neighborhood guide breaks down where the value is. If you're buying with plans to keep the home into retirement, it's worth reading how home equity fits a retirement plan early — the way you structure the first mortgage matters decades later.

Your first home, without the 20% down payment myth.