Minnesota down payment assistance launch: What you need to know

ST. PAUL, Minn. (FOX 9) - A massive program is launching this year to help first-generation homebuyers with down payments.

In 2023, the Minnesota Legislature set aside $150 million to help 5,000 families. But smaller down payment assistance programs are already making some dreams come true.

Dana Freeman wanted a place to call her own since she was 16 years old, but she thought it just wasn’t in the cards until she found a real estate agent and a lender who understood down payment assistance.

Since she was a child, Dana Freeman dreamed of cooking in her own kitchen and family dinners at the table. Decades later, the 33-year-old mother sat down with her own children for scrambled eggs and French toast in their first home.

"We cried, and we prayed and just thank God because this was, like, everything," she told FOX 9.

Like a lot of Black families, Freeman never owned a home.

The Black homeownership rate peaked in Minnesota in 1950 and has fallen almost every decade since then. Barely a quarter of Black families own homes, while 76% of white families in Minnesota are homeowners.

Racist policies like redlining and covenants have been corrected, but some research shows they started a snowball rolling downhill and created a knowledge gap as well.

"If you come from a family that hasn't owned a home, doesn't have knowledge about owning a home, or doesn't have the generational wealth to help you purchase your own home, then that puts you at a severe disadvantage, right?" said Realtor Jackie Berry of Edina Realty.

How to get started with downpayment assistance

Down payment assistance programs for first-generation owners are designed to close the gaps. But there are hurdles, and getting started may be the biggest.

"People are intimidated by this process," said lender Shari Larson of Movement Mortgage. "You know, they don't want to go talk with a lender."

Credit score, income, job history, and collateral are still just as important to lenders for people getting down payment assistance as for any other buyer.

In Freeman’s case, she thought her credit wasn’t good enough and didn’t have enough saved. But almost out of desperation, she talked to Berry and Larson and found out about down payment assistance.

"They got to tell me about the program, and it kind of clicked, like, ‘Wait a minute, this is really going to happen,'" she said.

The programs add their own requirements, and the money is usually in the form of another loan, although most of them are forgivable under certain conditions.

Freeman says it was ultimately really easy. She loves paying her mortgage every month, and she’s proud of how she got here.

"I don't mind that somebody helped me get into my home for my children," Freeman said. "You know, this is everything for my kids."

Minnesota down payment assistance status

Freeman got help from a Ramsey County program, and several cities in the Metro offer down payment assistance. But the big statewide fund should be ready to go by early spring, and you can track it here.