Janet MatchinskyThe main first-time buyer program in Minnesota for 2026 is Minnesota Housing's Start Up loan. It pairs a fixed-rate first mortgage with up to $18,000 in down payment and closing cost help, for households earning up to $136,700 in Douglas, Todd, Pope, Kandiyohi and Stearns counties, on homes priced up to $472,030 (Minnesota Housing).
I'm Janet Matchinsky, broker and owner of Home Match Realty in Alexandria. These programs are worth discussing with a participating lender, who can check the current rules against your income, household and proposed purchase. Below are the differences to understand before you rely on assistance in your budget. If you would rather skip the reading and talk it through, the buyer page explains how I work with first-time buyers.
Who counts as a first-time buyer
Minnesota Housing uses a wider definition than most people expect. You are a first-time homebuyer if you have "not had an ownership interest in a principal residence in the last three years" (Minnesota Housing, Buy or Refinance a Home).
That three-year window matters. Someone who owned a home in their twenties, sold it during a divorce or a job move, and has rented for at least three years since can qualify for Start Up again. It also cuts the other way: if your spouse currently holds title to a house, even one you never lived in, ask a participating lender to run both names before you count on the program.
Start Up: the first mortgage
Start Up is the first mortgage. The down payment loans described below only work when they sit behind a Start Up or Step Up first mortgage, and only through a Minnesota Housing participating lender (lender directory).
The limits that apply in Janet's service area, which Minnesota Housing files under "All Other Counties" outside the 11-county Twin Cities metro (Homeownership Income Limits):
| Rule | Start Up limit for Douglas, Todd, Pope, Kandiyohi, Stearns and the rest of Greater Minnesota |
|---|---|
| Household income, 1 to 2 people | $118,900 |
| Household income, 3 or more people | $136,700 |
| Purchase price | $472,030 |
| Minimum borrower contribution | Lesser of $1,000 or 1 percent of the price |
| Homebuyer education | Required before closing |
| Occupancy | You must live in the home |
The income figures on the main program page top out at $156,100, but that number applies to the metro counties. Our counties use the lower figures in the table. A two-income household in Willmar or Alexandria can clear $118,900 without feeling wealthy, so check the number early rather than after you have fallen for a house.
The $472,030 price cap is not a problem for most first-time buyers here. For scale, my own listings in Long Prairie as of October 20, 2026 are priced at $220,000 and $249,000, with a third at $197,200, now pending (Home Match Realty listings on NorthstarMLS, #7147067, #7063553 and #7144439), and Willmar, where I have represented the buyer on 11 closings since November 2023 (NorthstarMLS), had a $232,000 median sale price over the three months ending August 2026 (Redfin). You can see current inventory on the Long Prairie and Willmar pages.
The three down payment loans
Minnesota Housing's comparison sheet dated July 1, 2026 lays out three second loans that cover down payment, buyer closing costs and mortgage insurance (Downpayment and Closing Cost Loans Comparison, PDF). Only one of them can be open at a time.
Monthly Payment Loan
- Up to $14,000, in whole dollars.
- Interest rate equals your first mortgage rate.
- 15-year term, fully amortized, paid monthly.
- Works with Start Up or Step Up.
- No limit on the cash you keep after closing.
This is the flexible one. If you have savings you want to hold onto for repairs, or your income is above the deferred-loan targeting rules, the Monthly Payment Loan is usually the fit. On $14,000 the payment is modest, and it goes away in 15 years.
Deferred Payment Loan
- Up to $14,000.
- 0 percent interest, no monthly payment.
- Repaid in full when you sell, transfer title, stop living in the home as your primary residence, refinance (unless you refinance with Step Up), or pay off the first mortgage.
- Start Up only.
- You may keep no more than $13,000 in liquid assets after closing.
The deferral is the whole point. Nothing is due until the house changes hands or the loan is paid off. The catch is the $13,000 post-closing asset limit. Checking, savings, CDs, stocks, tax refunds and crypto all count toward it. Retirement accounts, HSAs and 529 college savings do not. Minnesota Housing also says you cannot shuffle money into a retirement account to get under the line, though you may pay down debts before closing to spend down excess cash if you document it.
Deferred Payment Loan Plus
- Up to $18,000.
- Same 0 percent, no-payment, balloon structure as the Deferred Payment Loan.
- Same $13,000 asset limit.
- Start Up only, and you must meet targeting criteria on Minnesota Housing's DPL Plus eligibility worksheet.
The Plus version adds $4,000 for borrowers who meet the targeting rules. Your lender runs the worksheet; the criteria are not something you can self-certify, so do not plan on the extra $4,000 until the lender confirms it.
Both deferred options also carry a 25 percent minimum housing ratio, per the same sheet. In plain terms, your house payment has to be a meaningful share of your income for the deferred loans to apply. If it comes in under 25 percent, the lender has to send the file to Minnesota Housing for a second review.
Homebuyer education is mandatory, and cheap
Start Up requires at least one borrower to finish an approved homebuyer education course before closing. Minnesota Housing lists four approved courses: Framework (online), Freddie Mac CreditSmart Homebuyer U, Home Stretch, and Realizing the American Dream, and describes them as "available at little or no cost" (Homebuyer Education).
Do the course before you write an offer. Every year I watch a closing date slide because a borrower left the class until the last week and the certificate did not come through in time.
Step Up: when you are over the Start Up limits
If your income is above $136,700, or you already own a home and are not a first-time buyer, Step Up is the fallback. Its income limit for our counties is $177,800, its price limit is $498,257, and it comes with the Monthly Payment Loan up to $14,000 but not the deferred loans (Minnesota Housing). Homebuyer education is only required under Step Up when every borrower is a first-time buyer.
Programs that are gone, and the ones that fit rural buyers better
Two things I get asked about weekly:
The First-Generation Homebuyer Loan Program is closed. Minnesota Housing reports that its one-time funds "have been exhausted and the program is closed" as of December 19, 2024 (Minnesota Housing). The agency points first-generation buyers to its other programs and to the Minnesota Homeownership Center's down payment assistance search tool instead. If someone tells you they can get you the first-generation money in 2026, ask what program they actually mean.
USDA and VA loans can beat Start Up outside town. A zero-down USDA guaranteed loan on a home in Osakis, Long Prairie or the townships around Alexandria often costs less per month than Start Up with a deferred loan behind it, because there is no second lien to repay when you sell. I cover the eligibility maps and income rules in USDA loans in Douglas, Todd and Pope County and in my guide to VA and USDA rural loans. Start Up first mortgages can also be FHA, VA, USDA or conventional products, so the two can stack; your lender will show you which combination costs less.
Two Minnesota costs the calculators skip
Neither of these will break a deal, but both surprise first-time buyers at the closing table:
- Mortgage registry tax. Minnesota charges 0.23 percent of the mortgage amount when the mortgage is recorded (Minn. Stat. 287.035). On a $190,000 loan that is $437.
- Well disclosure certificate. If the home has a well, the county recorder collects a $54 fee for the well disclosure certificate at closing (Minn. Stat. 103I.235). Most rural homes in Douglas, Todd and Pope counties have one.
My Minnesota closing costs guide walks through the rest of the line items.
How I sequence it for a first-time buyer
- Confirm the three-year rule and the income limit with a participating lender. Get a written pre-approval, not a pre-qualification.
- Pick the down payment loan that fits your savings. Under $13,000 in liquid cash after closing points to a deferred loan; more than that points to the Monthly Payment Loan.
- Finish the homebuyer education course the same week.
- Shop with a list. In towns like Alexandria, Long Prairie, Willmar or Osakis, many homes are on city water and sewer, which keeps the inspection list short.
- Write the offer with the inspection and financing contingencies intact. A Start Up loan is a normal loan to a seller; you do not need to waive protections to compete.
For the full walk-through from pre-approval to keys, read my first-time home buyer playbook.
Talk to Janet
If you think Start Up might fit, call or text me at (320) 219-2488 and I will connect you with a participating lender who knows the program in our counties. Tell me your household size and the towns you are considering, and I will tell you which program to ask about first.
Questions people ask
What is the income limit for Minnesota Housing Start Up in Douglas County in 2026?
Douglas, Todd, Pope, Kandiyohi and Stearns counties use the "All Other Counties" limits: $118,900 for a one- or two-person household and $136,700 for three or more, per Minnesota Housing's income limits page.
How much down payment help can a first-time buyer get in Minnesota?
Up to $18,000 through the Deferred Payment Loan Plus, or up to $14,000 through the Deferred Payment Loan or Monthly Payment Loan, according to Minnesota Housing's July 1, 2026 comparison sheet. Only one can be open at a time.
Do I have to pay back the Deferred Payment Loan?
Yes, but not monthly. It is a 0 percent loan that is repaid in full when you sell, transfer title, move out, refinance outside the Step Up program, or pay off your first mortgage.
Is the Minnesota First-Generation Homebuyer Loan Program still open?
No. Minnesota Housing states the one-time funds were exhausted and the program closed on December 19, 2024. Start Up with a deferred loan is the current path for most first-time buyers.