Normally a buyer makes a down payment when purchasing a home, unless they are using VA financing. FHA loans require a minimum of 3.5% of the purchase and Conventional loans require a minimum of 3%. If a buyer doesn’t have a down payment Minnesota Housing Finance Agency (MHFA) may come to the rescue.

Frank Kubitschek, a local Mortgage Loan Officer with First Centennial Mortgage, offered the following explanation: The MHFA is a state agency that has the sole mission to make housing more affordable to the average citizen. For Home purchasers, they provide “Down Payment Assistance Loans”, not only for First Time Home Buyers, but for individuals who own or have owned homes in the past. These “Down Payment Loans” come in two different varieties, A Deferred Payment Loan and a Monthly Payment Loan.

First Time Home Buyers are eligible for the Deferred Payment Loan, but they must meet certain income requirements. Maximum income for this program depends on family size and total family income. For example, a family of four, with a total family income of $85,000 or less, would be eligible for a Deferred Payment Loan of up to $10,000. A Deferred Payment Loan does not accrue interest and you do not need to pay it back until you move out or sell the property. At that time, you would repay the principal balance of the original loan.

First Time Home Buyers and Buyers who have owned before are eligible for the Monthly Payment Loan Program. A First Time Home Buyer with a family of four, with a total family income of $108,400 or less, would be eligible for a Monthly Payment Loan of up to $15,000. Buyers who are not considered first time buyers can have a family income of as high as $141,000 and still qualify for the $15,000 loan. The Monthly Payment loan is a second mortgage on your property. The monthly payments are based on the interest rate of the first mortgage on a ten-year amortization schedule.

MHFA requires that both the Down-Payment Assistance Loans and the first mortgage are obtained through a qualifying MHFA lender, and they require the buyer to pay a minimum of $1000 towards the purchase. This must come from the buyer’s savings and cannot be a gift.

The MHFA Loan Programs allow the seller to contribute to the buyer’s closing costs. This would be negotiated by your real estate agent.  Couple this with one of the Down-Payment Assistance Loans, you will see that an individual could purchase a home for as little as $1,000, if the seller pays the buyer’s closing costs.

An experienced loan officer or real estate agent can guide you to the programs available in Chisago County.


   Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.