Minneapolis is coming out with a new down payment assistance program effective April 1, 2009. This program will allow homebuyers to get $10,000 in down payment and closing cost assistance. The program is a zero-percent interest loan that is forgiven at the end of five years. It is considered a second mortgage and there is no monthly payment required. If you sell or rent out your home within 5 years, the loan is due immediately.
The eligible borrowers will receive funds on a first come first served basis. The income limit is $97,080 for most of the eligible areas. The home has to be a foreclosed single family detached home or a duplex that is in a foreclosed status. The first mortgage can be a FHA, VA, Fannie Mae or Freddie Mac loan that is considered to be a "prime" or "A" lending product. There is no purchase price limit.
Some Minneapolis neighborhoods are also providing home purchase and renovation funds. The McKinley, Webber-Camden and Folwell neighborhoods have an additional $4000 available on top of the $10,000 from the City of Minneapolis.
Dakota County also has a new program called the Silver Linings Program. This is also a down payment and closing cost assistance loan up to $15,000. This loan is not forgiven, but does not have any monthly payments and is also a zero-percent interest loan. It is due when the property is sold or the mortgage in paid in full. The income limit in Dakota County is 67,950 for one person and goes up for each additional household member. The purchase price must be under $256,080. The home must be a vacant, foreclosed home in certain areas of Dakota County. All of Lakeville, Farmington, Hastings, South St Paul and West St Paul are eligible. Other cities have areas that are eligible except Eagan.
The Silver Lining Program does require an inspection and an appraisal done by the Dakota CDA. The home purchase price must be at or under 85% of the appraised value. The buyer must invest 50% of the required down payment required by their loan product. So if the buyer is using an FHA loan, he must have 1.75% of his own money into the transaction. The down payment assistance can go towards the remaining down payment, closing costs and the remainder can go to lower the mortgage amount.
Both programs require you to attend a first time homebuyer class through the Home Stretch program and neither program require that you are a first time homebuyer. Additional information is available for the Minneapolis Advantage program at www.ci.minneapolis.mn.us/cped/minneapolisadvantage_home.asp and the Dakota County program at www.dakotacda.state.mn.us.
Other communities may have special programs available. Information may be available through the county or city websites. If you need assistance, you may want to check these areas when you are looking for a new home!
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