You do not need 20% down
That is the myth that keeps good Minnesota buyers renting longer than they should. In 2026, most first-time buyers Joe works with put down 0% to 5%, not 20%. The right file is the one that fits your income, credit, cash, and the house you actually want — not a rule of thumb from 1998.
This guide covers the programs Twin Cities and Greater Minnesota buyers ask about most: Minnesota Housing Start Up, deferred down-payment assistance, FHA, conventional 3% down, and (for eligible Veterans) VA.
Minnesota Housing Start Up
Start Up is a first-mortgage program for first-time buyers (and some buyers who have not owned in the last three years). It is offered through participating lenders statewide and is built for low-to-moderate income households.
Current published purchase-price caps (updated July 1, 2026) are $515,200 for a one-unit home in the 11-county Twin Cities metro and $472,030 in all other Minnesota counties. Income limits vary by household size and county. At least one borrower must complete an approved homebuyer education course before closing.
Metro counties: Anoka, Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Washington, and Wright. If you are buying in St. Paul, Minneapolis, Rosemount, Woodbury, or Eagan, you are in the metro cap.
Down-payment help: up to $18,000, but it is a loan
When you qualify for Start Up, you may also be eligible for a Minnesota Housing down-payment and closing-cost loan. These are not gifts and not grants. They are second mortgages used with a Minnesota Housing first mortgage:
- Deferred Payment Loan (DPL) — up to $14,000, 0% interest, no monthly payment. Typically due when you sell, refinance, or stop occupying the home.
- Deferred Payment Loan Plus (DPL+) — up to $18,000, same deferred structure, tighter eligibility.
- Monthly Payment Loan — up to $14,000, 15-year repayment at the same rate as your first mortgage. Available with Start Up or Step Up.
Some cities and counties still layer on their own down-payment grants. Those can be forgivable. Joe will tell you which stack is realistic for your zip code instead of sending you into a maze of PDFs.
FHA: 3.5% down and more flexible credit
FHA remains the workhorse for buyers with thinner savings or a credit event in the rear-view mirror. Highlights:
- 3.5% down with a 580+ credit score (some files can do 10% down in the 500s).
- Gift funds from family are allowed for the entire down payment.
- 1–4 unit properties, many condos, and some manufactured homes.
- Mortgage insurance is required; we will run the FHA vs. conventional math so you see the monthly difference, not just the down payment.
On a $320,000 Twin Cities starter home, 3.5% down is $11,200 — not $64,000. That is why FHA still closes a huge share of first-time files.
Conventional 3% down
If your credit and income are cleaner, a conventional 3% down loan (Fannie Mae HomeReady or Freddie Mac Home Possible, or a standard 3% product) can be cheaper over time because mortgage insurance drops off automatically at 78% loan-to-value, and you can request removal at 80%. FHA mortgage insurance usually lasts the life of the loan if you put less than 10% down.
The 2026 conforming loan limit for a one-unit home in Minnesota is $832,750. Almost every first-time purchase in the state is well under that.
Which program should you start with?
| If this is you | Start here |
|---|---|
| Limited cash, moderate income, first home | Start Up + deferred DPA, compared to FHA |
| Credit in the 500s–low 600s | FHA |
| 720+ credit, some savings, want MI to drop off | Conventional 3% |
| Veteran, active duty, or eligible surviving spouse | VA (often 0% down, no monthly PMI) |
Do not pick a program off a blog post — including this one. Bring two recent pay stubs, last year’s W-2s, and a screenshot of your bank balances. Joe will tell you, in one conversation, which path gets you under contract without lighting your cash on fire.
This article is for education only and is not a commitment to lend, a rate lock, or a guarantee of any program. Loan approval, rates, fees, and assistance amounts depend on the borrower, the property, the lender, and current guidelines. Programs and limits change. Joe Metzler, NMLS #274132, Cambria Mortgage. Equal Housing Lender. Licensed in AZ, CO, FL, IA, MN, ND, SD, and WI.
Talk through your scenario
Joe will tell you which program fits — and which one to skip.