Minnesota has introduced a groundbreaking program designed to assist first-time, first-generation home buyers with their down payments. This initiative aims to make homeownership more accessible for those whose parents have never owned a home.
Phillip Ward, one of the beneficiaries, proudly showed his new home to Lt. Gov. Peggy Flanagan after receiving $35,000 for his down payment under the new program. "My original mortgage would have been around $1,300, and $1,100 is doable," Ward said, expressing his relief at the reduced monthly payments.
The state has allocated $150 million for this program, which is expected to assist approximately 4,500 home buyers. Despite this assistance, first-time home buyers still face challenges with current high-interest rates, which significantly impact monthly mortgage payments. For example, a $220,000 home purchased in 2021 with a $22,000 down payment and a 2.65% interest rate resulted in a monthly payment of just over $1,000. Today, the same home with a 7% interest rate would have a monthly payment of $1,531.
One of the program's unique features is its loan forgiveness terms. If homeowners remain in their homes for 10 years, half of the down payment loan is forgiven. Staying for 20 years results in the entire loan being forgiven. Moreover, individuals whose parents' homes were foreclosed can still qualify for this program.
For more information on this program, click here.