The Minnesota Housing Finance Agency (Minnesota Housing, often called MHFA) offers the Start Up first-mortgage program for first-time homebuyers, the Step Up program for repeat buyers, and three downpayment and closing cost loan products — the Monthly Payment Loan (MPL), the Deferred Payment Loan (DPL), and the Deferred Payment Loan Plus (DPL Plus). This guide explains how the programs fit together for a Clay County or Moorhead-area buyer.

Information is current as of the date below and is provided for educational purposes. Program details, dollar limits, income limits, and acquisition price limits are set by Minnesota Housing and updated periodically — verify all current figures with a Minnesota Housing participating lender before relying on them.

🎯 Quick Facts: MHFA Start Up & Downpayment Loans

Minnesota Housing's downpayment and closing cost loans are second mortgages that pair with a Start Up or Step Up first mortgage. Minnesota Housing is explicit that these are loans, not grants — even when payments are deferred. The largest amounts are associated with the DPL Plus product (reported in recent MHFA materials at up to roughly $18,000), but DPL Plus is only available to borrowers who meet additional targeting criteria; the standard DPL and the MPL have lower caps. The exact current maximums change periodically — confirm the figure that applies to you with a participating lender.

Program Feature Minnesota Housing Guideline
Minimum FICO Score Generally 640 for the Start Up first mortgage and accompanying DPA loans. Specific minimums vary by loan type (FHA, VA, USDA, Conventional) and lender overlays.
Borrower Contribution The lesser of $1,000 or 1% of the purchase price when receiving a Minnesota Housing DPA loan. Not the greater — the lesser. A $250,000 home requires $1,000; a $90,000 home requires $900.
Liquid Asset Limit Minnesota Housing applies a post-closing liquid asset cap on total borrower assets at closing, with a limited spend-down allowed to meet it. Confirm the current limit and how it applies to you with a participating lender.
First-Time Buyer Rule For Start Up: applicant must not have had an ownership interest in a principal residence in the prior three years. Prior ownership outside Minnesota counts.
Maximum DPA Highest amounts are via DPL Plus for borrowers meeting targeting criteria; standard DPL and MPL caps are lower. All caps are set by Minnesota Housing and change periodically — verify current limits.
Homebuyer Education Required: at least one borrower receiving a DPL, DPL Plus, or MPL must complete an MHFA-approved course before closing.
Property Eligibility Subject to Minnesota Housing's acquisition cost limits, which differ between the 11-County Metro and all other Minnesota counties (Clay County uses the non-metro limit).

Source & Current Limits: Income limits, acquisition cost limits, and current DPA dollar maximums are published on the official Minnesota Housing Buy a Home & Refinance page. Always verify with a participating lender — limits shift periodically.

💰 The Three MHFA Downpayment Loan Products

Minnesota Housing offers three distinct downpayment and closing cost loan products. They differ in repayment structure, interest rate, and income eligibility. A borrower can only have one of the three at a time.

1. Monthly Payment Loan (MPL)

An amortizing second mortgage with monthly principal-and-interest payments. The interest rate equals the rate on your Start Up or Step Up first mortgage. Best suited for buyers who can comfortably absorb the additional monthly payment in exchange for a larger DPA amount.

2. Deferred Payment Loan (DPL)

An interest-free (0%) second mortgage with no monthly payments. The full balance becomes due as a balloon payment when one of these triggers occurs: the home is sold, title is transferred, the home is no longer your principal residence, the first mortgage is refinanced (other than to a Step Up refinance), or the first mortgage is paid off. Income limits are tighter than the Start Up first mortgage limits.

3. Deferred Payment Loan Plus (DPL Plus)

Same 0%, deferred-balloon structure as the DPL, with a higher dollar cap available to households that meet additional targeting criteria. Minnesota Housing directs that DPL Plus be used only when the borrower needs more assistance than the standard DPL provides. The specific cap is set by Minnesota Housing and is subject to periodic adjustment — verify the current figure with a lender.

Repayment trigger reminder: Even the deferred (DPL/DPL Plus) loans are not forgivable in the conventional sense. The balance comes due in full at sale, refinance, transfer, or when the home stops being your principal residence. Plan accordingly.

⚠️ How MHFA Stacking Works (It's Not Simple)

Minnesota Housing's stacking rule is more nuanced than other state housing agencies. Per the official Minnesota Housing program comparison materials:

  • A borrower may have only one Minnesota Housing first mortgage (Start Up or Step Up) open at a time.
  • A borrower may have only one Minnesota Housing DPA product (MPL, DPL, or DPL Plus) open at a time — the three are mutually exclusive.
  • However, an MHFA first mortgage and DPA product can be combined with eligible Community Seconds and certain other secondary financing programs (subject to Minnesota Housing's secondary-financing rules and the first-mortgage insurer's guidelines).

This means a Moorhead-area buyer may, in some cases, be able to layer MHFA assistance with a local DPA program — but eligibility is product-specific and requires lender review. Don't assume stacking is available without confirming with a participating MHFA lender.

🔑 How the Process Works

Minnesota Housing does not originate loans directly. All loans are originated through participating lenders and sold to U.S. Bank Home Mortgage – HFA Division, which acts as Minnesota Housing's Master Servicer. The general path for a Clay County first-time buyer is:

  1. Connect with a Minnesota Housing participating lender. The lender determines which combination — Start Up + MPL, Start Up + DPL, Start Up + DPL Plus, or first mortgage alone — fits your credit, income, and target purchase price.
  2. Complete an MHFA-approved homebuyer education course. Required when all borrowers are first-time homebuyers. Must be completed before closing.
  3. Identify an eligible property. The purchase price must fall within Minnesota Housing's acquisition cost limit for the property's county and unit count. Clay County uses the non-metro limit.
  4. Close on the loan. The DPA loan is recorded as a second mortgage at closing. MPL begins amortizing immediately; DPL and DPL Plus accrue no interest and require no monthly payment.

Eligible Property Types

The Start Up program supports a range of property types when paired with the applicable first-mortgage product (FHA, VA, USDA-RD, Fannie Mae HomeReady, or Freddie Mac Home Possible). Common eligible properties include single-family homes, approved condominiums and townhomes, and certain manufactured homes on permanent foundations. Two-unit properties have a separate, higher acquisition cost limit and require owner occupancy.

SPEAK WITH A MOORHEAD-AREA EXPERT

❓ Frequently Asked Questions

• What credit score is required for the Minnesota Housing Start Up program?
The Start Up program and its DPA loans generally require a minimum FICO score of 640. The applicable minimum is set by the underlying loan product (FHA, VA, USDA, or Conventional), Minnesota Housing's overlays, and the participating lender. Buyers with lower scores should still consult an MHFA-approved lender to discuss options.
• Is MHFA Down Payment Assistance a grant?
No. Minnesota Housing is explicit that all three DPA products — MPL, DPL, and DPL Plus — are loans, not grants. The DPL and DPL Plus carry 0% interest and require no monthly payments, but the balance becomes due in full when the home is sold, title is transferred, the first mortgage is refinanced (except into Step Up), the first mortgage is paid off, or the home is no longer your principal residence. The Monthly Payment Loan carries the same interest rate as your first mortgage and requires monthly payments. Treat all three as repayable loans, not free money.
• Can I combine MHFA assistance with other DPA programs?
Partially. A borrower can have only one Minnesota Housing first mortgage and only one Minnesota Housing DPA product (MPL, DPL, or DPL Plus) open at a time — the three DPA products are mutually exclusive. However, an MHFA first mortgage and DPA product can be combined with eligible Community Seconds and certain other secondary financing, subject to Minnesota Housing's secondary-financing rules and the first-mortgage insurer's guidelines. A participating lender confirms stacking eligibility on a case-by-case basis.
• How much of my own money do I need to bring to closing?
When receiving a Minnesota Housing DPA loan, your minimum contribution from your own funds is the lesser of $1,000 or 1% of the purchase price — not the greater. For example, on a $250,000 home, your minimum is $1,000 (since 1% would be $2,500). On a $90,000 home, your minimum is $900 (since 1% is less than $1,000). Separately, Minnesota Housing applies a post-closing liquid asset limit on your total assets at closing (with a limited spend-down allowed to meet it) — confirm the current asset limit and how it applies to your situation with a participating lender.
• Can I use MHFA Start Up if I owned a home outside Minnesota?
Yes. The first-time buyer rule is based on not having had an ownership interest in a principal residence in the last three years — regardless of state. Prior out-of-state homeownership counts the same as Minnesota ownership for purposes of the three-year lookback.
• What's the difference between DPL and DPL Plus?
Both are 0% interest, deferred balloon loans with identical repayment triggers (sale, transfer, refinance, or loss of principal residence status). The DPL Plus offers a higher maximum dollar amount but requires the borrower to meet additional targeting criteria — Minnesota Housing directs that DPL Plus be used only when the borrower needs more assistance than the standard DPL provides. The standard DPL has a lower dollar cap and broader eligibility. Current dollar caps for each are published on the Minnesota Housing Downpayment and Closing Cost Loan Comparison chart and change periodically — verify with a lender.
• What happens to my DPL if I refinance?
Generally, a refinance triggers full repayment of the Deferred Payment Loan. The one exception is refinancing your Minnesota Housing first mortgage into the Minnesota Housing Step Up program — in that case, Minnesota Housing may allow the DPL to be subordinated and remain in place, but the lender must request and receive subordination approval from Minnesota Housing. Always confirm in advance with your lender before initiating any refinance.
• Is homebuyer education required?
Yes. At least one borrower who receives a Deferred Payment Loan, Deferred Payment Loan Plus, or Monthly Payment Loan must complete a Minnesota Housing-approved homebuyer education course. The certificate of completion must be on file before loan closing. Approved online and in-person options are available.

Disclaimer: Vision Realty is a licensed real estate brokerage, not a mortgage lender. The information on this page is summarized from publicly available Minnesota Housing materials and is provided for general educational purposes only. It does not constitute lending, financial, or legal advice. Minnesota Housing does not make or arrange loans — all loans are originated by participating private-sector lenders. Program details, dollar maximums, income limits, and acquisition cost limits change periodically; verify all current figures with a Minnesota Housing participating lender or the official Minnesota Housing website before relying on them for a transaction. Last reviewed: May 18, 2026.