Minnesota extends funding for first generation homebuyers down payment assistance program

Minnesota's Senate Committee on Housing and Homelessness Prevention is advocating for a significant expansion of the First Generation Homebuyers Down Payment Assistance (DPA) program, which has already shown promising results since its launch in May 2023. During a recent meeting, committee members discussed a proposed funding increase that would allocate $25 million for fiscal year 2026 and $50 million annually for fiscal year 2027, transitioning the program from a pilot to a full-scale initiative.

The proposed changes to the program include broadening the definition of eligible homebuyers to any adult with an income at or below a specified percentage of the statewide income, rather than the previous area median income criteria. Additionally, the maximum assistance cap will be adjusted to 10% of the median statewide home sales price, moving away from the current cap of $32,000. The program will also update its loan structure to eliminate payments or interest during the five-year forgivable period, while maintaining requirements for repayment if the property is sold or converted to non-owner occupancy.

The program has already made a significant impact, helping over 600 new homeowners within its first seven months, with 90% of participants identifying as Black, Indigenous, or people of color (BIPOC). This initiative aims to address Minnesota's racial homeownership gap and promote wealth-building opportunities for lower-income households lacking access to generational wealth.

Testimonies from various stakeholders, including representatives from Habitat for Humanity and NeighborWorks Home Partners, highlighted the program's flexibility and its role in supporting first-generation homebuyers. They emphasized the importance of homebuyer education and the ability for families to choose their lenders, which enhances their competitiveness in the housing market.

The committee's discussions reflect a strong commitment to improving housing stability and economic opportunities for Minnesota families. As the program seeks additional funding, it aims to continue breaking down barriers to homeownership and fostering long-term community growth. The next steps will involve further deliberations on the proposed funding and its implications for future homebuyers across the state.