While living in the Land of 10,000 Lakes sounds wonderful, sifting through the “land of 10,000 home loan options” does not. To avoid this hassle, many first-time homebuyers in Minnesota are deciding to take out an FHA loan, which can greatly simplify the decision-making process and save you money in the long run.
Continue reading to see why and FHA loan in Minnesota may be the right option for you.
Why Pick an FHA Loan in Minnesota?
As of April 2019, the total value of FHA loans in Minnesota was over $145 million, so whether you are planning on settling up north near the Great Lakes, or near scenic valleys in the south many Minnesota residents are choosing this reliable home loan option.
Benefits of using FHA Loans
- FHA loans are great for first-time homebuyers, especially those who can’t or don’t want to put down a large down payment.
- FHA mortgage rates are typically lower than conventional mortgage rates.
- FHA down payment and credit score requirements are typically lower than conventional loans
- Sellers can contribute up to 6% of the purchase price or appraised value (whichever is less) towards the buyers’ closing costs.
- FHA loans are assumable
FHA Loan Limits in Minnesota
Purchasing a home in Minnesota is an exciting time, but things can get tricky if you don’t know how much you can borrow. Maximum FHA loan limits are in place, get adjusted yearly, and depend on your location. For example, the base limit on FHA loans in Minnesota is $472,030, but in Minneapolis the limit is higher at $515,200 due to higher cost of real estate. Use the link below to find the full list of Minnesota FHA loan limits for 2023 and get an idea of how much you will be able to borrow.
Are You Eligible for an FHA Loan in MN?
You may be eligible for an FHA loan, if you:
- Have 2 years of steady employment, preferably with the same employer.
- Have had steady income (or increasing income) in the past two years.
- Have had less than two 30-day periods of late payments on your credit report.
- Have declared bankruptcy no less than two years ago and have maintained good credit since.
- Have not been a party in a foreclosure for at least three years and have maintained good credit since.
- Anticipate your mortgage payment will be equal to or less than 30% of your gross income.
What Do You Need to Apply for an FHA Loan in MN?
Buyers must be able to provide the following information and documents as requested by lenders:
- The addresses of all your residences over the past two years.
- The names of your employers over the past two years.
- W2's for the past two years and current paycheck stubs.
- Your current gross monthly salary.
- Your Social Security Number.
- Names, addresses, and account numbers with balances on all checking and savings accounts.
- Addresses and loan information of any other real estate you owned.
- Self-employed individuals will need to provide personal tax returns for the past two years and a current income statement and balance sheet for the business.
- Students will need to provide evidence of enrollment. If you have student loans, you need to provide verification information.
Note: Facts and figures sourced from the latest statistics available at the time of this writing including data from the United States Department of Labor, United States Census Bureau and the United States Department of Housing and Urban Development.