Buying a home in Eagan but worried about the down payment? You’re not alone. Many first-time and move-up buyers in Dakota County use assistance to bridge the gap between savings and closing costs. In this guide, you’ll learn which programs may fit you, how to qualify, and the steps to take so you can move forward with confidence. Let’s dive in.
What is down payment assistance?
Down payment assistance, or DPA, is money that helps cover your down payment and sometimes closing costs. Programs can be a grant, a forgivable or deferred loan, or a low-interest second mortgage. Most require you to live in the home as your primary residence and complete a homebuyer education course.
DPA does not replace your main mortgage. It works alongside your loan, lowering the cash you need at closing so you can keep more savings for moving and future expenses.
Eagan buyers: your main options
Minnesota Housing programs
Minnesota Housing offers popular first mortgage products paired with down payment assistance options statewide. You access these through approved lenders who participate in the program. Visit the Minnesota Housing site to review programs and find participating lenders through Minnesota Housing.
These options often include fixed-rate mortgages and a second-mortgage DPA that is either deferred, forgivable over time, or repayable at a low rate. Availability and terms can change, so confirm details with a participating lender.
Dakota County and Eagan programs
Counties and cities sometimes offer down payment or closing cost help funded by local or federal sources. In Eagan, check the county housing pages and the city’s community development resources for current offerings and referrals:
- Explore county-level programs through Dakota County
- See city housing and development information at the City of Eagan
Local program funding can be limited and may open or pause during the year. Many require homebuyer education and set income and purchase price limits.
Low and no down payment loans
Even if you do not use a DPA program, several loan types allow a smaller down payment:
- FHA loans generally allow a minimum 3.5 percent down payment for eligible borrowers. Learn more at HUD.
- VA loans offer zero down to eligible veterans and some spouses. Details are at VA home loans.
- USDA Guaranteed Home Loans offer zero down in eligible rural areas. Many suburban parts of Eagan may not qualify as rural, so check property eligibility and income rules at the USDA Guaranteed program.
- Conventional low-down-payment options from Fannie Mae and Freddie Mac may allow as little as 3 percent down for eligible borrowers. See product information at Fannie Mae and Freddie Mac.
Some of these mortgages can be combined with state, county, or lender DPA. Compatibility depends on program rules and your lender’s approval.
Mortgage Credit Certificates
Some agencies offer Mortgage Credit Certificates, which provide a federal income tax credit on a percentage of your annual mortgage interest. An MCC is not cash at closing, but it may improve affordability by lowering your federal tax bill. Availability is local and changes over time. Ask Minnesota Housing or Dakota County about current status.
Lender and nonprofit help
Many local lenders offer their own assistance or partner with nonprofits that provide small grants or deferred loans. Ask lenders if they participate in Minnesota Housing programs and whether they can layer local assistance. You can also find HUD-approved housing counselors who know local options through the HUD counseling locator.
Who typically qualifies
Every program sets its own rules, but most look for a few common items:
- First-time buyer status, often defined as no homeownership in the past three years. Some programs allow exceptions for veterans or targeted areas.
- Household income within program limits that vary by household size.
- Purchase price within set caps.
- Primary residence requirement. Investment properties are not eligible.
- Property type and condition that meet program guidelines. Single-family homes, townhomes, and some condos may qualify.
- Credit and debt-to-income that meet your lender’s standards for the first mortgage.
- Completion of a homebuyer education course or counseling.
How to apply in Eagan
Use a simple, proactive plan to stay ahead of funding timelines:
- Get prequalified with a DPA-aware lender
- Ask if the lender participates in Minnesota Housing and any Dakota County or City of Eagan programs.
- Confirm which first mortgage options can be paired with assistance.
- Complete homebuyer education early
- Many programs require education before they reserve funds. Your lender or a HUD-approved counselor can guide you to an approved course.
- Gather documents and apply
- Be ready with income verification, recent tax returns, bank statements, photo ID, and your education certificate. You may need a signed purchase agreement to finalize the application.
- Reserve funds
- State and local programs often require a reservation. Funding may be first-come, first-served or prioritized. Work closely with your lender to secure a reservation promptly.
- Close with the full package
- Your DPA funds and primary mortgage are coordinated to close together.
Pros and tradeoffs
Down payment assistance can be a smart tool, but it comes with rules. Keep these points in mind as you plan.
Pros
- Increased buying power that can open more Eagan neighborhoods or home types.
- Lower cash needed at closing, which helps preserve your emergency savings.
- Some assistance is forgivable or deferred, which helps keep monthly payments manageable.
Tradeoffs
- A second lien is often recorded, which you may need to pay off if you sell or refinance.
- Forgiveness periods or recapture rules can affect your proceeds on a quick sale.
- Extra steps such as education, documentation, and compliance can add time and complexity.
- Local funding can change quickly. Availability may open and close during the year.
Smart ways to combine options
Many buyers layer DPA with FHA, VA, USDA, or conventional loans, but not every combination is allowed. Your lender will check whether your chosen program can pair with your first mortgage and whether the DPA affects qualifying. Remember that assistance reduces upfront cash, but your lender still underwrites your primary loan based on income, credit, and debt ratios.
For potential tax benefits, ask whether an MCC is available and how it may fit your situation. A tax professional can help you understand how a credit might affect your annual taxes.
Local resources and contacts
Use these trusted sources to verify program status, eligibility, and next steps:
- State options and participating lenders: Minnesota Housing
- County housing information and potential assistance: Dakota County
- City housing and community development: City of Eagan
- HUD-approved housing counselors: HUD counseling locator
- VA home loans for eligible veterans: VA home loans
- USDA Guaranteed Program details: USDA Guaranteed program
- FHA information and resources: HUD
- Conventional low-down-payment products: Fannie Mae and Freddie Mac
Ready to explore your options?
If you want a steady hand to help you navigate programs and timelines while you shop in Eagan, reach out. You’ll get clear next steps, a practical plan, and introductions to lenders who work with Minnesota Housing and local DPA. Schedule a conversation with Unknown Company to get started.
FAQs
What is down payment assistance for Eagan homebuyers?
- Down payment assistance is funding that helps cover your down payment and sometimes closing costs, often as a grant, forgivable loan, deferred loan, or low-interest second mortgage.
How do I find Minnesota Housing lenders near Eagan?
- Visit Minnesota Housing to review programs and locate participating lenders that serve Dakota County and the Twin Cities area.
Can I use assistance with FHA, VA, or USDA loans in Eagan?
- In many cases yes, but it depends on program rules and lender approval. FHA, VA, and USDA each have specific guidelines, and your lender will confirm compatibility.
Are there income or price limits for Eagan programs?
- Most programs set income and purchase price caps that vary by household size and program. Check current limits with Minnesota Housing, Dakota County, or your lender.
Do I have to repay down payment assistance in Dakota County?
- It depends. Some aid is forgivable over time, some is deferred until you sell or refinance, and some has monthly payments. Your program documents will spell out terms.
