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If buying a house has seemed like a distant dream with today's steep list prices as well as inflation making it difficult to sock away enough money for a hefty down payment, you'll be heartened to hear help is on the way.

In a big way (albeit, not right away).

The Minnesota Legislature recently approved a $150 million housing-assistance package aimed at helping thousands of first-generation homebuyers, especially people of color, come up with a down payment.

The First Generation Fund comes at a time when house prices are increasing more quickly than incomes, advocates of the program say. Unlike the many down-payment assistance programs that already exist, it is specifically tailored to assist people in bridging the gap between the high cost of housing today and what people can actually afford.

The $150 million appropriated in the omnibus housing finance bill includes $100 million dedicated to homebuyer assistance. Just weeks after approval, advocates of the bill are busy working out details and say it will take several months before the funds are ready for disbursal.

If you're interested in securing some of the money to make your homeowning dreams a reality — or if you want to learn more about financial assistance available right now — check out these tips:

First Generation Fund facts

A coalition of groups — including the Minnesota Realtors (MNR), the Minnesota Homeownership Center and Twin Cities Habitat for Humanity — conceived the fund in 2020 said Emily Green, a Twin Cities real estate agent and president of MNR.

The aim of it is to "help advance the goal of closing the racial homeownership gap in Minnesota and getting more first-generation homebuyers over the down-payment barrier and into homeownership," said Julie Gugin, president of the Homeownership Center.

The Midwest Minnesota Community Development Corporation — in partnership with a variety of organizations, including Community Development Financial Institutions, several nonprofits and tribal entities around the state — will administer the fund.

The bill provides first-generation buyers who meet income guidelines a percent of the purchase price of a home up to a specific dollar amount in the form of a forgivable or deferred loan (or a combination of both, depending on the borrower's circumstances).

"These are really meaningful dollars," said Robyn Bipes-Timm, chief strategy and operations officer for the Twin Cities office of Habitat for Humanity. "It will really help level the playing field."

Bipes-Timm and other advocates are hopeful the program will be ready for buyers before the end of the year and will have guidelines and restrictions that are more flexible than many others.

"This will be very consumer-driven," she said.

Believe you can be a homeowner

The Minnesota Homeownership Center, a one-stop-shop for free homebuyer assistance, says it's time to dispel certain myths about buying a home.

Having crummy credit doesn't mean you'll never own a home. Your credit score varies, and there are many ways to repair it. Ask an expert for help. Also, some Federal Housing Administration (FHA) programs are tailored to those with a credit score as low as 500.

Not having a 20% down payment isn't a deal-breaker. While it is optimal, the FHA requires just 3.5%, which is sometimes less than even a security deposit for a rental. And down-payment assistance programs, sometimes in the form of grants that don't need repaying, are widely available.

And don't count yourself out just because you think you don't earn enough. A large down payment can increase your buying power. In some cases, your house payment might even be less than your rent.

What's available now

Down-payment assistance is already widely available in the Twin Cities, but you might have to make a few calls before you find a program that's right for your situation. Kathy Wetzel-Mastel, executive director of PRG, said it's imperative to meet with a Department of Housing and Urban Development (HUD)-approved housing counseling agency in the area where you hope to buy.

The Minnesota Homeownership Center provides homebuyer education and counseling services via a network of statewide advisers who work with community-based organizations. Its website includes a list of community partners and advisers who are familiar with what funds are available, and who is eligible. Most require homebuyer education classes. The same is true for Habitat For Humanity and PRG, a Minneapolis-based nonprofit that serves as an affordable housing developer and homeownership counseling center.

A skilled real estate agent or loan officer should also be able to answer questions. The Regional Multiple Listing Service already has a tool that agents and many lenders can use to find out what resources might be available.

Minnesota Housing, the state's housing finance agency, has a variety of loan programs for first-time and repeat homebuyers as well as those looking to refinance. The group works with a variety of lenders who can answer questions about eligibility and various programs, including down payment and closing cost loan options up to $18,000. Its "Start Up" program is for first-time homebuyers, or those who have not had an ownership interest in a principal residence in the past three years.

Layering isn't just for warmth

Homebuyer counselors and savvy real estate agents know how to layer — as in, use more than one assistance program — to help their clients qualify for a mortgage.

Green said the most programs she's layered for a buyer was six. Erin Wilson, real estate/development coordinator and a HUD-certified homeownership adviser for PRG, agreed buyers needn't stop at just one program. She recently worked with Albert and Sundia Briscoe, who used three sources of down-payment assistance to buy a newly built three-bedroom house in Minneapolis' Jordan neighborhood for $284,900.

The Briscoes paid $2,500 out of pocket after participating in homebuyer classes to make sure they had the income, credit worthiness and skills to buy a house. They received $40,000 in down-payment assistance from the Minneapolis Homes program, the MN Housing Impact fund down-payment assistance (specific to PRG developments) and Community Keys down-payment assistance through NeighborWorks Home Partners.

Like many down-payment assistance programs, these are technically deferred loans that buyers must fully repay but only after they sell.

"I know that homeownership is the first step to financial empowerment," Albert Briscoe said. "This has been the most amazing thing ever."

Don't fret about few listings

Though houses have become less affordable, hundreds of starter houses hit the market every month. And nonprofits, including Habitat for Humanity and PRG, are doubling down on their efforts to build more affordable starter houses. So don't give up — or become discouraged with — the search.

"You have to be patient, be prepared. So have your down payment and loan figured out so you can be a more attractive buyer if there are bidding wars," Gugin said.

She also said it's important to remember that your first house is not likely to be your last, so adjust your expectations.

"Have realistic expectations about what houses are available and how much you can afford," she said. "While not sacrificing your wants and needs about where you want to live."