Prepare for your home-buying journey and secure your dream property
with these streamlined, step-by-step first-time home buyer guides.
Buying your first home is an exciting milestone. If you’re looking to purchase in Minnesota, you’ll find a vibrant real estate market with plenty of options across the state. This guide is designed to help you navigate the process, from getting your finances in order to exploring mortgage options. We’ve put together a checklist and some helpful tips to help you move forward with confidence.
When you hear the term first-time homebuyer, you might assume it only means someone who has never owned a home before. However, the official definition is broader. According to the U.S. Department of Housing and Urban Development, you can qualify as a first-time homebuyer as long as you haven’t owned a principal residence in the three years before you close on a new home.
You might also qualify if you only owned a home with a former spouse, or if the only property you owned was a manufactured home that wasn’t attached to a permanent foundation. This is great news, as it means you might still be eligible for special programs even if you’ve owned property in the past.
Buying a home in Minnesota comes with some fantastic perks. There are several state and local programs specifically designed to help buyers with modest incomes get their foot in the door. These programs can make a big difference by offering lower down payments or, in some cases, even no down payment at all. This makes buying your first home much more accessible.
Additionally, some lenders provide flexible credit score requirements for people who qualify. If you’re worried about upfront costs, check out Minnesota first-time home-buying assistance programs managed by local housing authorities. These agencies offer cash grants and forgivable loans to help cover expenses.
You should also chat with your loan officer early on about down payment assistance programs. They can tell you which programs are a good fit for your financial situation. Just remember that every program has its own specific rules, so it’s worth comparing your options to find the best match for your needs.
Recommended: Minnesota First-Time Home-Buying Assistance Programs
Compare current home interest rates by state and find a mortgage rate that suits your financial goals.
Select a state to view current rates:
If you’re wondering how to buy a house for the first time, the following steps can help you stay organized and come up with a plan. These first-time homebuyer tips and advice will prepare you for the journey, from setting a budget to what you need on closing day.
Before you start browsing listings, take a moment to look at your financial health. You’ll want to make sure your budget can comfortably cover your down payment, mortgage payments, property taxes, homeowners insurance, and ongoing maintenance.
Lenders will evaluate a few key numbers to decide if you’re ready for a mortgage. A strong credit score is one. Another is your debt-to-income (DTI) ratio, which is the percentage of your monthly income that goes toward paying off debt. Usually, lenders prefer this to be 36% or less, though some government-backed loans allow up to 50%.
Planning to stay in your home long-term is a great strategy, as it gives you time to build equity through home appreciation and consistent monthly payments.
Recommended: Average Monthly Expenses for One Person
Establishing a realistic budget can help you narrow your home search to affordable properties. A home affordability calculator can determine your budget based on your upfront and ongoing monthly housing costs. If you plan to move out of state, check the local cost of living there.
Homebuyers often plan for a 20% down payment to avoid paying private mortgage insurance (PMI) on conventional loans, which also helps you secure a lower interest rate from lenders. The minimum down payment for a conventional mortgage can be as low as 3% for qualified buyers, while certain government loans don’t require any down payment from eligible borrowers. In addition, using a down payment calculator can reveal how different down payment amounts can affect your monthly mortgage.
Finding the right type of mortgage loan is a huge part of your affordability strategy. There are several options available, each with its own requirements:
Shopping around for a mortgage lender can help you find affordable loan terms, as financial institutions offer different loan types and interest rates. You’ll also want to understand the difference between the interest rate and the APR (annual percentage rate). The APR includes the baseline interest rate plus additional costs such as lender fees and discount points, making it a more accurate measure of your total cost. And comparing lenders’ timelines and customer service reviews can help you avoid delays during the purchase.
Prequalification and preapproval may sound similar, but these steps are very different. Prequalification is just a casual estimate of what you might be able to borrow based on the basic information you provide. You can get prequalified with multiple lenders as you shop around for the best offers.
Preapproval, on the other hand, is the real deal. During the mortgage preapproval process, your lender will verify your financial documents — like tax returns, pay stubs, and bank statements — and check your credit history. Getting a preapproval letter is a smart move before you start touring homes. It shows sellers you’re a serious, qualified buyer, which can be a big advantage in a competitive market. Plus, it helps you focus your search on homes that fit your budget, saving you time and stress.
A licensed real estate agent helps you navigate the complex housing market with confidence, saving you time and simplifying the process. An agent tailors your home search so you spend less time looking at properties that don’t meet your criteria and guides you through the intricacies of contract negotiations and official paperwork.
You might want to look into how agents get paid, because industry norms changed recently. Read more about How Real Estate Commission Fees Are Changing.
Bet you thought this was step 1, right? It often is, but going through the six prep steps above will put you way ahead of competing homebuyers.
Finding the right property means carefully researching neighborhoods and local market trends and balancing your physical property preferences with your daily lifestyle needs. Evaluate neighborhood safety, school districts (if that’s relevant), and your daily commute times to work.
Be aware of your legal rights regarding fair housing laws during your search. Federal laws prohibit housing discrimination based on race, religion, sex, or family status. Real estate agents are required to show you all available homes in your price range without bias. Documenting your conversations and taking screenshots of listings helps protect you if you suspect unfair treatment.
Recommended: Best Affordable Places in the U.S.
Your real estate agent can help you draft a formal offer letter for the seller. This letter outlines your proposed purchase price and a response timeline and can also include inspection and appraisal contingencies to protect your money if problems arise.
The seller can accept your offer, reject it, or submit a counteroffer with revised terms. If the seller accepts your offer, you proceed to the contract stage of the transaction. At this point, you’ll submit an earnest money deposit to demonstrate your good faith commitment. This deposit sits in an escrow account until the sale is finalized at closing.
Hire a professional home inspector to evaluate the property’s physical and structural condition. This independent evaluation protects your investment from expensive hidden surprises. An inspection involves a thorough examination of the roof, plumbing, electrical systems, and foundation components.
The cost of a home inspection usually ranges between $400 and $650 out of pocket. Shop around for quotes from certified inspectors in your area to find a fair deal.
Review your lender’s requirements to ensure the inspection covers all necessary items, and attend the inspection in person to ask questions about potential defects. The inspection report helps you decide whether to finalize the contract or request repairs from the seller.
Lenders require a property appraisal to verify the home’s actual market value before issuing a mortgage. This step ensures that the financial institution doesn’t loan more than the property is worth.
An appraisal differs from an inspection as it focuses on dollar value rather than mechanical defects. Your lender will engage an appraiser, selecting them randomly to ensure complete objectivity. Like an inspection, an appraisal involves a certified specialist visiting the property and looking around the structure.
The homebuyer needs to schedule the appointment or have their agent coordinate the time. Make sure someone is present to open the house for the appraiser. The homebuyer pays the cost of the appraisal, which typically ranges from $300 to $600.
You’re in the home stretch! Closing is the final stage where property ownership officially transfers from the seller to you. The process involves signing legal documents and settling your remaining financial obligations.
You’ll need to provide proof of homeowners insurance to your lender before the closing meeting. Review your policy to ensure it covers state-specific environmental hazards such as winter storm damage or local flood zones.
You’ll receive a final closing disclosure three days before the meeting to review your loan details. You’ll want to conduct a final walk-through of the house to verify its condition before signing. Then the escrow agent and title company coordinate the legal transfer of the deed and record the transaction with the county. Once you sign the mortgage note, you’ll receive the keys to your house.
An online calculator can be a big help in comparing home equity loan rates and terms. And it’s not the only calculator you’ll find helpful during your home equity loan process:
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Moving into your first home is an exciting transition, but it helps to have an organized plan. Here are some first-time homebuyer tips to help you settle in successfully.
You can minimize stress by creating a clear move-in checklist before moving day arrives, including:
Homeownership brings new ongoing expenses that differ significantly from renting a property, so it’s a good idea to start a monthly budget that tracks your mortgage, property taxes, and utility bills. Set money aside for home upkeep so you can handle unexpected repair projects without financial strain. Consider building an emergency fund for long-term stability.
Buying your first home in Minnesota is a big step, but with a solid plan, it’s definitely achievable. Focus on getting your budget in order, understanding your mortgage options, and using the resources available to you — like state assistance programs and your real estate agent. By taking the time to prepare now, you’ll be much better positioned to navigate the market and find a place you’re proud to call home.
Buying a house for the first time requires enough money to cover your upfront down payment and the closing costs, which typically run 2%-5% of the mortgage amount. Make sure your monthly mortgage payment, property tax, home insurance, and any homeowners association dues fit your ongoing budget. Saving for a larger down payment can reduce your monthly obligations, but minimum down payment options can be as little as 3% for conventional loans.
As a first-time homebuyer, you’ll typically need a minimum credit score of 620 to be approved for a conventional loan. FHA loans allow a credit score of 580 with a 3.5% down payment, or a score of 500-579 with a 10% down payment. Government-backed programs such as VA and USDA loans don’t have a set minimum score.
Before you buy your first house, understand that a home’s listing price is just the beginning of your expenses. You’ll need to factor in closing costs, property tax, home insurance, and maintenance. Your credit score directly impacts the interest rate you’ll receive from lenders, and obtaining a formal preapproval letter helps you compete effectively in hot housing markets. Finally, working closely with an experienced real estate agent can help your home-buying process go more smoothly from start to finish.
The 30/30/3 guideline suggests spending no more than 30% of your gross income on housing payments, including insurance and taxes. It also recommends saving 30% of the home’s value in cash as a down payment and emergency buffer, and limiting the value of your target home to no more than three times your annual gross income. This rule may not be realistic in expensive markets where property values are very high, where many buyers follow the alternative 28/36 rule.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
This article is not intended to be legal advice. Please consult an attorney for advice.Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SOHL-Q226-045Take the first steps to homeownership today. Get prequalified for an FHA loan online.
