See programs you qualify for
Get Matched Free →By Tyler Thompson · Licensed Real Estate Agent · Updated May 5, 2026
Homebuyer Programs in Owatonna, MN (2026)
Owatonna is the county seat of Steele County, located along Interstate 35 about 65 miles south of Minneapolis-Saint Paul, with a population of roughly 26,500 and a median home price near $275,000. While the Owatonna HRA primarily administers rental and Section 8 voucher programs and Steele County does not currently fund a county-level homebuyer assistance program, buyers in Owatonna can still access substantial down payment help through Minnesota Housing and federal programs. The Minnesota Housing Deferred Payment Loan offers up to $18,000, the Monthly Payment Loan offers up to $17,000, and the First-Generation Homebuyer Loan Program offers up to $35,000 (forgivable over five years) to eligible first-generation buyers. Federal options include FHA, VA, and USDA Rural Development loans, the latter being especially useful in eligible rural parts of Steele County. Owatonna's relatively affordable median home price means even modest assistance can cover a substantial portion of the down payment and closing costs.
State Programs in Minnesota
| Program Name | Type | Amount | First-Time Only | Details |
|---|---|---|---|---|
| Minnesota First-Generation Homebuyer Loan Program | Deferred Loan | — | Yes | View → |
| Minnesota Housing Deferred Payment Loan | Deferred Loan | — | Yes | View → |
| Minnesota Housing Monthly Payment Loan | Repayable Loan | — | No | View → |
| Minnesota Housing Start Up Program | Government-Insured Mortgage | First mortgage with as little as 3% down | Yes | View → |
| Minnesota Housing Step Up Program | Government-Insured Mortgage | First mortgage; can also be used to refinance | No | View → |
- Type:
- Deferred Loan
- First-time only:
- Yes
- Type:
- Deferred Loan
- First-time only:
- Yes
- Type:
- Repayable Loan
- First-time only:
- No
- Type:
- Government-Insured Mortgage
- Amount:
- First mortgage with as little as 3% down
- First-time only:
- Yes
- Type:
- Government-Insured Mortgage
- Amount:
- First mortgage; can also be used to refinance
- First-time only:
- No
Federal Programs
| Program Name | Type | Amount | First-Time Only | Details |
|---|---|---|---|---|
| FHA Loans | Government-Insured Mortgage | Up to FHA county loan limits ($541,287 floor to $1,249,125 ceiling for single-family in 2026) | No | View → |
| Good Neighbor Next Door (HUD) | Government Property Sale Program | 50% discount off the list price of HUD-owned homes | Yes | View → |
| Home Possible Mortgage (Freddie Mac) | Government-Guaranteed Mortgage | Up to conforming loan limits ($832,750 standard / $1,249,125 high-cost in 2026); 3% minimum down payment | No | View → |
| HomeReady Mortgage (Fannie Mae) | Government-Guaranteed Mortgage | Up to conforming loan limits ($832,750 standard / $1,249,125 high-cost in 2026); 3% minimum down payment | No | View → |
| HUD $100 Down Program | FHA-Financed HUD REO Purchase | Only $100 down payment required (vs. standard 3.5% FHA down payment). HUD may also pay up to 3% of buyer's closing costs. | No | View → |
| USDA Rural Development Loans | Government-Guaranteed Mortgage | 100% financing (no down payment required); loan amount up to appraised value | No | View → |
| VA Loans | Government-Guaranteed Mortgage | No loan limit for veterans with full entitlement (0% down at any price); partial entitlement subject to conforming limits ($832,750 standard in 2026) | No | View → |
- Type:
- Government-Insured Mortgage
- Amount:
- Up to FHA county loan limits ($541,287 floor to $1,249,125 ceiling for single-family in 2026)
- First-time only:
- No
- Type:
- Government Property Sale Program
- Amount:
- 50% discount off the list price of HUD-owned homes
- First-time only:
- Yes
- Type:
- Government-Guaranteed Mortgage
- Amount:
- Up to conforming loan limits ($832,750 standard / $1,249,125 high-cost in 2026); 3% minimum down payment
- First-time only:
- No
- Type:
- Government-Guaranteed Mortgage
- Amount:
- Up to conforming loan limits ($832,750 standard / $1,249,125 high-cost in 2026); 3% minimum down payment
- First-time only:
- No
- Type:
- FHA-Financed HUD REO Purchase
- Amount:
- Only $100 down payment required (vs. standard 3.5% FHA down payment). HUD may also pay up to 3% of buyer's closing costs.
- First-time only:
- No
- Type:
- Government-Guaranteed Mortgage
- Amount:
- 100% financing (no down payment required); loan amount up to appraised value
- First-time only:
- No
- Type:
- Government-Guaranteed Mortgage
- Amount:
- No loan limit for veterans with full entitlement (0% down at any price); partial entitlement subject to conforming limits ($832,750 standard in 2026)
- First-time only:
- No
How to Apply
Step 1: Check your eligibility. Most Minnesota Housing programs require first-time homebuyer status (no homeownership in the past three years), a credit score of at least 640, income within program limits, and completion of an approved homebuyer education course.
Step 2: Complete homebuyer education. Approved Home Stretch courses are available online and through nonprofit partners across Minnesota. The Minnesota Homeownership Center maintains a list of approved providers at hocmn.org.
Step 3: Get pre-approved for a mortgage with a Minnesota Housing-approved lender. Ask specifically about the Start Up loan program for first-time buyers and the Step Up program if you are a repeat buyer or want to refinance.
Step 4: Discuss down payment assistance options with your lender. Minnesota Housing Deferred Payment Loan (up to $18,000), Monthly Payment Loan (up to $17,000), and First-Generation Homebuyer Loan (up to $35,000) all pair with a Minnesota Housing first mortgage.
Step 5: Find a home in Owatonna within program purchase price limits. If you are buying in an eligible rural area of Steele County, ask your lender about USDA Rural Development financing, which offers 100% financing.
Step 6: Submit your application through your lender. Minnesota Housing assistance is processed by your lender as part of the mortgage application.
Step 7: Close on your home and meet ongoing requirements. Most assistance loans require the home to remain your primary residence; the First-Generation loan is forgiven 20 percent per year over five years.
Frequently Asked Questions
How much down payment assistance can I get in Owatonna?+−
Why does Owatonna not have a local down payment assistance program?+−
Do I have to be a first-time homebuyer to qualify?+−
What is the maximum home price for these programs?+−
Can I use a USDA Rural Development loan in Owatonna?+−
What homebuyer education is required?+−
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