Start Up and Step Up Program Description

Program Income Limits

Refer to the posted income limits on the Minnesota Housing website.

Conventional Product Income Limits

Underwrite to Minnesota Housing Start Up and Step Up income limits.

Conventional Product Income Limits for Reduced-Cost MI

Borrowers under 80% of the Area Median Income (AMI) are eligible for reduced-rate MI.

• Read your DU or LPA findings to determine the AMI and coverage percentage for mortgage insurance eligibility.
• See MI Coverage section for details.
• Non-occupant co-signer income must be included in the loan qualifying income and used to determine whether the borrower is above or below 80% AMI.

Start Up

Each Start Up loan file will have two income calculations: Program Eligibility and Loan Qualifying.

• Refer to the Eligibility and Qualifying Income Reference Guide for further explanation about when to use each type of calculation.
• Refer to the Program Eligibility Income Worksheet for guidance on how to calculate different sources of income
• Start Up: Do not include non-occupant co-signer income in Program Eligibility Income.

Step Up

Step Up uses only loan qualifying income.

• Step Up income limits are based on loan qualifying income.

Purchase transactions only:

• If all borrowers are first-time homebuyers, at least one borrower must complete an approved homebuyer education course prior to closing.
• Duplex using conventional loan: See Fannie/Freddie landlord education course requirement indicated in your findings. For information on landlord education classes, contact PST by phone at 651.296.8215 or email mnhousing.solution@state.mn.us

See the Credit and DTI Requirements webpage for further information

Minimum Borrower contributions are only required for Purchase transactions using a Minnesota Housing downpayment and closing cost loan.

• For a single family home, the minimum contribution is $1,000 or 1% of the purchase price, whichever is less
• For a duplex using a conventional loan, a higher minimum borrower contribution applies. Refer to Fannie/Freddie product requirements.
• The minimum contribution must be the borrower’s own funds, not gift funds.
• Note: If the transaction includes gift funds, follow these best practices:
  • Bring a separate check to closing and ID the gift funds on the CD, or
  • Deposit the check in the borrower’s account after the borrower has paid items outside of closing sufficient to cover the minimum borrower contribution.
  • The minimum homebuyer contribution will be calculated after netting out any cash back at closing. See Start Up/Step Up manual for cash back requirements. 

• Defer to underlying product guidelines
• Refer to Minnesota Product Guides in U.S. Bank AllRegs (Section 500) for reserve requirements beyond the underlying product guidelines
• See the DPA Comparison Guide for DPL and DPL Plus maximum post-closing liquid reserves

Refer to the posted Purchase Price and Acquisition Cost Limits on Minnesota Housing website 

• Start Up: Owner occupied property for purchase
• Step Up: Owner occupied property for purchase or refinance
• Non-occupant co-signers: contact the Partner Solutions Team by phone 651.296.8215 or by email mnhousing.solution@state.mn.us for further guidance.

• Fee simple interest
• Tenancy in common
• Sole Ownership
• Joint tenancy
• Tenants by the entirety
• Community Land Trust (CLT)

VA/ RD / Conventional loans:

Minnesota Housing Delegated Lenders can underwrite VA / RD / Conventional condo spot approvals to underlying product guidelines.

FHA Loans:

FHA condo spot approvals allowed up to max of 90% LTV/100% CLTV.

For overlays and underwriting requirements see U.S. Bank AllRegs:

• Delegated Government Product Guides file path: Housing Finance Agency Programs 500, Minnesota HFA, Product Guides, Government
• Overlay Matrix for HFA Government Loans for delegated lenders file path: 
  HFA Division Lending Guide, 1400.01: Overlay Matrix, Delegated HFA Government Overlays

Borrowers can utilize the corresponding Downpayment and Closing Cost Program available with Start Up or Step Up as well as other community seconds. Borrowers may not layer the Monthly Payment, Deferred Payment Loan or Deferred Payment Loan Plus with each other.

For more info on Minnesota Housing Downpayment and Closing Cost Loans, see DPA Comparison Guide 

Refer to the posted Interest Rates on the Minnesota Housing website:

• Fixed interest rate and fully amortizing
• Start Up: 30-year term purchase only
• Step Up Purchase or Refinance: 30-, 25-, 20- and 15-year terms

Follow underlying product guidelines (shown below). See overlay on FHA Condo Spot Approval in Condo Spot Approval section above.

• One unit property: 97%/105%
• Two Unit Property: 95%/105%
• Manufactured Housing: 
  • Fannie HFA Preferred: 95%/105%
  • Fannie Mae MH Advantage® : 97%/105%
  • Freddie HFA Advantage: 95%/95%
  • Freddie Mac CHOICEHomes® :  97%/105%

Defer to underlying product guidelines.

• On the "Additional Data" screen, select "HFA Preferred."
• “Approve/Eligible” acceptable.
• "Refer Eligible” or “Refer with Caution” requires manual underwriting. See Credit and DTI Requirements webpage and Minnesota Housing Conventional Product Guide (Section 500 in U.S. Bank Allregs) for details on when manual underwriting is allowed.
• Special Feature Code: SFC 782 and SFC 781
• Underwrite to Minnesota Housing Start Up and Step Up income limits.

• You must receive an LPA® recommendation of “Risk Class Accept”
• Investor Feature Identifier (IFI): 
  LPA Offering Identifier 251 or choose “Home Possible Advantage for HFAs” (eligible users only) from drop-down menu
• Underwrite to Minnesota Housing Start Up and Step Up income limits.

• Borrowers under 80% of the Area Median Income (AMI) are eligible for reduced-rate MI.
• Read your DU findings to determine the AMI and coverage percentage for mortgage insurance eligibility.

At or Below 80% AMI:

Above 80% AMI:

Follow standard product-specific FICO/DTI guidance in Credit and DTI Requirements webpage. 

UPMI Additional Information:

• The credit score determines the MI rate. The AUS findings provide percentage of coverage based on Area Median Income (AMI). 
• If credit score is below 720, call PST before locking the loan at 651.296.8215.
• Unused UPMI SRP must be credited to the borrower for closing costs.
• UPMI can be applied to single pay or split premium MI coverage.
• See the SRP Lender Credit Examples for additional guidance.