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How Much Money Do I Need to Buy a House in Minnesota? | 2026 Guide

Learn how much money you may need to buy a home in Minnesota, including down payment, closing costs, prepaids, earnest money and assistance options.

MINNESOTA HOMEBUYER GUIDES

John Richter

9/14/202610 min read

How Much Money Do You Actually Need to Buy a Home?

One of the most common questions I hear from Minnesota homebuyers is, “How much money do I actually need to buy a house?”

Most buyers immediately think about the down payment. But your down payment is only one part of the equation.

The number we really need to understand is your cash to close. That can include your down payment, closing costs, prepaid expenses and other items. Money you've already paid, along with seller or lender credits when applicable, can also affect the final amount you need at closing.

After helping families buy homes for more than 30 years, I've learned that the goal isn't simply to figure out the minimum amount you can scrape together to buy a house. I want to help you understand how much you may need, where that money goes and how much you should consider keeping available after you get the keys.

In this guide, I'll break those numbers down so you can start building a homebuying game plan that makes sense for you.

You may not need 20% down to buy a home in Minnesota.

Depending on the loan program and your qualifications, certain conventional options may allow as little as 3% down, FHA may allow as little as 3.5%, and eligible VA or USDA buyers may have 0% down-payment options.

But here's the important part:

Down payment is not the same thing as cash to close.

Understanding that difference is one of the first things I want a buyer to learn when we start building their game plan.

1. Your Down Payment

Your down payment is the portion of the purchase price you pay upfront rather than finance with your mortgage.

One of the biggest misconceptions I still hear from buyers is that they need 20% down to buy a home. In many cases, they don't.

The amount you may need depends on the loan program, your qualifications, the property and the strategy we build around your overall financial picture.

How Much Down Payment Could I Need?

Certain conventional loan programs: As little as 3% down for eligible borrowers
FHA: As little as 3.5% down for eligible borrowers
VA: Eligible Veterans and service members may have a 0% down-payment option
USDA: Eligible borrowers purchasing an eligible property may have a 0% down-payment option

These are potential program minimums, not a recommendation for every buyer. Loan eligibility, credit, income, property type, occupancy and other requirements can affect which options are available.

The Minimum Down Payment Isn't Always the Best Down Payment

Just because a loan program allows a certain minimum down payment doesn't mean that's automatically the best choice.

Putting more money down may reduce the amount you finance and could affect your monthly payment, mortgage insurance and loan pricing. On the other hand, using every dollar you have for the down payment could leave you without enough savings after closing.

That's why I prefer to look at the entire game plan: monthly payment, cash to close and money remaining after closing.

Sometimes putting more down makes sense. Sometimes keeping more money in the bank makes more sense. The right answer depends on your situation.

2. Closing Costs

Your down payment isn't the only expense involved in buying a home. There are also costs associated with getting the mortgage and completing the purchase.

Depending on your transaction, closing costs can include items such as lender charges, appraisal costs, title and settlement services, recording charges and other expenses associated with the loan and transfer of the property.

I don't like giving buyers a blanket rule that says closing costs will always equal a certain percentage of the purchase price. Your actual costs can vary based on the loan, lender, property, purchase agreement and other details of the transaction.

That's why your Loan Estimate is so important. It gives you an itemized estimate of the loan terms, closing costs and estimated cash you'll need for the transaction.

Can Someone Else Help Pay My Closing Costs?

Depending on the loan program and transaction, seller credits, lender credits or eligible assistance programs may help with certain closing costs. Each option has rules and tradeoffs, so I don't automatically assume that getting the largest credit is the best strategy.

The goal is to compare the entire transaction and understand what you're giving up, if anything, in exchange for reducing the amount you bring to closing.

Prepaid Expenses and Escrow

Some of the money you bring to closing may not actually be a “closing cost” in the way most buyers think about it. You may also need money for expenses connected to owning the home that are paid in advance or collected to establish an escrow account.

Depending on your loan and property, these amounts may include:

Homeowners insurance premiums
Prepaid interest
Property taxes
Initial deposits into an escrow account for taxes and insurance
Other property-specific items when applicable

These amounts can vary significantly from one transaction to another. The closing date, property taxes, insurance premium and how your loan is structured can all affect the amount.

Why This Matters When Planning Your Cash to Close

This is one reason I don't want a buyer to simply calculate a down payment and assume that's all the money they'll need.

Two buyers purchasing homes at the same price with the same down payment could still have different amounts needed at closing because their taxes, insurance, closing date, loan structure and other details may be different.

As we get closer to closing, these numbers become much more specific. Early in the process, the goal is to make sure we're planning for them instead of being surprised by them.

4. Earnest Money

Earnest money is money you provide after your offer is accepted to show that you're serious about purchasing the home. The amount isn't the same for every transaction and can depend on the property, offer and market conditions.

One thing I want buyers to understand is that earnest money generally isn't just an extra expense that gets added on top of everything else.

When the transaction closes, your earnest money is typically accounted for as part of the funds you've already contributed toward the purchase. In other words, if you've already deposited earnest money, we don't want to count those same dollars twice when we're estimating what you'll ultimately need for closing.

Your purchase agreement controls how earnest money is handled, including what may happen if the transaction doesn't close. That's why it's important to understand the terms of your offer and any contingencies with your real estate agent before signing the purchase agreement.

Don't Count the Same Money Twice

Here's a simple example:

If your overall transaction requires $20,000 from you and you've already provided $5,000 in earnest money that is being credited toward the transaction, you wouldn't plan on bringing another $20,000 at closing. That $5,000 has already been contributed, so the remaining amount would be adjusted accordingly.

The actual numbers will be shown on your closing documents, but this is an important concept when you're trying to estimate how much money you'll need.

5. Money You Keep After Closing

There's one more bucket I want buyers to think about, and technically it isn't part of your cash to close at all.

It's the money you don't spend.

Getting the keys shouldn't automatically mean draining your checking and savings accounts to zero. Owning a home comes with expenses that don't always show up on a mortgage application or Loan Estimate.

Depending on your situation, you may want money available after closing for things such as:

Moving expenses
Furniture or appliances
Immediate repairs or maintenance
Utility deposits or setup costs
Unexpected home expenses
Emergency savingsMinnesota-Specific Assistance Programs

Buying the House Is Only Part of the Game Plan

This is why I don't start by asking, “What's the absolute maximum house you can qualify for?” or “What's the smallest down payment we can possibly use?”

I would rather look at the whole picture.

What monthly payment feels comfortable?

How much money will you need at closing?

How much will you have left afterward?

Those three numbers can tell us much more about whether a homebuying plan makes sense than simply knowing the maximum loan amount a lender might approve.

6. Can Minnesota Programs Help With My Down Payment or Closing Costs?

Yes. Depending on your situation, there may be Minnesota programs that can help eligible homebuyers with some of the money needed for a down payment or closing costs.

One resource I look at with buyers is Minnesota Housing. Its homeownership programs include Start Up and Step Up, along with assistance-loan options that may help qualified borrowers with down payment and closing costs.

The important word is qualified. Income limits, purchase-price limits, loan requirements and other eligibility guidelines apply and can change. That's why I don't want a buyer assuming they qualify, or assuming they don't, based on something they read online.

Down Payment Assistance Doesn't Always Mean Free Money

This is an important distinction.

When buyers hear “down payment assistance,” they sometimes assume we're talking about a grant that never has to be repaid. That isn't always the case.

Minnesota Housing currently offers assistance options structured as loans. Depending on the program, repayment terms can be different. Some may have monthly payments, while certain deferred options may not require monthly payments but become due under specified circumstances.

As of September 2026, Minnesota Housing lists assistance-loan options of up to $18,000 for eligible borrowers under certain programs. Because program amounts and requirements can change, I recommend verifying the current guidelines when you're actually preparing to buy.

Could Assistance Change My Homebuying Game Plan?

Absolutely.

A buyer who believes they need to save thousands more before buying may discover that an assistance program changes the picture. Another buyer may qualify for assistance but decide that using their own funds creates a better overall loan strategy.

That's why I don't start with, “Which program gives you the most assistance?”

I start with:

What are you trying to accomplish?

What payment are you comfortable with?

How much cash do you have available?

How much would you like to keep after closing?

Then we can compare the options and build the game plan around you.

7. Down Payment vs. Cash to Close: What's the Difference?

This is probably the most important distinction in this entire guide.

Your down payment is only one part of your cash to close.

Your down payment is the portion of the home's purchase price that you're paying rather than financing with your mortgage.

Your cash to close is the final amount you need to bring to closing after the different pieces of the transaction are accounted for.

What Can Affect My Cash to Close?

Depending on your transaction, your cash to close may reflect:

Your down payment
Closing costs
Prepaid expenses
Initial escrow deposits
Earnest money you've already paid
Seller credits, when applicable
Lender credits, when applicable
Eligible down payment or closing-cost assistance
Other credits or adjustments associated with the transaction

This is why I don't want buyers estimating how much money they need simply by multiplying the purchase price by their down-payment percentage.

A Simple Example

Let's say you're buying a $400,000 home and using a loan that requires a 5% down payment.

Your down payment would be $20,000.

But that does not automatically mean your cash to close is $20,000.

There may be closing costs, prepaid expenses and escrow funding to account for. At the same time, earnest money you've already paid, seller or lender credits, or eligible assistance could reduce the amount you still need to bring.

The final number depends on your actual transaction.

0% Down Does Not Necessarily Mean $0 Out of Pocket

This is especially important for VA and USDA buyers.

An eligible borrower may have a loan option that doesn't require a down payment, but that doesn't automatically mean there will be no money needed for the transaction.

Closing costs, prepaid expenses, earnest money and other transaction-specific items can still exist. Credits, financing options and assistance may affect those amounts, but I want buyers to understand the difference between “no down payment” and “no money needed.”

8. Frequently Asked Questions About Money Needed to Buy a Home in Minnesota

How much money do I need to buy a $400,000 house in Minnesota?

There isn't one number that applies to every buyer. For example, a 5% down payment on a $400,000 home would be $20,000, but your total cash to close may be higher or lower after closing costs, prepaid expenses, earnest money, credits and eligible assistance are accounted for.

That's why I recommend estimating the entire transaction rather than looking only at the down payment.

Do I need 20% down to buy a house in Minnesota?

No. You do not automatically need 20% down. Certain conventional programs may allow eligible borrowers to purchase with as little as 3% down, FHA may allow as little as 3.5%, and eligible VA and USDA borrowers may have 0% down-payment options.

The minimum available down payment isn't necessarily the best financial strategy for every buyer.

Can I buy a home in Minnesota with no down payment?

Possibly. Eligible VA and USDA borrowers may have financing options that don't require a down payment. Eligibility requirements apply, and a 0% down-payment loan does not necessarily mean you'll need $0 for the entire transaction.

Can the seller pay my closing costs?

Depending on the loan program and purchase agreement, a seller may be permitted to contribute toward certain closing costs. Limits and requirements vary by loan program and transaction.

A seller credit can be valuable, but I still want to evaluate the entire offer and financing strategy rather than looking at the credit by itself.

Can I use down payment assistance in Minnesota?

Qualified buyers may have access to Minnesota Housing or other eligible assistance programs that can help with down payment or closing-cost needs. Income limits, purchase-price limits, loan requirements and other eligibility guidelines may apply.

Assistance doesn't automatically mean free money. Some programs are structured as loans and have repayment requirements.

Is earnest money additional money on top of my cash to close?

Earnest money is generally accounted for as money you've already contributed toward the transaction when the purchase closes. That means we don't want to count the same dollars twice when estimating what you'll still need to bring to closing.

Your purchase agreement determines how earnest money is handled if the transaction does not close.

How much money should I have left after buying a house?

There isn't a universal amount that's right for everyone. I want buyers to consider what they'll need after closing for moving expenses, repairs, appliances, furnishings, emergency savings and other priorities.

The goal isn't simply to get into the house with the least amount possible. It's to build a homebuying plan that still makes sense the day after closing.

Ready to Build Your Minnesota Homebuying Game Plan?

Knowing the minimum down payment is helpful, but it doesn't tell you the whole story.

I want you to understand what you can comfortably afford, how much money you may need at closing and how much you'd like to keep afterward.

Once we know those three numbers, we can compare loan programs, down-payment options and available assistance and start building a plan around your goals.

If you're thinking about buying a home in Minnesota and aren't sure where to start, let's build your Personal Game Plan together.

SCHEDULE MY PERSONAL GAME PLAN SESSION

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