HOW Guidelines

The HOW program's mission is to provide affordable renovated homes to qualified first-time homebuyers who want to live in the City of Minneapolis.

Program Information and Policies

• All prospective buyers must comply with the guidelines and restrictions of the program.
• All properties are owned by the Minneapolis CPED (MCDA) and are sold "AS IS."
• All offers must be submitted using the CPED (MCDA) Offer to Purchase Packet. (Contact PRG for a packet.)
• Properties on the market for the first time are available for a two-week period with any and all qualified offers due at the end of this two-week period.
• Offers submitted must be for the full purchase price. Offers less than the full purchase price will not be considered.
• If the financing requires the seller (CPED/MCDA) to pay points, or the buyer is requesting the seller to pay points, up to two points may be built back into the purchase price.
• In situations where more than one offer is submitted for a specific property, a lottery will determine which offer will be selected.
• Properties not sold during the initial two-week offer period, or properties back on the market, will be sold on a first-come basis, except where noted.
• All properties are owned by CPED/MCDA and must go through a Land Sale process, so contact the marketing agent to determine the earliest possible closing date. Generally, the earliest a closing can occur is 45 days after acceptance of the offer.
• All buyers are required to secure new financing (mortgage) of their choice in order to purchase. Offers submitted must include a copy of the buyer's pre-approval letter from their lender. A pre-qualification letter will not be given the same consideration as a pre-approval letter.
• Some buyers may be eligible for an affordability second mortgage provided by the seller, CPED/MCDA. These funds cannot be used for the buyer's required downpayment or to pay closing costs. Call for more information.
• Effective April 1, 2002: In the case where a four bedroom property is for sale, the property must be sold to a household of three or more people. Where a five bedroom home is for sale, the property must be sold to a household of four or more people. A household shall be defined as any combination of an adult or adults including legal dependents and/or having legal guardian status at time of offer.
• Offers submitted must also include: (i) a copy of the buyer's three most recent earnings statements and (ii) copies of the last three years federal tax returns (need form 1040 in addition to W-2's for each year). This information will be used to verify the buyer meets the first-time buyer and income restrictions of the program.
• CPED/MCDA requests that earnest money be submitted with the offer and made payable to CPED/MCDA. (minimum is $500).
• CPED/MCDA reserves the right to select any offer, and reject any offer that does not meet the terms described above.
• CPED/MCDA will make a determination as to which offer will be selected in a timely manner, usually within three to five business days.

Program Guidelines and Buyer Restrictions

• Must be a first-time homebuyer, verified with the last three years of income tax returns.
• Income Restriction: Buyer(s) cannot exceed the following, based on total household annual gross income. (Income earned over the last year and income anticipated from all sources over the next 12 months will be used for determination.)

• Must be the owner-occupant of the property: Cannot use the home as a place of business. Day Care is not allowed.
• Must purchase for the after-rehab fair market value, determined by appraisal.
• Must attend a pre-closing session with Buyer's Agent or Listing Agent (PRG) before the offer to purchase is presented, in order to review the program guidelines and buyer restrictions. (See Exhibit D of Offer to Purchase Packet).


• Must complete and receive a certificate from an approved homebuyer workshop before closing. Workshops are available through PRG and through other organizations affiliated with the Home Ownership Center.
• Affordability Second Mortgage Restrictions (HOME Program funds):

  Resale Restriction: If there is no direct HOME assistance to the Purchaser and the property is not located in the federal HOME Presumption of Affordability Neighborhoods identified, purchaser must sign a note and mortgage which provides that during the period of affordability (10 or 15 years), (i) the home can only be sold to another low-moderate income buyer and (ii) upon resale and after deducting equity and closing costs, original Purchaser must repay a portion of the HOME funds based upon a fair return on investment. If the home is located in a Presumption of Affordability Neighborhood and the buyer receives no direct assistance a 6-year Resale Restriction applies.

  6-Year resale restriction: Purchaser must sign a note and mortgage which provides that during the first six years of ownership, if the property is sold, Purchaser must repay fifty percent of the net proceeds of the sale to the MCDA as defined in the note. May deduct from initial proceeds any: agent fees, title company fees, normal seller closing costs, initial downpayment, any equity (principal paid) and improvements that have added value (must have receipts).

  Recapture Restriction: If there is direct federal HOME assistance to the Purchaser (affordability second mortgage), Purchaser must sign a Note and Mortgage for the amount of the assistance and must repay the full amount when the property is sold or refinanced. If there is a decline in the fair market value, upon sale to a bona fide buyer, MCDA may forgive a portion of the loan amount to "share in the loss" with the Purchaser.