Explore Minnesota; Land of 10,000 Lakes.

Home Mortgage Rates in Minnesota

Why Minnesota?

Despite the freezing weather and long winters, Minnesota has long been deemed one of the best states in which to purchase real estate. This is especially true for those looking to settle down in a place of their own. There are few states that are better suited to raising a family. After all, Minnesota has consistently ranked at the top of Morgan Quitno's list of "most livable states." Public education in this state is second to none-many of the top school districts in the nation are located in or around the twin cities area. Healthcare is also excellent, perhaps owing to the esteemed Mayo Clinic located in Rochester, Minnesota. Other highlights of living in Minnesota include low crime rates, a variety of career opportunities, and the unparalleled natural beauty of the state’s 10,000 pristine lakes.

Popular Cities in Minnesota

Twin Cities

Minneapolis Skyline.

The Mecca of this northern state is a thriving metropolis known as the "twin cities." These two cities are surely fraternal twins, for despite a few similarities, Minneapolis and St. Paul differ greatly. St. Paul is the quietest of the pair. Visitors come for the historic architecture and sprawling parks, but stay for the serenity. Minneapolis, on the other hand, is flashy and exciting, with a thriving nightlife scene. The twin cities prove the cliché "opposites attract" true. Despite striking differences, the two cities complement each other perfectly.

Minneapolis and St. Paul are continuing to expand, if that is possible. As of 2008, the metro area's population was 2.87 million and growing rapidly. Currently, seven counties fall within the metro area. This number may increase as demand for housing in the sprawling twin cities suburbs continues to grow.

Saint Paul, Minnesota Skyline.


Located in the southern region of Minnesota, the city of Rochester is best known for housing the Mayo Clinic, one of the best medical centers in the world. Given the current economic downturn, it comes as no surprise that Rochester's population is growing so quickly. After all, in addition to the 28,000 jobs provided by the Mayo Clinic, the city is home to a large and successful IBM facility. Another advantage of moving to Rochester is that it offers the sophistication of the twin cities, minus the traffic.

St. Cloud

Already the largest city in the central region of the state, St. Cloud has experienced explosive growth during the last 5 years. Many people move to St. Cloud with the intention of commuting to the twin cities. Given the growing suburban sprawl, the city is actually closer to the metro area than several of the suburbs located in the seven county twin cities metro area. Additionally, St. Cloud is a quiet haven among the growing bustle of the twin cities. It is mere minutes away from the rural farmland of central Minnesota. However, if the population surge seen in recent years continues, this may no longer be the case.

Real Estate Prices In Minnesota

Real estate prices vary greatly throughout the state of Minnesota. Overall, Minnesota real estate prices tend to be slightly lower than the United States median. Of course, real estate listings of the entire Midwest region of the nation are consistently much lower than the nation's averages. In fact, homes in Minnesota are on average, listed for almost twice the price of those in Michigan, Ohio and Indiana.

Statistics regarding real estate prices tend to be misleading in Minnesota. The data is highly skewed by the difference in prices between real estate located in or around the twin cities metro area, as opposed to real estate elsewhere in the state. Listing prices in Minneapolis, St. Paul and the surrounding suburbs are significantly higher than the nation's average. Average homes sell for over $300,000, a figure that has remained surprisingly stable, despite the housing collapse.

The expensive real estate in the twin cities most likely stems from the area's growing demand. The metro area was one of few cities to retain a relatively low unemployment rate and a high standard of living during the recession. Many people are relocating to the twin cities in search of jobs and this demand is driving up real estate prices, even in the midst of a housing crisis.

One region that features surprisingly high priced real estate is the land along the Canadian border, especially in Koochiching County. Typically, those who choose to invest in real estate in this area do so in hopes of owning a vacation home. Many of the expensive houses sold here sit empty most of the year.

Housing prices in the western and southern regions of the state are on average, significantly lower than average listing prices in the rest of the United States. This is especially true of the counties that border North and South Dakota. Homes typically sell for under $80,000 in these regions.

Mortgages Offered in Minnesota

The following types of mortgages are currently available in Minnesota:

  • FHA loans
  • Adjustable rate mortgages
  • Fixed rate mortgages
  • VA loans
  • Equity Loans
  • Reverse mortgages
  • Streamlined-K Mortgage Loans

Currently, the most sought after mortgage in the state is the FHA. FHA loans are meant for middle income families that are not capable of making a large down payment on a home. There are several types of FHA loans available in Minnesota.

These include:

  • FHA Adjustable Rate mortgage
  • FHA Fixed Rate loan
  • FHA Energy Efficient Mortgage program
  • FHA condominium loans
  • FHA Graduate Payment loans.

Recently, young borrowers in Minnesota have been taking advantage of low housing prices and interest rates. As such, the FHA Fixed Rate Mortgage has been used extensively by younger Minnesotans, especially newlyweds and recent college grads. Most choose the 203(b), a fixed rate loan popular with first-time home buyers, because it keeps down payments and closing costs.

For years, the most common type of mortgage in Minnesota has been the fixed rate mortgage. This was especially true of homes in the suburbs of the twin cities. Families who took mortgages on these houses usually intended to remain in them for several decades. Today, fixed rate mortgages are still common in Minnesota, but they are no longer dominant among mortgage options. This is mostly due to the increased frequency with which Minnesotans move. Although they typically remain in the state, few are willing or able to remain in the same house for more than a few years, especially if they secure employment on the other side of the twin cities metro. As such, adjusted rate mortgages have seen a rapid increase in popularity in the last decade. Typically, Minnesotans who choose adjusted rate mortgages prefer 5/1 adjusted rate mortgages.

Overall, mortgage rates in Minnesota are lower than the nation's average. This is mostly due to the popularity of FHA mortgages, as well as the increasing popularity of adjusted rate mortgages. Both of these types of mortgages are considered low-risk. As a result, the starting interest rates for these loans are much lower than the rates of loans that involve higher risks. Adjusted rate mortgages have the potential of becoming pricy, depending on the interest rate level. Interest rates on these mortgages are currently very low, due to the poor state of the economy. So, while Minnesotans' mortgages are less expensive on average than mortgages in other states, there is no guarantee that they will remain inexpensive in the future.

Specific Mortgage Laws in Minnesota

As of 2007, "no documentation" and "low documentation" mortgages and loans are prohibited in Minnesota. This law was a response to the skyrocketing rates of loan defaults.

In Minnesota, judicial and non-judicial foreclosures are both allowed. Those who choose judicial foreclosures must file a lawsuit. They are also required to obtain a court order for the foreclosed property to be sold. Mortgages that include power of sale clauses can be foreclosed by advertisement, provided the house is in default and there is no current lawsuit surrounding the foreclosure.