Minnesota Homebuyer Costs Explained: What You’ll Pay Before Closing

Uncovering Buyer Expenses 101: What Minnesota Homebuyers Should Expect

Buying a home is exciting—but the full list of upfront costs can catch many first-time buyers off guard. Most people focus on saving for the down payment, only to discover additional expenses as they begin making offers, scheduling inspections, and preparing for closing.

This guide breaks down the most common homebuyer expenses in Minnesota so you know what to expect, how to budget, and where you may have options to reduce costs.

When you understand these pieces early, you can shop confidently and avoid surprises along the way.

Key Takeaways

• Expect more than just a down payment—plan for inspections, insurance, and closing costs.
  
  
• Several loan programs in Minnesota allow low or no down payment options.
  
  
• Earnest money is refundable in many scenarios, but still requires upfront cash.
  
  
• Closing costs often total 2%–3% of the purchase price.
  
  
• Knowing these expenses helps you make stronger, clearer decisions when writing offers.
  
  
  
  

How Much Should a Minnesota Buyer Save for a Down Payment?

Down payments remain the largest expense in most home purchases. While many people assume 20% is the standard, that’s just one option.

Typical down payment paths include:

• Conventional loans: Often 3–20% down
  
  
• FHA loans: Minimum 3.5% down
  
  
• VA loans: 0% down for eligible buyers
  
  
• Down payment assistance programs: Offered through Minnesota Housing, local counties, and some cities
  
  

Example: A 3.5% down payment on a $300,000 home equals $10,500.

A good Twin Cities mortgage lender can help you compare programs and determine which options offer the best mix of affordability and long-term benefits.

What Is Earnest Money and When Do You Pay It?

Earnest money shows sellers you’re serious about your offer. In the Twin Cities, the typical range is 1%–2% of the purchase price.

Example: About $3,000 on a $300,000 home.

Key notes:

• It’s usually due within a few days of offer acceptance.
  
  
• It’s applied toward your closing costs or down payment at closing.
  
  
• It’s generally refundable if you cancel within your inspection or financing contingencies.
  
  

Earnest money isn’t an “extra cost”—but you do need cash available at the time of your offer.

How Much Do Home Inspections Cost in Minnesota?

A home inspection is one of the smartest investments you can make. In Minnesota, most inspections run $300–$600, depending on:

• Home size
  
  
• Age of the home
  
  
• Additional tests (radon, sewer scope, chimney)
  
  

Some buyers choose a home warranty instead or in addition, typically around $600–$800 for a year of coverage. This can help cover unexpected repairs during your first year of ownership.

What Does Homeowners Insurance Cost Before Closing?

Your lender will require you to secure a homeowners insurance policy before closing. Costs vary based on:

• Location
  
  
• Age and features of the home
  
  
• Coverage level
  
  
• Deductible
  
  
• Credit score
  
  

Many Minnesota buyers pay the first year’s premium at closing, or it may be included in your escrow account and paid monthly.

Shopping between multiple insurance companies can save hundreds of dollars per year.

What Are Typical Minnesota Closing Costs?

Closing costs include a mix of lender fees, title charges, prepaid taxes, insurance, and other administrative items. Minnesota buyers commonly pay 2%–3% of the purchase price, though it varies by loan type.

Example: On a $300,000 home, that’s roughly $6,000–$9,000.

Your lender will give you a detailed Loan Estimate early in the process so you can plan ahead and understand every line item.

What’s Unique About Buyer Costs in Minnesota?

Minnesota has a few quirks that buyers should be aware of:

• Winter purchases may limit inspections (like roof reviews) until snow melts.
  
  
• Radon tests are common due to regional soil conditions.
  
  
• Many Twin Cities homes are older, making sewer scopes and chimney inspections more common.
  
  
• Property taxes vary widely by county—budgeting early helps avoid surprises.
  
  

Understanding these regional differences helps you prepare more accurately than using generic national guidance.

Need Help Breaking Down Your Buyer Costs?

Buying a home is a major milestone—and you shouldn't have to navigate the numbers alone. If you’d like a personalized expense breakdown or want help comparing down-payment and financing options, the team at First Choice Realty Solutions is here to guide you.

Reach out anytime to start your Minnesota homebuying plan—simple, clear, and tailored to you.