Market Overview: Minnesota Housing Mid-Range
Minnesota ranks as a mid-range housing market, with a median home price of $337,891. The state's effective property tax rate of 1.10% is higher than the national average of 1.00%, and annual homeowners insurance averaging $2,628 falls above the US median of $2,201.
These three factors — price level, tax burden, and insurance costs — combine to shape the true monthly cost of homeownership in Minnesota. Below we break down a realistic purchase scenario using state-specific data.
🏡 Purchase Example: Buying a $337,891 Home in Minnesota
Using the state's median home price of $337,891, a 20% down payment, and a 6.5% 30-year fixed rate, here is the complete picture of what it costs to buy in Minnesota:
| Cost Component | Amount |
|---|---|
| Home Price | $337,891 |
| Down Payment (20%) | $67,578 |
| Loan Amount | $270,313 |
| Estimated Closing Costs (3.5%) | $11,826 |
| Total Cash Needed at Closing | $79,404 |
Monthly Payment (20% Down)
| Item | Monthly |
|---|---|
| Principal & Interest | $1,709 |
| Property Taxes (1.10%) | $310 |
| Homeowners Insurance | $219 |
| PMI (not needed at 20% down) | $0 |
| Total Monthly Payment | $2,237 |
Annual income needed (28% DTI): $96,000/yr
PMI Scenario: What If You Put Only 10% Down?
With a 10% down payment ($33,789), you'd have a loan of $304,102 and would need to pay Private Mortgage Insurance (PMI) at roughly 0.7% of the loan annually:
| Item | 10% Down | 20% Down (savings) |
|---|---|---|
| Principal & Interest | $1,922 | $1,709 |
| Monthly PMI | $177 | $0 |
| Total PITI+PMI | $2,628 | $2,237 |
The lower down payment costs you an extra $391/month (P&I + PMI). You would need $113,000/yr to qualify under the 28% DTI rule. PMI can typically be canceled once you reach 20% equity.
First-year interest: In year one, $17,481 of your payments go to interest alone. Over the full 30-year term, you'll pay $344,769 in total interest.
💰 State-Specific Cost Notes for Minnesota
Property taxes in Minnesota are 1.10%, meaning about $3,717/year ($310/month) on the median-priced home.Homeowners insurance in Minnesota averages $2,628/year ($219/month).
Closing costs in a mid-range market like Minnesota typically run 2%–4% of the purchase price — roughly $11,826 on a $337,891 home. This includes loan origination, appraisal, title insurance, escrow fees, and prepaid taxes/insurance.
Monthly Payment on a $337,891 Home in Minnesota
With a standard 20% down payment ($270,313 loan) and a 6.5% interest rate on a 30-year fixed-rate mortgage, your estimated total monthly payment comes to $2,237.
Monthly Payment Breakdown (PITI)
| Component | Monthly Cost | Annual Cost |
|---|---|---|
| Principal & Interest | $1,709 | $20,508 |
| Property Taxes (1.10% est.) | $310 | $3,720 |
| Home Insurance | $219 | $2,628 |
| Total Monthly Payment | $2,237 | $26,844 |
Income Required in Minnesota
Using the standard 28% front-end DTI rule, you'd need a gross annual income of approximately $96,000 to comfortably afford the median-priced home in Minnesota with 20% down at 6.5%.
How Interest Shapes Your Payments
In your first year, approximately $17,481 goes toward interest alone. Over the full 30-year term, you'll pay a total of $344,769 in interest.
Amortization Schedule — First 10 Years
| Year | Principal Paid | Interest Paid | Balance Remaining |
|---|---|---|---|
| Year 1 | $3,021 | $17,481 | $267,292 |
| Year 2 | $3,224 | $17,279 | $264,068 |
| Year 3 | $3,440 | $17,063 | $260,628 |
| Year 4 | $3,670 | $16,833 | $256,958 |
| Year 5 | $3,916 | $16,587 | $253,043 |
| Year 6 | $4,178 | $16,325 | $248,865 |
| Year 7 | $4,458 | $16,045 | $244,407 |
| Year 8 | $4,756 | $15,746 | $239,651 |
| Year 9 | $5,075 | $15,428 | $234,576 |
| Year 10 | $5,415 | $15,088 | $229,161 |
* Full 30-year amortization available in our interactive calculator.
❓ Frequently Asked Questions — Buying a Home in Minnesota
How much income do I need to buy a house in Minnesota?
With the median home price in Minnesota at $337,891 and a 20% down payment, you need roughly $96,000/year based on the 28% front-end DTI rule (total monthly housing costs of $2,237). If you put down 10%, the income requirement rises to about $113,000/year due to the higher loan amount and PMI.
What's the minimum down payment in Minnesota?
While 20% down ($67,578) avoids PMI, many Minnesota buyers opt for lower down payments. FHA loans require as little as 3.5% ($11,826), and conventional loans can go as low as 3%–5% ($10,137–$16,895). However, a 10% down payment ($33,789) would cost you $2,628/month — about $391 more than 20% down — due to PMI and a larger principal.
What are property taxes like in Minnesota?
Minnesota's effective property tax rate is 1.10%, which is moderate the national average of 1.00. On a $337,891 home, you'd pay approximately $3,717/year in property taxes ($310/month).
How much is homeowners insurance in Minnesota?
The average annual premium in Minnesota is $2,628, which is roughly in line with the US median of $2,201. This is a relatively affordable insurance market for homeowners. This adds $219/month to your payment.
What are the total closing costs for a home in Minnesota?
On a $337,891 home in Minnesota, expect to pay about $11,826 in closing costs. Combined with a 20% down payment ($67,578), you'd need approximately $79,404 in cash at closing. First-time buyers in Minnesota may qualify for down payment assistance programs or reduced closing costs through local housing authorities — check your state housing agency for available grants and low-interest loan programs.
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Disclaimer: This is an estimate for informational purposes only. Actual mortgage payments depend on your credit score, exact interest rate, property taxes, insurance premiums, PMI, and other factors. Sources: Zillow Q1 2025 (median home prices), ATTOM 2025 (property tax rates), Quadrant Information Services Feb 2025 (insurance premiums). Consult a qualified mortgage professional for personalized advice. See our full Disclaimer.