Mortgage Vs. Contract for Deed in Minnesota

Understanding Your Options

Remember: Both have pros and cons, so research and consult a professional. Always read and understand the terms before signing any contract.

Minnesota has resources, including help to cover costs for down payments and closing costs.

More info: Minnesota Housing

2023 Contract for Deed (.pdf)

Mortgage

You borrow money from a lender to buy a home.
Typically requires a down payment.
You make monthly payments with interest.
You own the home from day one.
You can build equity and get tax benefits.
You have foreclosure rights if you are late or miss a payment

Contract for Deed

You agree to buy the home from the seller over time.
You make regular payments to the seller.
You don’t own the home until the contract is complete. This often requires a large lump sum, or ‘balloon’ payment.
If you fail to make any of the payments, the seller can cancel the contract and evict you quickly.
Generally higher interest rates.
Limited tax benefits, and you may not be able to access equity.

Which Is Right for You?

Choose a mortgage if you want ownership and tax benefits.
Consider a contract for deed if you are not ready for a mortgage.
Read the terms carefully. Always read and understand the terms before signing any contract.
Get help if needed.