MinnesotaCertain investment-property mortgages avoid specified fee and penalty rules
Starting August 1, 2026, specified fee and penalty rules will not apply to qualifying investment-only residential mortgages executed on or after that date.
What it does
Certain investment-only mortgages secured by residential property are excluded from specified fee and penalty rules when no borrower-related person will occupy the property and the seller moves out.
A DSCR mortgage means a nonqualified mortgage on investment property approved mainly from expected property cash flow, rather than the borrower's personal income.
Argument forInvestment-property lenders and borrowers may face clearer fee and penalty treatment when the loan meets the stated occupancy and investment conditions.
Argument againstPeople using investment-property mortgages may lose protections tied to the excluded fee and penalty rules, even when the property is residential.
More detail
Specified fee and penalty rules do not apply to certain investment-property mortgages. The exception covers purchase-money, first-lien, or debt-service-coverage-ratio mortgages secured by residential property. The loan must be made only for investment purposes. No borrower, guarantor, or cosigner may intend to occupy the property. The seller may not continue living in the property after the sale. The exception applies to residential mortgage loans executed on or after August 1, 2026.
The law defines a debt-service-coverage-ratio, or DSCR, mortgage by the type of property and income used to approve it. A DSCR mortgage is secured by investment property and is not a qualified mortgage. The lender must base its decision on expected cash flow from the investment property rather than the borrower's personal income. This definition applies beginning August 1, 2026, to residential mortgage loans executed on or after that date.
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Where it stands
- Introduced
- Passed 1st Chamber
- Passed 2nd Chamber
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- Aug 1Effective date 08/01/2026Latest
- Apr 29Secretary of State Chapter 58 04/29/26
- Apr 29Governor Tim Walz's action Approval 04/29/26Major
- Apr 29Secretary of State, Filed 04/29/2026
- Apr 29Governor Tim Walz approval 04/29/2026Became Law
- Apr 28Presentment date 04/28/26
- Apr 28Presented to Governor 04/28/2026To Governor
- Apr 23Bill was repassed as amended by the Senate
- Vote recorded Repassage, as amended by the Senate. Result: pass.Lower
- Apr 23Third reading as amended by the SenateMinor
- Apr 23Motion prevailed
- Apr 23Motion to concur with Senate amendments
- Apr 23Returned from Senate with amendment
- Apr 22House rule 1.15 (c), message requesting concurrence received
- Apr 20Third reading Passed as amendedPassed 2nd Chamber
- Vote recorded Third reading Passed as amended. Result: pass.Upper
- Apr 20AmendedMajor
- Apr 20Special Order: Rule 45 amendment stricken
- Apr 15Second readingMinor
- Apr 15Comm report: Rule 45-amend, subst. General Orders SF4168
- Apr 14Referred to Rules and Administration for comparison with SF4168, now on General OrdersMinor
- Apr 14Introduction and first readingMinor
- Apr 14Received from HouseMinor
- Apr 13Bill was passedPassed 1st Chamber
- Vote recorded Passage. Result: pass.Lower
- Apr 13Third readingMinor
- Apr 9House rule 1.21, placed on Calendar for the Day Monday, April 13, 2026
- Apr 7Second readingMinor
- Apr 7Committee report, to adopt as amendedMinor
- Feb 17Introduction and first reading, referred to Commerce Finance and PolicyIntroduced
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