A First-Time Homebuyers' Guide to Rochester, MN

Key takeaways:

Rochester, Minnesota, is home to the Mayo Clinic, which accounts for more than 34,000 staff and students in the area.
The world-class medical center helps keep the local real estate market competitive, with properties in the $300,000 price range moving quickly.
Working with a local loan officer in Rochester and getting pre-qualified can help you move quickly when you find a home that fits your needs.

Rochester, Minnesota is best known for being home to the world-renowned Mayo Clinic. But while the top-notch healthcare facility anchors this Minnesota town, there are even more reasons for first-time homebuyers to consider Rochester, from a range of urban and outdoor activities to historical attractions to its gorgeous riverside setting.

“The Rochester real estate market remains competitive because so many healthcare employees move to the area,” says Shawn Bohlsen, Old National Bank Mortgage Sales Director. While some of the highest-end homes are staying on the market for longer, there’s still competition for lower- to mid-priced homes that appeal to first-time buyers.

For buyers interested in putting down roots in Rochester, it's critical to prepare for the homebuying process in advance. Researching the local real estate market, getting pre-qualified for a mortgage, and taking advantage of down payment assistance and other loan programs can ensure that when you find the right home, you’re ready to make an offer.

Competition Depends on Your Price Point

Rochester’s real estate market relies on a steady influx of healthcare workers headed to the Mayo Clinic. According to RedFin, the average home sells within 17 days for around its list price, while homes in competitive price points are selling within a week, often above asking price. The median home price in Rochester is $349,691, a 6.3% increase over the past year.

Bohlsen notes that competition within the first-time homebuyer price ranges can be hot, primarily because of declining inventory. Many homeowners with homes in the $250,000 to $300,000 price range currently have exceptionally low interest rates on their mortgage, and are less motivated to sell. “If there’s a home that does come on the market in that sweet spot, it goes fast,” he says.

Conversely, Bohlsen says homes priced at $900,000 or above are sitting on the market for longer. For some medical professionals, that may be the price range they’re looking in; lower demand can work to their advantage when it comes to negotiating a home purchase.

World-Class Healthcare Anchors Rochester’s Economy

As noted, Rochester’s economy centers on the presence of the Mayo Clinic, which accounts for more than 34,000 staff and students. The clinic also draws more than a million patients to the area annually, driving the growth of the downtown area as well as supporting related economic industries such as hospitality.

A 20-year, $5.6 billion economic development initiative called Destination Medical Center will spur even more economic expansion and population growth. Much of that investment is centered on Rochester's downtown core, which is marked by cranes and construction projects.

“It’s a thriving community, with a lot being built and more to come,” Shawn says.

Finding success in Rochester real estate

There are multiple reasons why Rochester is a fantastic place to buy a home. Follow these tips to ensure you find the best property for you and your needs:

Determine Your Budget

Shawn says the most important thing a first-time homebuyer can do is to figure out what they can afford before they begin shopping. “You want to know what you’re comfortable with,” he says.

Fortunately, this isn’t work that you need to do alone. Old National Bank loan officers can help guide first-time homebuyers through the process, including determining your price range and how that correlates to an eventual mortgage payment. Factors that impact the latter include how much money you put down, whether you need mortgage insurance (a requirement if you're putting less than 20% down), and HOA fees. “Our experienced loan officers can help people navigate hurdles and figure out what’s best for them,” Shawn says.

Get Prequalified for a Mortgage

Once you know how much you can afford, you can move toward prequalifying for a mortgage. This is especially important when you’re shopping in competitive markets such as Rochester. “We want to see buyers pre-qualified before they ever begin shopping,” Shawn says. “That way, they don’t fall in love with a house that’s not possible.” The prequalification can reassure sellers that you’re financially capable of purchasing the home. It also gives buyers a set of helpful parameters for home shopping.

Familiarize Yourself with the Local Market

Whether you’re coming from another part of Minnesota or another part of the country, take the time to research the neighborhoods that make sense for you — and their respective home prices.

For instance, areas near downtown such as Pill Hill, Kutzy Park, and Slattery Park make for an easy commute to the Mayo Clinic. You can find newer homes and more housing developments on the edge of town, in places such as Mayo Woodlands, Windemere Woods, Crimson Ridge, and more. Country Club Manor and Elton Hills offer older homes in the $300,000 price range, while downtown and areas such as Historic Southwest and Viking Park are good options for condominiums.

Consider Down Payment Assistance Programs

Down payment assistance programs can help lessen your monthly payment and even make a purchase possible. Old National offers a Mortgage for Professionals² loan program for eligible borrowers, including physicians, dentists and professors. The program provides up to 100% financing on loan amounts up to $1,000,000 for current professionals and up to $806,500 for new professionals. Our down payment assistance program² offers up to 3% of your home’s purchase price (up to $10,000) to qualified buyers for homes in specific geographic areas, which include parts of Rochester.

Buy Your First Home in Rochester

Rochester offers first-time home buyers an enticing mix of professional opportunities and a high quality of life with a small-town feel. Connect with the loan officers at Old National Bank to help you find and buy a home in this Minnesota gem.

¹Subject to credit review and approval. Property insurance required. Some restrictions may apply and program conditions subject to change without notice. Rates are subject to change daily. Available on first mortgage purchase transactions on owner-occupied residences. Contact an Old National Mortgage Lender for product details. NMLS #459308.

²Funds are limited; subject to availability. Amounts applicable in the eligible following counties (IL) Cook, DuPage, Grundy, Kane, Kendall, Lake, and Will; (MI) Kent and Washtenaw; (IN) Allen and Marion; (MN) Hennepin and Ramsey; (KY) Jefferson; (TN) Cannon, Davidson, Hamilton, Knox, Rutherford, Sumner and Williamson; (WI) Dane and Milwaukee. Specific census tracts and other restrictions may apply. Program conditions subject to change. Old National reserves the right to discontinue program at any time.

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