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2022 Montana First-Time Homebuyer Programs

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Montana offers first-time homebuyers programs to help people afford down payment costs and find affordable mortgage options. Most of the programs are designed to help low to middle-income families, and they come with restrictions on where you can buy, how much (or little) you must earn, and occupancy terms to qualify. Learning about Montana’s program’s rules can help you decide if one of their first-time homebuyer programs could be right for you.

Montana statewide and local first-time homebuyer programs

Montana’s main first-time homebuyer assistance loan programs are available through Montana Housing. The loans are often 30-year fixed programs, and borrowers can take out additional second mortgages in the form of cash to help pay for down payments and closing costs. Eligible potential homebuyers must work with Montana Housing-approved lenders to access the agency’s opportunities. Montana Housing partners with local organizations across the state and provides information on federal housing programs to create equal housing opportunities.

Program nameAssistance amountAssistance typeWhere it’s available
Regular Bond Loan ProgramDepends on the loan, and purchase price limitLow interest ratesAll counties in Montana
Bond Advantage Down Payment Assistance ProgramAvailable for up to 5% of sales price, maximum $12,50015-year amortizing loan with low monthly paymentsAll counties in Montana; you must use with the Regular Bond Loan program
Montana Veterans’ Home Loan ProgramCurrent maximum loan amount is $349,205Low-interest, fixed-rate 30-year mortgage loanAll counties
**80% Combined ProgramFirst mortgage 80% of the purchase price/second mortgage covers 20% remainder of costAffordable financing/low-interest rates (3.75%, subject to change)All counties
NeighborWorks Montana HOME program (down payment and closing cost assistance)Loans available between $2,500 and $25,000 - designed to cover closing costs and down payments.0% deferred 15-year loansAnaconda-Deer Lodge, Broadwater, Butte-Silver Bow, Carbon, Cascade, Fergus, Flathead, Glacier, Hill, Lake, Lincoln, Lewis and Clark, Pondera, Stillwater and Yellowstone – Cities approved are: Baker, Choteau, Columbia Falls, Columbus, Havre, Helena, Kalispell, Laurel, Lewistown, Miles City, Red Lodge and Whitefish
*MBOH Plus 0% Deferred Down Payment Assistance ProgramAvailable for up to 5% of sales price, maximum $10,0000% loan, no monthly payments (Due upon transfer/sale of property or refinance/payoff/of the first loan)Statewide

*Must be used in conjunction with a Montana Housing first-mortgage. 
**Alternative to an FHA loan. 

What to know about different types of down payment assistance

Many first-time homebuyer programs offer some form of payment assistance to help you get the cash you need for a down payment or to cover closing costs.

Most of Montana Housings down payment assistance programs provide 0% interest second loans, which you take out on top of your mortgage. These loans don’t accrue interest, and you don’t have to pay them back until you sell or refinance your home. Some programs only call for buyers to contribute $1,000 of their own money. The rest can come from assistance program loans. While Montana Housing doesn’t offer housing grants, some programs do. Payment assistance grants don’t need to be paid back at all.

Here’s how each type of down payment assistance works.

Forgivable or zero-percent interest second mortgage. There are two types of second mortgages often offered in conjunction with a homeownership assistance program. When a second mortgage is taken out, you typically must live there for a set number of years. Some second mortgages are 100% forgivable after a certain number of years. Most zero-percent or low-interest loans require you to pay off the loan when you sell or refinance your house, with no interest charged.

Low-interest home loans. Montana Housing provides interested potential buyers with a list of participating lenders who do the background work (like confirming property and income qualifications) and close the low-interest home loan. Montana Housing purchases the loan from the lender. The loans are serviced either via the lender or Montana Housing. The home loan options from Montana Housing are affordable due to the low interest rates, lower closing costs and assistance provided by the program terms.

Grant. Unlike a second mortgage, no lien is recorded against your home if you use grant money. Many grants require you to live a specific number of years in your home. If you default on your mortgage or sell or refinance before the grant terms, you may have to pay the grant back.

How Montana first-time homebuyer programs work

Here are five steps you must take to qualify for Montana’s first-time homebuyer programs.

  1. Obtain a mortgage through an approved lender.You must use a specified lender to participate in the state’s programs. If you plan on using one of the down payment assistance programs, you will have to meet all the loan requirements to qualify for your first mortgage.
  2. Complete your homebuyer education courses.Montana Housing and Neighbor Works programs typically require completing a homebuyer education course. Information on where and how to take the classes is listed on the programs’ websites. You may be able to skip some of Montana Housing’s programs with a high enough credit score.
  3. Learn the income limits.All Montana Housing and NeighborWorks programs have strict income limits depending on where you want to purchase in the state.
  4. Learn the purchase limits.Some of the programs have purchase limits on the loans. Learn how much home you can buy using these programs before you start house-hunting.
  5. Establish a length of stay.Some programs ask you to remain put for a certain amount of time to avoid having to pay off your loan early. If you move or refinance before the time is up, you may find yourself having to pay back some or all of the loan.

Montana’s first-time homebuyer program requirements

Montana’s programs call for homebuyer education courses, and you must meet specific requirements, such as a minimum credit score, income thresholds and debt-to-income ratio criteria. The table below contains the basic program requirements for housing assistance in Montana.

Program name Credit score minimumDTI ratio maximumMaximum income limitHow long you have to live in home
Regular Bond LoanVaries by lenderVaries by lender$73,300 (for a one- to two-person household); $110,740 (Three-plus person household)N/A
Bond Advantage Down Payment Assistance Program620N/A (but will have to meet DTI requirement for first mortgage based on which lender you use)$73,000 (for a one- to two-person household); $110,740 (Three person household)N/A
Montana Veterans’ Home Loan ProgramN/AN/A*No income, asset or purchase price limitsN/A
80% Combined Program64045%$73,000 (for a one- to two-person household); $110,740 (Three-plus person household)N/A
NeighborWorks Montana HOMEAsk lenderAsk lenderHouseholds with income at or below 80% of the county median income, based on family size15 years
*MBOH Plus 0% Deferred Down Payment Assistance Program62043%$55,000 for one to two individuals and $65,000 for three-plusN/A

*Current maximum loan amount is $349,205 (Effective Feb. 14, 2022) and no condos.

Things you should know

If you plan to use a Montana Housing first-time homebuyer program, it’s essential to understand the median income limits for the area in which you want to live. Search Montana’s income limits by using the Department of Housing and Urban Development (HUD) website’s lookup tool and entering your state and county information.

National first-time homebuyer programs

Montana’s programs require you to obtain a mortgage. You may qualify for affordable government-backed loans (in addition to these programs). Many of these national programs are aimed at helping potential first-time buyers afford their first homes.

Conventional loans. Unlike the other programs on this list, conventional loans aren’t backed by a government agency. As a result, they come with more stringent qualifying requirements. If you want to use a conventional mortgage, look at the Fannie Mae HomeReady and Freddie Mac Home Possible programs. These are two popular homebuyer loans because they have cancelable mortgage insurance.

FHA loans. Borrowers often use a Federal Housing Administration (FHA) loan because it only calls for 3.5% of the purchase price down. If you have a lower credit score (580 or above), you won’t necessarily be rejected. FHA loan limits are lower than conventional mortgage limits, plus you are required to take out two forms of mortgage insurance.

VA loans. The U.S. Department of Veterans Affairs (VA) guarantees VA loans. VA loans are the most flexible of the government-backed loan programs because they call for no down payment, no mortgage insurance and, unlike FHA loans, no limits on the amount you can borrow. You can only use these if you are a veteran or an eligible spouse.

USDA loans. The U.S. Department of Agriculture (USDA) loan requires no down payment, but you may have to pay guarantee fees. These loans can only be used in specific rural parts of the state.

FAQs about Montana’s first-time homebuyer programs

Who qualifies as a first-time homebuyer in Montana?

To qualify as a first-time homebuyer in Montana, you cannot have owned a principal residence in the past three years.

Can I qualify for down payment assistance in Montana?

You can qualify for Montana Housing assistance by meeting the income and purchase price limits and being willing to take part in the homebuyer education classes.

How much of a down payment do I need to buy a house in Montana?

The amount of down payment you need depends on the program and mortgage you use. If you take out an FHA mortgage, you will need only 3.5% of the purchase price. An 80% Combined Payment program allows you to borrow most of your down payment costs.

Home price trends in Montana’s major areas

Montana home prices rose to nearly all-time highs in 2021. The state’s home prices continue to experience an upswing. For example, in Gallatin County (Bozeman, Montana), the median home listing price was up 26% from the fourth quarter of 2020 to the same quarter in 2021, to $565,664. This translates to an average monthly mortgage payment of $2,168, up from $1,662 a year earlier. In one year, the payment rose by $506, according to data from the National Association of Realtors. In Louis and Clark County, prices rose 26% year-over-year to $381,707. The monthly mortgage payment was $1,463, up from $1,122 the year prior.

 

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