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Montana First-Time Homebuyer Programs of 2019

Buying your first home can be stressful — not only is there a lot of house hunting to do and a ton of paperwork to wade through, but the upfront costs can be hefty. As a new buyer, you should be aware of the assistance for which you may be eligible as you start on the path to homeownership.

Montana offers several programs and incentives designed to make homeownership more accessible by meeting and addressing the common needs and challenges new buyers often face.

In this guide, we will cover:

Montana first-time homebuyer programs

Montana’s multiple loan programs are available through Montana Housing — a part of the Montana Department of Commerce. In some cases, the agency partners with local nonprofits to provide buyers further program benefits. Homebuyers access the various programs by working directly with participating lenders.

In January 2019, we researched current information on first-time homebuyer programs in Montana, which included reviewing program websites and the Montana Department of Commerce guidelines. Here’s what first-time homebuyers in Montana need to know.

Eligibility for Montana assistance

The programs offered by Montana Housing aim to help homebuyers who are typically underserved by traditional financing. Most of the programs are income-sensitive, have limits on the purchase price of the home or provide incentives for buying in specific locations.

The following criteria must be met to qualify for Montana Housing programs, unless specified differently within each program description.

  • Borrower must be a first-time homebuyer (defined as not having owned a principal residence in the past three years). Buyers who own a manufactured home that is not on a permanent foundation qualify as first-time buyers.
  • First-time homebuyer requirement is waived if purchasing in specific “targeted areas”  (Counties: Blane, Sanders, Deer Lodge, Silver Bow, Flathead, Mineral, Missoula and Hill; census tracts: Gallatin County 6 & 11.01 and Lincoln County 2; City of Great Falls)
  • Maximum income limits range between $67,500 and $113,680, depending on household size and county or area. (Exceptions are noted within program descriptions.)
  • Maximum purchase price ranges between $271,165 and $429,647, depending on the county or area. (Exceptions are noted within program descriptions.)
  • Home must be owner-occupied.

Regular Bond Loan Program

Features

  • Low mortgage rates
  • Reduced lender fees

Eligibility

  • Homebuyer education classes may be required depending on income and debt-to-income ratio (DTI).
  • Property can be a single-family residence, condo, townhome or manufactured home if it was made post-1976, is de-titled and is on a permanent foundation.
  • New construction is allowed.
  • Additional requirements are based on credit scores, DTI and payable down payment; these are dependent on the lender and loan program.

How it works

Montana Housing provides low, fixed interest rates and pays a portion of the loan origination fee for federally guaranteed loans. In some cases, the housing agency services the loans. Borrowers can combine federal loans with some of the other available programs. Apply through a Montana Housing participating lender.

Score Advantage Down Payment Assistance

Features

  • Down payment assistance
  • Closing cost assistance
  • First and second mortgage at the same interest rate
  • Reduced lender fees

Eligibility

  • First mortgage must be insured or guaranteed by FHA, VA, USDA RD or HUD-184.
  • Minimum middle credit score of 620 for at least one borrower (borrowers with higher scores receive lower rates) is required.
  • Borrowers with no credit history may be eligible.
  • Borrower must contribute a minimum of $1,000 (gifted funds may be used).
  • Buyers must attend homebuyer education classes.
  • Property can be a single-family residence, condo, townhome or manufactured home if it was made post-1976, is de-titled and on a permanent foundation.
  • New construction is allowed.

How it works

Buyers can borrow some of the funds needed for a down payment or closing costs with a “junior loan” starting at $1,500 up to $6,500 (5% of the purchase price maximum). There’s a $175 application fee for the second mortgage. Apply through a Montana Housing participating lender.

NeighborWorks Montana Down Payment Assistance

Features

  • Down payment assistance
  • Closing cost assistance
  • Low interest rates (rates dependent on borrower’s income range)

Eligibility

  • Available statewide, except Cascade County
  • First-time homebuyer requirement not mandatory for Amortizing Second Mortgage Program (ASMP)
  • Must be single head of household with dependent children or have a disabled family member (single head of household status required for Temporary Assistance for Needy Families program [TANF])
  • May not be eligible for TANF program if already receiving TANF cash assistance
  • Must be within established income limits based on exact program, family size and county
  • Total purchase price cannot exceed $236,840
  • Borrower’s assets limited to $5,000 liquid cash and $70,000 total family assets
  • 41% maximum debt-to-income (DTI) ratio unless valid compensating factors apply
  • Up to 105% loan-to-value (LTV) allowed without valid compensating factors
  • Borrowers must provide a minimum down payment of $1,000
  • Must complete NWMT-approved homebuyer education course

How it works

Montana Housing and NeighborWorks Montana partner to offer homebuyers closing cost and down payment assistance through a second mortgage ranging from $1,500 to $20,000. Apply through a Montana Housing participating lender, or contact NeighborWorks Montana.

MBOH Plus 0% Deferred Down Payment Assistance

Features

  • Down payment assistance
  • Closing cost assistance
  • Reduced lender fees
  • 0% interest on second mortgage
  • Deferred payments (second mortgage is due in full upon sale, transfer of property, or refinance of first mortgage)

Eligibility

  • Must be eligible for Montana Housing financing under the Regular Bond Program
  • Minimum middle credit score of 620
  • 43% maximum DTI ratio
  • Borrower must contribute a minimum of $1,000 (gifted funds may be used)
  • Buyers must attend homebuyer education classes
  • Property can be a single-family residence, condo, townhome or manufactured home if it was made post-1976, is de-titled and on a permanent foundation
  • New construction allowed

How it works

Borrowers can take advantage of a 0% interest second mortgage up to $6,500 (or 5% of the purchase price) with deferred payments to help cover down payment or closing costs. There is a $100 application fee for the second mortgage. Apply through a Montana Housing participating lender.

80% Combined Program

Features

  • Low down payment
  • No mortgage insurance
  • Low mortgage rates

Eligibility

  • 640 minimum credit score
  • 41% maximum DTI ratio unless other circumstances are met
  • Borrower must contribute a minimum of $1,000 (gifted funds may not be used)
  • Buyers must attend homebuyer education classes
  • Property can be a single-family residence, condo, townhome or manufactured home if it was made post-1976, is de-titled and on a permanent foundation (single-wide mobile homes not permitted)
  • New construction permitted

How it works

This program assists borrowers who face the challenge of coming up with a down payment by combining a first mortgage for 80% of the purchase price with a second mortgage for the remaining 20%. Apply through a Montana Housing participating lender.

Board of Investments (BOI) residential mortgages

Features

  • 15-, 20- and 30-year term loans available
  • Flexible borrower eligibility

Eligibility

  • No income limits
  • Borrower eligibility based on Freddie Mac or Fannie Mae guidelines
  • Must be borrower’s primary residence
  • Must be in a residential neighborhood
  • Can be one- to four-family units

How it works

Montana Veterans Home Loan Mortgage Program

Features

  • Low mortgage rates (fixed rate is a full 1% lower than market rates)
  • No income, asset or purchase price limits

Eligibility

  • Must have served in the federal armed services or Montana National Guard (or be a surviving spouse of a deceased, eligible veteran killed in the line of duty)
  • Must be a Montana resident maintaining a permanent place of abode in the state
  • Maximum loan amount of $257,607
  • Borrower must contribute a minimum of $2,500 (can be gifted)
  • Buyers must attend homebuyer education classes
  • Property can be a single-family residence or manufactured home if it was made post-1976, is de-titled and on a permanent foundation (no condos or single-wide mobile homes)
  • New construction is allowed

How it works

This program provides funding to residents who are currently serving or have served in the federal armed forces or Montana National Guard, with fewer restrictions than other Montana Housing programs. Apply through a Montana Housing participating lender.

Disabled Accessible Affordable Homeownership Program

Features

  • Low mortgage rates
  • Reduced lender fees

Eligibility

  • Homebuyer or an immediate family member must have a permanent physical disability (If immediate family member is disabled, buyer must live in the home)
  • Maximum gross annual income of $30,000 (after specific exclusions)
  • Assets limited to $50,000
  • Borrower must contribute a minimum of $1,000
  • Property can be a single-family residence, condo, townhome or manufactured home if it was made post-1976, is de-titled and on a permanent foundation
  • Property must incorporate accessible features to accommodate the borrower’s or disabled family member’s physical disability
  • New construction allowed

How it works

Apply through a Montana Housing participating lender.

Habitat for Humanity

Features

  • Low mortgage rates
  • No mortgage insurance

Eligibility

  • Single-family homes only
  • New construction allowed

How it works

Mortgage credit certificate

Features

  • Tax credit

Eligibility

  • Property can be a single-family residence, condo, townhome or manufactured home if it was made post-1976, is de-titled and on a permanent foundation
  • New construction is allowed
  • Cannot be used in conjunction with other Montana Housing programs
  • Additional eligibility criteria established by lender

How it works

Borrowers can maximize their buying power and increase their take-home pay with a dollar-for-dollar federal tax credit for 20% of mortgage interest paid (up to $2,000). There is a $750 application fee for this program. Apply through a Montana Housing participating lender.

National first-time homebuyer programs

In addition to these state programs, new homebuyers can also take advantage of several federal loan programs aimed to meet their needs, including  FHA, VA and USDA loans. Be sure to familiarize yourself with the national programs available.

 

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