Montana Mortgage Rates

Living in Montana

Montana is known as “Big Sky Country,” and for good reason. In terms of sheer size, Montana is the fourth largest state in the U.S., but it ranks 44th in terms of population. The low population means that this is one of the best states to enjoy the great outdoors, and almost 30% of the state is comprised of public lands.

Montana housing prices have increased dramatically over the past two decades. According to the Bureau of Business and Economic Research at the University of Montana, from 2000 to 2015, the cost of housing increased in the state’s biggest cities: 77% in Billings; 69% in Missoula; 52% in Great Falls and 78% in Bozeman. Notably, Bozeman’s median home price is $347,900, 170% of the average home price in the U.S. The high prices may be due, in part, to the many second homes people own in Montana.

The average amount of time homes spent on the market is 107 days statewide, according to the real estate company Windermere, but this varies by area. In the Missoula metro area, for instance, homes spent an average of 159 days on the market in the early months of 2019; it was 156 days in 2018, when the city saw its second-highest level of sales activity in 10 years. Statewide, affordable housing is a concern, so if you see a home in your price range, it’s best to move quickly.

The rules and costs of buying a home in Montana

The laws around buying a home and dividing up property vary by state. Before you move forward in buying a home, take a moment to review Montana’s laws.

Home seller and buyer laws

If you are buying a home directly from an owner, keep in mind that sellers are not required to complete any formal disclosure forms other than the federally required lead disclosure and a mold disclosure if they know about the presence of mold. In other words, Montana is a caveat emptor (buyer beware) state, meaning courts typically won’t award damages to buyers who discover defects after purchasing. Real estate agents and brokers are required to disclose any material defects associated with the property, though.

Once you’ve found — and carefully inspected — a home and secured your financing, you’ll need to close on your home. Montana is an escrow state, which means that an attorney is not required to be present at closing. In Montana, escrow agents are licensed by the state’s Division of Banking and Financial Institutions. Attorneys and licensed accountants and mortgage brokers can also serve as escrow agents without getting licensed as an escrow agent.

If you are unable to keep up with your mortgage payments, you could be subject to foreclosure. Technically, Montana allows both judicial and nonjudicial foreclosures. In a judicial foreclosure, the lender files a lawsuit to foreclose. In a nonjudicial foreclosure, the lender must follow state procedures, but they do not have to go to court. However, most residential foreclosures in Montana are nonjudicial because they fall under the Small Tract Financing Act of Montana, which applies to properties of less than 40 acres. In nonjudicial foreclosures, you can’t be sued if the house fails to sell for enough to pay off your mortgage balance.

In the event of a divorce, Montana is an equitable distribution state. This means that the court divides a couple’s property “equitably,” which is not necessarily 50/50. The court takes into account the monetary and nonmonetary contributions of each partner, the employability of each partner and who is caring for any children, along with other factors.

Taxes

Montana has no real estate transfer tax (a tax paid in many states whenever real estate is sold); it is one of just 13 states that does not have a real estate transfer tax.

When it comes to real estate taxes, Montana has some of the lowest tax rates in the country. In fact, it’s ranked 29th in the nation in terms of the average amount of property taxes collected. It has no statewide property tax; instead, property taxes are determined at the county level. The median property tax bill in the state is $1,465 per year on a home worth the median value of $176,300.

Montana also offers several programs to help residents with their property taxes. The Property Tax Assistance Program reduces the property taxes of low-income or fixed-income residents, while the Montana Disabled Veterans Assistance Program helps disabled veterans and their unmarried surviving spouses with their property taxes. The state also has a program to assist homeowners who have experienced a natural disaster.

Conforming loan limits

For 2019, the conforming loan limit across Montana is $484,350. Although allowances are made for high-cost areas, all counties in Montana adhere to this limit.

A conforming loan is a loan that is eligible for purchase by Freddie Mac and Fannie Mae, two government-sponsored entities designed to stabilize the housing market. These loans have limits, which are adjusted each year based on the average price of a home in the U.S.

Programs for homebuyers in Montana

Montana offers several programs to help homebuyers secure the home of their dreams in Big Sky Country.

Regular Bond Loan Program

With this program, Montana Housing provides a 30-year, fixed-rate mortgage and pays 1% of the origination fee for federally guaranteed loans.

Who qualifies:

  • Borrowers must be first-time homebuyers (not owned a home any time in the last three years), unless they purchase a home in a targeted area.
  • Borrowers must meet income limits.
  • Borrowers must meet purchase price limits.

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Montana Veterans Home Loan Program

This program for qualified military veterans offers a 30-year, fixed-rate mortgage at 1% lower than the market rate. The maximum loan amount is $269,180. There are no income or purchase price limits.

Who qualifies:

  • Borrowers must be first-time homebuyers.
  • Borrowers must have served in the federal armed services or the Montana National Guard or be the surviving, unremarried spouse of a veteran killed in the line of duty.
  • Borrowers must have been discharged under honorable conditions.
  • Borrowers must contribute at least $2,500 toward the down payment or closing costs.
  • Borrowers must complete a homebuyer education class.

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Disabled Accessible Affordable Homeownership Program

This program offers a 30-year, fixed-rate mortgage to those with a permanent disability and their family members.

Who qualifies:

  • Borrowers must have a permanent disability, or be an immediate family member of a person with a permanent disability (required to live in home).
  • Borrowers must be first-time homebuyers unless they live in a targeted area.
  • Borrowers must have an income of $30,000 or less.
  • Borrowers must meet purchase price limits.
  • Borrowers must contribute at least $1,000.
  • Borrowers must have $50,000 or less in assets (certain adaptive equipment does not count toward the asset total).

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Board of Investments Residential Mortgages

Board of Investments Residential Mortgages offers a variety of mortgages, including 15-, 20- and 30-year term loans. There are no income limits.

Who qualifies:

  • Borrowers must meet Freddie Mac or Fannie Mae limits.
  • Borrowers must carry hazard insurance.
  • Property must be a primary residence and located in a residential neighborhood.

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80% Combined Program

This program offers a first mortgage for 80% of the purchase price and a second mortgage for the remaining 20% to those who qualify. This allows borrowers to avoid paying for private mortgage insurance.

Who qualifies:

  • Borrowers must be a first-time homebuyer, unless buying in a targeted area.
  • Borrowers must contribute at least 1% (or a minimum of $1,000).
  • Borrowers must income limits.
  • Borrowers must meet purchase price limits.
  • Borrowers must complete a homebuyer education class.

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Score Advantage Down Payment Assistance Program

The Score Advantage program provides up to $6,500 as a second mortgage to help cover a down payment.

Who qualifies:

  • Borrowers must meet the income and purchase price limits.
  • At least one borrower must have a credit score of 620 or higher.
  • First-time homebuyer education is required.

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MBOH Plus Deferred Down Payment Assistance Program

This program offers a second mortgage of up to $6,500 to qualified homebuyers. No payments are due until the home is sold, transferred or refinanced.

Who qualifies:

  • Borrowers must be a first-time homebuyer or live in a targeted area.
  • Borrowers must meet income and purchase price limits.
  • Borrowers must provide a minimum of $1,000 of their own funds.
  • Borrowers must have a credit score of at least 620.
  • Borrowers must have a debt-to-income ratio of less than 43%.
  • Borrowers must attend a first-time homebuyer education class.

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NeighborWorks Montana 20+ Community Second Program

This second mortgage program helps borrowers put down a larger down payment, which allows you to get a mortgage without having to pay for private mortgage insurance. You must work with a lender within the NeighborWorks network to qualify. The minimum loan amount is $10,000.

Who qualifies:

  • Borrowers must qualify for a first mortgage that covers 80% of the purchase price.
  • You must contribute 1% of the purchase price, or a minimum of $1,000, from your own funds.
  • Your liquid assets must be $7,500 or less, after adding your own funds..
  • Your family assets must be $100,000 or less.
  • Your household income must be at or below 120% of the HUD median income for your county or meet the requirements of your first mortgage, if those are more restrictive.
  • Your total payments must be 29% of your income or less.
  • Your total debt payments must be 41% of your income or less.
  • You must complete a NeighborWorks-approved homebuyer education class.

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NeighborWorks Montana STATE-HOME Deferred 2nd Mortgage Program

This program offers no-interest second mortgages to many Montana residents, and you can work with any lender who has an office in Montana. (Notably, this program is not available to those living in Billings, Great Falls or Missoula or in the following counties: Gallatin, Meagher, Mineral, Missoula, Park and Ravalli.) The minimum loan amount is $2,500 and the maximum is $25,000 ($40,000 if you have a disabled family member or if you live in Carbon or Flathead counties, or in the city of Red Lodge).

Who qualifies:

  • Borrowers must have an income of 80% or less of the area median income.
  • You must be a first-time homebuyer, a single parent with dependent children or have a disabled family member.
  • Your liquid assets must be $5,000 or less.
  • Your family assets must be $70,000 or less.
  • Your total housing payments must be 32% of your income or less.
  • Your total debt payments must be 41% of your income or less.
  • You must complete a NeighborWorks-approved homebuyer education class.

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NeighborWorks Montana Statewide Low & Moderate Amortizing Second Mortgage Product

This program is designed to assist borrowers with closing costs. Loans range from $1,500 to $10,000, and the loan terms are 15 or 30 years, depending on your level of income.

Who qualifies:

  • Your household income must be at or below 125% of the HUD median income guidelines for your county.
  • You must work with a participating lender.
  • You must complete a NeighborWorks-approved borrower education class.
  • You must contribute at least $1,000.
  • Your housing payments must be less than 32% of your household income.
  • Your total debt payments must be less than 41% of your household income.

Learn More

Rate shopping tips

Shopping for the lowest rate can save you thousands of dollars over the life of your loan. Here are a few tips to ensure you find the best rate.

Contact at least three lenders on the same day

The more lenders you contact, the better. To make an accurate comparison, though, contact all the lenders on the same market day, as mortgage rates change daily.

Give each lender the same information

Getting mortgage quotes is only helpful if you give each lender the same information regarding your income, assets and debts. You can further simplify the process by asking each lender for a quote on the same type of loan, such as a 30-year, fixed-rate mortgage.

Add up all the lender fees to confirm the costs

Review each quote carefully, looking for fees. Some lenders may charge higher origination fees than others, for example, which can drive up the overall cost of your loan. Some lenders may offer credits, which can lower your costs. It’s important to take all costs into consideration when comparing offers from lenders.

Know when to lock in the rate

Since mortgage rates fluctuate daily, it’s essential to know when to lock in your rate. Some lenders lock in your rate when they send you your quote, but be sure to verify. You can also ask your lender if they have a “float-down” provision, which allows you to get a lower interest rate if rates drop after your rate lock.

The information in this article is accurate as of the date of publishing.