Montana First-Time Homebuyer Assistance Programs

Pierrette Guertin/Shutterstock

Skiing, biking, hiking, camping and more — if you live in Montana, you have a host of reasons to enjoy the outdoors. The big sky can’t be your only roof, though. If you’re a first-time homebuyer in the state, Montana Housing — the state’s housing finance authority — has a range of programs that can work with conventional, FHA, VA, USDA or Section 184 loans to make buying your first home more affordable.

Montana first-time homebuyer programs

Montana Housing considers you a first-time homebuyer as long as you haven’t owned a home in the last three years. If that description fits you, consider contacting Montana Housing to apply to one of these programs:

Montana Housing Regular Bond Program

Montana Housing’s main mortgage program for first-time homebuyers is the Regular Bond Program, which offers a low interest rate on a 30-year fixed-rate loan.

• Requirements
  

  • Annual household income can’t exceed Montana Housing limits, which vary based on household size and the home’s location
  • Homebuyers must first qualify for an FHA, VA, RD or HUD 184 first mortgage loan
  • Must complete a homebuyer education course if all of the following apply: your credit score is below 680; your front-end ratio (debt-to-income ratio) is above 31 percent; and your back-end ratio is above 41 percent

• Pros and cons
  

  Pros

  • Open to single-family homes, condos, planned unit developments or manufactured homes
  • Provides low interest rates

  Cons

  • Can’t be used with a conventional loan

Montana Housing 80% Combined Program

The 80% Combined Program allows first-time homebuyers to pair a Montana Housing-approved loan for 80 percent of the purchase price with another loan that covers the remaining 20 percent of the price. The second loan comes from one of the agency’s partners, such as NeighborWorks Montana. You must meet the same Montana Board of Housing income requirements that apply to the Bond program.

• Requirements
  

  • Must contribute at least 1 percent of the purchase price with your own funds, with a $1,000 minimum
  • Minimum credit score of 640
  • Maximum front-end ratio of 32 percent and back-end ratio of 45 percent
  • Must complete homebuyer education course
  • Must adhere to the same income and purchase price limits that apply to the Regular Bond program

• Pros and cons
  

  Pros

  • Open to a variety of property types
  • Eliminates need for mortgage insurance

  Cons

  • Must contribute at least 1 percent of purchase price with your own money ($1,000 minimum)

Montana Veterans’ Home Loan Program

If you’re a veteran in Montana and buying your first home, you could be eligible for the Montana Veterans’ Home Loan Program, which comes with an attractive below-market rate. This program is first-come, first-served. Speak with your mortgage lender to get the latest on availability.

• Requirements
  

  • Must be an eligible veteran buying your first home
  • Must be a Montana resident
  • Must contribute at least $2,500 of your own funds to the purchase
  • Must complete homebuyer education course

• Pros and cons
  

  Pros

  • Lower interest rates
  • No income or purchase price limits

  Cons

  • Limited property types (no condos)
  • Must put at least $2,500 of your own funds toward the purchase
  • Must maintain property as your primary residence for the duration of the loan
  • Limited funds available

Montana down payment assistance and grants

If you’re paying monthly rent, you might be comfortable making a similar monthly mortgage payment, but not accumulating enough for a down payment and closing costs. To help you with that upfront expense, Montana Housing offers two down payment assistance options. To qualify for either, you’ll first need to be eligible for the Regular Bond Program.

Bond Advantage Down Payment Assistance Program

The Bond Advantage assistance program is a 15-year loan with monthly payments. You can get this loan for up to 5 percent of your home’s sale price, with a maximum of $15,000, for your down payment and closing costs.

• Pros and cons
  

  Pros

  • Up to $15,000 in assistance
  • Can be used for the down payment and closing costs
  • The required cash investment of $1,000 can come from gift funds

  Cons

  • Requires repayment on a monthly basis

MBOH Plus 0% Deferred Down Payment Assistance

With the MBOH Plus 0% Deferred option, you can receive up to 5 percent of your home’s sale price, up to a maximum of $15,000. The main difference between this and the Bond Advantage program is a lack of monthly payments. Instead, you must repay the assistance amount when you sell your home or pay off or refinance your first mortgage. There are no additional interest charges.

• Pros and cons
  

  Pros

  • Up to $15,000 in assistance
  • Can be used for the down payment and closing costs
  • Repayment deferred until you sell the home
  • Comes with zero interest
  • The required cash investment of $1,000 can come from gift funds

  Cons

  • Must repay the funds if you sell the home or refinance before the loan term ends
  • Comes with a $175 application fee

City-specific homebuyer assistance programs

City of Billings First-time Home Buyer Program

The City of Billings offers zero-interest, deferred-payment loans of up to $15,000 to first-time homebuyers. To qualify, you’ll need to meet certain income limits, and the funds are available on a first-come, first-served basis. Preference is given to large families and households with at least one person with a disability.

• Requirements
  

  • Annual household income can’t exceed program limits, which vary by household size and range from $41,400 to $104,050
  • Must contribute a minimum of $1,000 to $2,500 of your own cash to the home’s purchase
  • Must not have more than $15,000 in assets
  • Must attend a homebuyer education course

• Pros and cons
  

  Pros

  • Up to $15,000 in assistance
  • Can be used for down payment and closing costs
  • Zero interest loan
  • No monthly payments; repayment deferred until you sell the home

  Cons

  • Must contribute $1,000 of your own funds to the home purchase
  • Can’t have more than $15,000 in assets

Mineral, Missoula and Ravalli Counties: Human Resource Council Down Payment Assistance Program

First-time homebuyers in Mineral, Missoula or Ravalli counties may be eligible for up to $35,000 in down payment assistance. This is a deferred payment simple interest loan, and payment isn’t required until the mortgage is paid off or refinanced. The Human Resource Council states it will only provide the minimum assistance required to enable you to buy a modest home.

• Requirements
  

  • Annual household income can’t exceed program limits, which vary by county and household size and range from $48,100 to $89,500
  • Purchase price can’t be above $238,000 for Mineral county, $404,000 for Ravalli county or $445,000 for Missoula county
  • Must contribute a minimum of 3 percent of the purchase price toward the down payment
  • Must not exceed a debt-to-income ratio of 42 percent
  • Must attend a homebuyer education course

• Pros and cons
  

  Pros

  • Up to $35,000 toward the cost of purchasing a home
  • No monthly payments; repayment deferred until you sell the home

  Cons

  • Must make a 3 percent contribution toward the down payment using your own funds
  • Must repay funds in full if you sell the home or refinance before the loan term ends

Other Montana homebuyer assistance programs

Mortgage credit certificate (MCC)

If you don’t qualify for a Montana Housing mortgage, you might still have an opportunity to save as a first-time homebuyer by getting a mortgage credit certificate (MCC). In Montana, the MCC allows you to take a dollar-for-dollar tax credit on 20 percent of your mortgage interest, up to a maximum of $2,000 per year.

There is an upfront fee to obtain an MCC, however ($500 to Montana Housing, and your lender could charge an additional $250), but the fee can pay off over the lifetime of a mortgage, so it’s worth considering for the longer-term savings.

Other Montana first-time homebuyer loans

In addition to the state-specific assistance programs for first-time homebuyers in Montana, here are some national loan programs to consider:

• FHA loan: Loans insured by the Federal Housing Administration (FHA) have more lenient financial requirements than other loans. To get an FHA loan, you need at least a 580 credit score and a 3.5 percent down payment.
• VA loan: This loan type — guaranteed by the U.S. Department of Veterans Affairs — is a great option for active-duty military, veterans or surviving spouses. You can get a VA loan with no down payment, and they often come with lower interest rates.
• USDA loan: Loans guaranteed by the U.S. Department of Agriculture (USDA) also have no down payment requirements. However, to qualify, you must buy a home in a designated rural area and meet area-specific income requirements.
• HomeReady and Home Possible: HomeReady and Home Possible are first-time homebuyer loan programs created by government-sponsored enterprises Fannie Mae and Freddie Mac. With these programs, you only need to put 3 percent down on a home purchase.

Get started

Ready to make your dream home in Montana a reality? Begin by comparing mortgage rates in Montana to understand today’s borrowing landscape at banks, credit unions and other mortgage lenders. If a Montana Housing loan seems like a fit for you, review the agency’s current rates and income and price caps.

Once you know if you’re eligible, you can take a look at participating lenders and get the process started. You can also read Montana mortgage lender reviews on Bankrate to get a sense of how different lenders rate with other prospective homebuyers. Don’t forget to consider your options for homeowners insurance in Montana as well to get a more complete picture of your homebuying costs.

As you start searching for your first home in Montana and considering your mortgage options, take advantage of Bankrate’s guide to first-time homebuyer loans and programs to explore other offerings that might be available to you.

• Explore other first-time homebuyer programs by state