Montana First-Time Homebuyer Programs

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Updated on Monday, April 1, 2019

Looking to kick-start your ranching lifestyle in Big Sky Country? Montana has a wealth of first-time homebuyer programs designed to make your dream home more affordable. Whether you’re struggling to come up with a down payment, hoping for a lower interest rate or in need of cash to make your space disability-friendly, these programs can help. Some programs provide second mortgages to help cover closing costs and a down payment, and others offer helpful tax credits to reduce your year-end liability.

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We’ll go over what first-time Montana homebuyers need to know. Here’s what we’ll cover in this guide:

Montana first-time homebuyer programs

The Montana Bureau of Housing (MBOH), also known as Montana Housing, runs many of the state’s first-time homebuyer programs. The agency works with a statewide partner network to ensure that all Montanans have access to affordable, safe housing.

Some housing programs are also offered through one of MBOH’s partners, NeighborWorks Montana. This nonprofit agency provides additional home loans and education for homebuyers looking to purchase property.

Requirements for Montana assistance

In Montana, a “first-time homebuyer” is one of the following:

  • Someone who has never owned a home before, or
  • A previous homeowner who has not owned a home in three years

The first-time requirement is waived if you live in a federally targeted area. Those areas are:

  • Blane, Deer Lodge, Flathead, Hill, Mineral, Missoula, Sanders or Silver Bow counties
  • Census tracts: Gallatin County 6 and 11.01 and Lincoln County 2
  • The city of Great Falls

Regular Bond Loan Program

What is it?

Montana Housing’s Regular Bond Loan Program offers first-time homebuyers a 30-year mortgage. The interest rate is fixed and based on credit score — see current rates here. This program is designed to pair with federal mortgage programs.

Montana’s Regular Bond Loan Program offers:

Requirements

To be eligible for the Regular Bond Loan Program, buyers must:

  • Be first-time homebuyers
  • Have a maximum household income that does not exceed the program’s income limits, which vary by county and household size
  • Buy a home whose purchase price does not exceed the program’s purchase price limits, which vary by county
  • Occupy the home for the life of the loan
  • Purchase a single-family property.

How to apply

To start your loan, reach out to one of Montana Housing’s approved lenders, who will verify your credit and ensure you qualify for the program and for the government mortgage program of your choice. From there, they’ll help you through the lending process.

Score Advantage Down Payment Assistance (DPA) Program

What is it?

Montana Housing’s Score Advantage DPA program provides down-payment assistance for first-time homebuyers. Upon closing, buyers will receive two loans: a traditional 30-year mortgage and a second 15-year mortgage for the amount of the down payment assistance. Loan rates depend on your credit score — check MBOH’s current rates here.

Montana Housing’s Score Advantage DPA offers:

  • Down payment assistance in the form of a second mortgage worth 5% of the purchase price maximum. Assistance ranges from $1,500 to $6,500
  • 30-year, fixed-rate FHA, VA, USDA Rural Development or HUD Section 184 loans
  • Reduced lender fees.

Requirements

In order to take advantage of the Score Advantage program, you must:

  • Be a first-time homebuyer
  • Complete Montana Housing’s first-time homebuyer education course
  • Have a total household income that does not exceed income limits, which vary by county and household size
  • Occupy the property for the life of the loan
  • Contribute at least $1,000 to the down payment
  • Pay a $175 application fee for the down payment loan
  • Purchase a single-family home.

How to apply

Ready to get started? Begin by finding a participating lender, who will work with MBOH to secure the loan.

NeighborWorks Montana State HOME Deferred 2nd Mortgage Program

What is it?

The NeighborWorks State HOME Deferred 2nd Mortgage Program helps buyers who may not be eligible for state-run first-time homebuyer programs afford a down payment and closing costs. This 15-year loan can be extended to 30 years, and is due in full upon maturity — or if you move out, sell the home, die or refinance the mortgage.

Features include:

  • Second mortgage of between $2,500 and $25,000 for down payment and closing costs (maximum of $40,000 if there is a family member with a disability or the property is located in Flathead or Carbon counties or the city of Red Lodge)
  • No additional fees
  • 0% interest rate
  • No monthly payments. The loan must be paid in full when it matures, or if you move out, sell or refinance the home, or die.

Requirements

To be eligible for the State HOME Deferred 2nd Mortgage Program, you must:

  • Take out an FHA or VA mortgage (some USDA RD loans may also be eligible; check with your lender)
  • Meet the following conditions:
    • Not have owned a home in the past three years, or
    • Be a single parent with dependents, or
    • Have a family member with a disability
  • Purchase a single-family property in an eligible city or county that has not been rented in the previous 90 days
  • Purchase a home whose price does not exceed purchase price limits, which vary by county and property type
  • Have a household income equal to or less than 80% of the area median income
  • Occupy the home for the term of the loan
  • Have a housing ratio (your future housing expense divided by your gross monthly income) of between 29% and 32%.
  • Have a maximum combined loan-to-value ratio (LTV) of 105%. (Your LTV is your loan amount divided by the property value.)
  • Contribute at least 1% of the sales price or $1,000 (whichever is higher) to the down payment
  • Have less than $5,000 in family liquid assets and $70,000 in total family assets after closing
  • Allow Neighborworks to perform an environmental review and inspection
  • Complete a homebuyer education program.

How it works

To begin the loan application process, work with a NeighborWorks preferred lender. Because this program requires several additional inspections, it may take up to four weeks for processing. In addition, every family member 18 years or older who will live in the home must submit a verification of employment.

MBOH Plus 0% Deferred DPA Program

What is it?

Buyers who worked through the Regular Bond Program to take out their first mortgage can get an additional mortgage to help cover their down payment and closing costs through the MBOH Plus 0% Deferred DPA program. Your second mortgage will be due in full if you sell or transfer your property or if you refinance your mortgage. The MBOH Plus 0% Deferred DPA program provides:

  • A second mortgage of up to 5% of the home purchase price. Loans range between $1,500 and $6,500
  • No interest or monthly payments.

Requirements

To be eligible for this program, you must:

  • Be a first-time homebuyer using the Regular Bond Program for your primary mortgage
  • Have a minimum credit score of 620
  • Have a maximum debt-to-income ratio (DTI) of 43%
  • Undergo homebuyer education
  • Contribute at least $1,000 to the down payment
  • Live in the property for the life of the loan
  • Purchase a single-family property.

How to apply

To get started, contact a participating lender, who can determine if you’re eligible for the program and walk you through the application and lending process.

80% Combined Program

What is it?

If you’re taking out an FHA, VA or USDA RD loan, the 80% Combined Program can help you avoid mortgage insurance and provide a substantial down payment. For this program, MBOH partners with nonprofits to help buyers take out two loans: a primary mortgage for 80% of the purchase price and a secondary loan for 20%.

Montana’s 80% Combined Program offers:

  • Fixed-rate, 30-year first mortgage for 80% of the property’s purchase price
  • Nonprofit-funded second mortgage for 20% of the property’s purchase price
  • No mortgage insurance required.

Requirements

To be eligible for the 80% Combined Program, you must:

  • Be a first-time homebuyer
  • Have a household income that does not exceed income limits, which vary by county and household size.
  • Have a minimum credit score of 640
  • Buy a home whose purchase price does not exceed purchase price limits for your county
  • Take a First Time Homebuyer Education course
  • Contribute 1% of the purchase price — at least $1,000
  • Occupy the home for the life of the loan
  • Purchase a single-family property.

How to apply

To get started, contact a participating lender. They’ll determine if you qualify for the program and help you begin the loan application process.

Board of Investments (BOI) Residential Mortgages

What is it?

Montana Housing’s BOI Residential Mortgages are designed to help return coal taxes to the local economy. These loan programs provide significant flexibility for homeowners looking to take out an FHA, VA or conventional mortgage, with a variety of loan terms and lengthy lock options.

These flexible mortgages offer:

  • Mortgages with 15-, 20- or 30-year loan terms
  • Rate lock options, with interest rates varying based on the reservation period (see interest rates here).

Requirements

In order to be eligible for the BOI Residential Mortgages, buyers must:

  • Be approved or eligible via automatic underwriting
  • Buy a home that qualifies under Freddie Mac and Fannie Mae conforming loan limits
  • Take out hazard insurance
  • Use the property as a primary residence
  • Purchase a 1- to 4-unit property in a residential neighborhood
  • Pay private mortgage insurance, unless the loan-to-value ratio is 80% or higher
  • Submit to a full appraisal for loans not insured by the FHA or VA.

How to apply

These loans are issued via participating lenders. Contact one near you to begin the application process.

Disabled Accessible Affordable Homeownership Program (DAAHP)

What is it?

First-time Montana homebuyers with a physical disability can use the DAAHP to make necessary architectural changes essential for independent living. Possible alterations include widening doorways, installing roll-in showers, building wheelchair lifts, ramps and more.

This program offers:

  • 30-year, fixed-rate loans of up to $30,000 to construct, buy or rehabilitate homes to accommodate people with physical disabilities
  • Reduced lender fees.

Requirements

In order to be eligible for this program, you must:

  • Be a first-time homebuyer with an FHA or VA loan
  • Have or be the immediate family member of a person with a permanent disability
  • Have a maximum household income of $30,000
  • Purchase a home that falls within the purchase price limits of your county (see purchase price limits here)
  • Have maximum assets of $50,000, excluding some adaptive equipment
  • Live in the home for the life of the loan
  • Contribute at least $1,000 to the down payment
  • Purchase a single-family property
  • Incorporate architectural changes to accommodate the disability of either yourself or your disabled family member.

How to apply

To apply for this loan, you will need to fill out several forms that attest to your family income, verify your (or your family member’s) disability and prove you have applied for an FHA or VA loan.

Montana Veterans Home Loan Program

What is it?

The Montana Veterans Home Loan Program helps military veterans afford their first home by offering a lower-than-market interest rate. But beware: This program is only available for current Montana residents. Veterans from other states cannot apply.

This loan program offers:

  • 30-year mortgage loans through the FHA, VA or HUD’s Section 184
  • Fixed rate 1% lower than the current market rate
  • No purchase price, asset or income limits.

Requirements

To be eligible for this program, you must:

  • Have served or be serving in the federal armed services or Montana National Guard with, if applicable, an honorable discharge
  • Or, be an unmarried surviving spouse of a deceased, eligible veteran who was killed in the line of duty
  • Be a first-time homebuyer
  • Be a Montana resident
  • Remain in the home until the loan is paid off
  • Contribute at least $2,500 toward the down payment or closing costs
  • Take a first-time homebuyer education class
  • Purchase a single-family home (condominiums are not allowed).

How to apply

To start your loan application, reach out to a participating lender. If you qualify, they’ll guide you through every step of the application and lending process.

Mortgage Credit Certificate Program (MCC)

What is it?

Montana Housing’s MCC program helps buyers reduce their tax liability. Up to 20% of the annual mortgage interest paid becomes a federal tax credit, which directly lowers the amount of tax you owe every year.

This program allows buyers to:

  • Take a federal tax credit of 20% of the annual mortgage interest paid (maximum credit is $2,000)
  • Deduct 80% of the remaining mortgage interest from their taxable income

Requirements

To be eligible for this program, you must:

  • Be a first-time homebuyer
  • Have a household income that does not exceed income limits, which vary by county and household size
  • Buy a home whose purchase price does not exceed county-wide purchase price limits
  • Maintain occupancy while using the MCC tax credit
  • Buy a single-family home.

How to apply

Work with a certified Montana lender to start your application for the MCC tax credit.

National assistance

Montana first-time homebuyer programs aren’t the only options for new homeowners in the state. National programs offer additional grants, tax credits and loan options. Interested? Check out LendingTree’s general guide to first-time homebuyer programs. (LendingTree is the parent company of MagnifyMoney.)

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