- You might be eligible for a 30-year mortgage with a low interest rate through Montana Housing.
- The state also offers loans to help you afford a down payment and closing costs.
- Some Montana Housing programs have income and home price limits, but not all.
- See today’s mortgage and refinance rates in Montana on Insider.
Buying a home is an expensive venture, and high costs can keep people from pursuing homeownership. But if you are a first-time homebuyer in Montana, you may qualify for a low-interest mortgage, down payment assistance, or tax credit program through Montana Housing.
Montana first-time homebuyer loans
Regular Bond Program
This is a 30-year fixed-rate mortgage for first-time homebuyers, and rates are lower than on typical mortgages. You can use the Regular Bond Program to buy a single-family home, planned unit development, manufactured home, or a condo.
You’ll need to complete a homebuyer education course if your credit score is below 680, front-end ratio is over 31%, or back-end ratio is more than 41%. Your front-end ratio is the percentage of your monthly gross income spent on housing expenses. Your back-end ratio is the percentage of monthly gross income going toward any debt payments.
80% Combined Program
With the 80% Combined Program, you’ll take out two mortgages. The first is from Montana Housing for 80% of the home price, and the second is from a partner non-profit organization for the remaining 20%.
You must have a 640 credit score, front-end ratio of 32% or less, and back-end ratio of 45% or less. You’re also required to pay at least 1% of the home price (or a minimum of $1,000) upfront, and you’ll complete a homebuyer education course.
Montana Veterans’ Home Loan Program
The Veterans’ Home Loan Program is for current or former members of the national armed forces or reserves, or the Montana National Guard. You’ll take out a 30-year fixed-rate mortgage with a low interest rate.
There are no income or purchase price limits, but in 2022, you are limited to borrowing $296,380. You also need to pay at least $2,500 upfront and take a homebuyer education course.
For many first-time homebuyer programs, you can qualify if you haven’t owned a home in the last three years. But for the Montana Veteran’s Home Loan Program, you’re only eligible if you have never owned a house.
Montana down payment assistance programs
The following programs are loans to help you purchase a home, and you may combine them with any of the aforementioned Montana mortgage programs. You can put the money toward either a down payment or closing costs.
Bond Advantage Down Payment Assistance Program
Borrow up to 5% of your home price for a maximum of $12,500. You must have a minimum 620 credit score and $1,000 to put toward the purchase upfront.
Your interest rate on the down payment loan will be the same as the rate on your mortgage — but while the mortgage is a 30-year loan, the down payment loan only has a 15-year term.
MBOH Plus 0% Deferred Down Payment Assistance Program
This program is a loan for up to 5% of your home price, maxing out at $10,000. You need a 620 credit score and a back-end ratio of 43% or lower. For a household of one or two people, you must earn under $55,000; for three or more people, the maximum household income is $65,000.
This down payment loan has a 0% interest rate, and you won’t make monthly payments. Instead, you’ll pay off the loan when you sell the house, refinance, or pay off your mortgage completely.
Other first-time homebuyer programs in Montana
Mortgage Credit Certificate (MCC)
An MCC is a tool for saving money on your taxes. You can’t combine it with a Montana Housing home loan, so it’s a good way to save money if you don’t qualify for a loan through the state.
With this program, you’ll receive a tax credit for 20% of the interest paid on your mortgage each year, up to $2,000 annually. You don’t have to wait until tax season — you may adjust the tax withholdings on your W-4 to receive some of the money every month instead.
Programs through your lender or local resources
You may qualify for a unique mortgage or down payment assistance program through your mortgage lender. When talking with your lender, ask if assistance can be combined with any Montana Housing programs.
The city of Billings offers a zero-interest loan of up to $15,000 for residents, and you’ll repay it when you sell, refinance, or pay off your mortgage in full. You must be a true first-time homebuyer, meaning you won’t qualify even if you owned a home over three years ago.
Darrin English, senior community development loan officer at Quontic Bank, has a tip for receiving assistance if you don’t qualify for one of the Montana Housing mortgages or down payment assistance programs.
“I would recommend that every individual buying a home for the first time, no matter your socioeconomic background, align yourself with a Housing and Urban Development-sponsored not-for-profit whose job it is to educate the public on buying a home for the first time,” English says.
Any assistance through the not-for-profits associated with the federal housing agency can often be combined with programs offered by the state government. English suggests searching for a HUD-sponsored homebuying education counselor to learn about all of your options.
Montana homebuyer program income and purchase price limits
To qualify for certain Montana Housing programs, your income and home price must fall under a certain limit. Here are the limits for the Regular Bond Program, 80% Combined Program, Bond Advantage Down Payment Assistance Program, and Mortgage Credit Certificate in 2022.
Source: Montana Housing
Note that these limits do not apply to the Montana Veterans’ Home Loan Program or MBOH Plus 0% Deferred Down Payment Assistance Program.
There are resources in Montana that make homeownership more accessible for first-time buyers. The best choice will depend on your income, debt levels, and cost of the home you want to buy.