Last Updated on August 23, 2023 by Hannah Stevens
Mortgage Assistance for Homebuyers in Montana
Billings created the First Time Home Buyer Program to put a stopper on the affordability gap for low-income households who are unable to buy their first home without assistance. They also assist them to qualify for traditional housing financing programs in order to buy their first home.
The First-Time Home Buyer Program provides up to $15,000 assistance. This assistance comes as a zero-interest, deferred-payment loan. Therefore, monthly payments are not required, but the loan must be paid in full if the borrower moves out, refinances or sells the property. This loan is not forgivable, and secured with a Promissory Note, Deed Restriction, and Trust Indenture (mortgage). Moreover, large families with five or more people and households with a disabled person are preferred.
Every applicant must be a first-time buyer to qualify for the First Time Homebuyer Program. Anyone who has owned a house in the past three years is not eligible. The primary applicant must be 18 years old or older. Their yearly household income must also be within 80% of the Area Median Income (limits listed below). Additionally, their household assets must not also exceed $15,000, and they must make a personal financial investment of $1,000 to $2,500.
Borrowers can use program funds to purchase residentially zoned, single-family homes within the city limits of Billings. The property must also be the borrower’s primary residence, and it must not be put up for rent. The maximum price for the home is $209,000. This represents 95% of the current HUD determined median area sales price. The program does not also apply to homes built before 1978 with chipping/peeling paint.
For loans up to $15,000
- 1-person household: $28,440
- 2-person household: $32,520
- 3-person household: $36,600
- 4-person household: $40,620
- 5-person household: $43,920
- 6-person household: $47,160
- 7-person household: $50,400
- 8-person household: $53,640
For loans up to $10,000
- 1-person household: $37,950
- 2-person household: $43,350
- 3-person household: $48,750
- 4-person household: $54,150
- 5-person household: $58,500
- 6-person household: $62,850
- 7-person household: $67,150
- 8-person household: $71,500
The Montana Board of Housing (MBOH) acknowledges that while many potential homebuyers are able to afford monthly mortgage payments, they might not have enough money to make large down payments or cover closing costs. Therefore, to help people escape the “renters trap,” MBOH has partnered up with other organizations in the state.
The Bond Advantage Down Payment Assistance Program is one way MBOH provides help. This program assists borrowers who are eligible for MBOH financing, but do not have the funds to pay the down payment and closing costs. Qualified applicants are given a junior loan which is up to 5% of purchase price or $10,000, whichever is lower. The Montana Housing 30-year first mortgage is required, and both loans have the same fixed interest.
Potential borrowers are required to have at least a 620 credit score. However, individuals without credit history may qualify, provided that the loan meets the underwriting standards set by the lender or guarantor of the initial-position loan. When there are multiple borrowers, the mortgage rate will be determined based on the highest mid-credit scores. Moreover, all applicants must take a homebuyer education course, and contribute a minimum of $1,000 cash to purchase the property. The MBOH also requires that homes purchased be used as the homebuyer’s primary residence.
This is similar to the down payment programme we see as one of the First-Time Homebuyer Assistance Programs in Missouri.
Montana Board of Housing (MBOH) associates with counties, non-profit organizations, lenders, employers and others to help potential homebuyers overcome the obstacles of closing costs and down payments. However, most of the programs only offer assistance in a certain geographic area. The NeighborWorks Montana (NWMT) Statewide Down Payment Assistance Second Mortgage Program fills in for areas that are not covered.
NeighborWorks Montana offers a variety of programs, some deferred and some amortized. These programs provide help for applicants to realize their dream of owning homes. The HOME program is one of them. It provides loans from $2,500 to $25,000 (up to $40,000 in certain cases) to help cover the gap between the total required funds, and the amount the primary mortgage lender will lend.
The HOME program also provides loans that are amortizing, with monthly payments, but no interest. However, the borrowers don’t begin making payments until after 15 years, or until they leave the home or refinance it.
Applicants must be first-time homebuyers, single parents with children, or live in a home with someone disabled to qualify for the assistance through the HOME program. The borrowers also need to complete an approved NeighborWorks Montana partner organization homebuyer education class. Furthermore, the borrower must be able contribute a minimum of $1,000 from their own funds to purchase the home. This, then, must be their primary residence. The HOME program is only for households with incomes at or less than 80% of the county median income, which is based on the family size.
- 1 person household: $35,050
- 2 person household: $40,050
- 3 person household: $45,050
- 4 person household: $50,100
- 5 person household: $54,100
- 6 person household: $58,100
- 7 person household: $62,100
- 8 person household: $66,100
Prior to applying for NeighborWorks Montana assistance, borrowers should check if there are any other organizations that have partnered with MBOG in the area. This is because the HOME funds are for people who live in areas not covered by similar programs. Borrowers can reach out to their lenders if the HOME program can provide assistance toward homeownership if they are not being served by another organization.
Are you interested in the First-Time Homebuyer Assistance Programs in Nebraska?