What to know about buying a house in Montana

Montana offers plenty of help to first-time home buyers. For those who are eligible, that can include down payment assistance loans, special mortgages with below-market rates, and home buyer education classes. Here’s how to get started.


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Montana home buyer overview

The median home price in Montana was $444,990 in April 2022 according to Zillow. That was a price increase of 28% year-over-year.

Montana home buyer stats

Average Home Sale Price in MT $444,900
Minimum Down Payment in MT (3%) $13,350
20% Down Payment in MT $88,980
Average Credit Score in MT1 730
Maximum MT Home Buyer Down Payment Assistance2 Up to $50,000 loan in Great Falls

Down payment amounts are based on the state’s most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.

If you’re eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the US Department of Agriculture), you may not need any down payment at all.

First-time home buyer loans in Montana

If you’re a first-time buyer in Montana with a 20% down payment, you can get a conventional loan with a low interest rate and no private mortgage insurance (PMI).

Putting 20% down will keep your monthly mortgage payments low. It might also give you an edge in competitive housing markets. However, few first-time borrowers have saved that much.

The good news is, Montanans have access to a wide range of mortgage loans that can help them get into a new house with low or even no down payment:

  • Conventional 97: Backed by Freddie Mac or Fannie Mae. 3% down payment and 620 minimum credit score. You can usually stop paying mortgage insurance after a few years
  • FHA loan: Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. You’re on the hook for mortgage insurance until you refinance to a different type of mortgage, move, or pay off your loan
  • VA loan: Only for veterans and service members. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so check your eligibility if you have a military service history
  • USDA loan: For those on low-to-moderate incomes buying in designated rural areas. Zero down payment required. Credit score requirements vary by lender but often 640. Low mortgage insurance rates
  • Montana Housing loans: Special mortgages with below-market rates; down payment assistance loans; home buyer education courses. More info below

Note that government loan programs (including FHA, VA, and USDA home loans) require you to buy a primary residence. That means you can’t use these loans for a vacation home or investment property.

In addition, most programs let you use gifted money or down payment assistance (DPA) to cover your down payment and closing costs. Depending on the mortgage loan you choose, you could potentially get into your new house with minimal cash out of pocket.

If you’re unsure which program to choose for your first mortgage, your lender can help you find the right match based on your finances and home buying goals.

Montana first-time home buyer programs

Montana Housing — an arm of the state government — offers special mortgages to qualifying Montana first-time home buyers. Assuming it keeps its mortgage rates page up to date, these might come with competitive, below-market interest rates. But the main advantage of these loans is that they provide down payment assistance, which we’ll cover in the next section.

To be eligible for a Montana Housing first-time home buyer mortgage, you must:

There are other minor conditions, which you can see on the website.

Montana first-time home buyer grants

The Montana state government has two forms of down payment assistance, which can provide help with both your down payment and closing costs. You’ll need to use one of its mortgages (above) to get this help. Note that neither is a grant. Both are loans that have to be repaid. However, the terms of each are very different:

Bond Advantage Down Payment Assistance Program

Montana’s Bond Advantage Down Payment Assistance Program offers a second mortgage that you repay over 15 years in parallel with your first (main) mortgage. The monthly payments should be relatively low, and your lender should make sure you can comfortably afford them.

You can borrow up to $12,500 or 5% of the purchase price, whichever is the lesser. To qualify, you’ll need a credit score of 620 and to have $1,000 of your own money to contribute to your purchase. Click the link above for more details.

MBOH Plus 0% Deferred Down Payment Assistance Program

The Deferred Down Payment Assistance Program is also a second mortgage, but it’s very different from the first program. That’s because you pay 0% interest and make no monthly payments. In industry jargon, this is called a “silent mortgage.”

You do have to repay the loan eventually, but only “upon sale or transfer of the property to another party or if the outstanding loan secured by the first mortgage is refinanced.”

But don’t get too excited until you know whether you qualify for this program. Income limits are lower for this one ($55,000 for a household comprising one or two people, and $65,000 for three or more, at the time this was written), and you still need a credit score of 620 or higher.

Again, click the link above for full details.

Buying a home in Montana’s major cities

On average, homes in Missoula are above the statewide median for Montana. However, housing prices in Billings and Great Falls are below that average and rising more slowly.

Billings first-time home buyers

The median listing price in Billings was $360,000 in April 2022, according to Realtor.com. That was 20% higher than a year earlier.

If you want to buy a home at that price, your down payment might fall between:

  • $10,800 for a 3% down payment
  • $72,000 for a 20% down payment

The City of Billings manages three down payment assistance programs. Download its brochure for full details.

The basic Home$tart program offers up to $7,500 to lower-income households in the form of a deferred loan. You pay no interest and make no monthly payments. But you have to repay the amount you borrowed in full when you sell, transfer the property, or refinance your mortgage.

The same deal is offered to those who currently receive public housing assistance under the Home$tart Plus program. But they can borrow up to $10,000.

Neighborhood Housing Services, Inc. has a different program that lets eligible applicants borrow up to $20,000. Again, this requires no monthly payment. But it charges a below-market rate (the brochure mentions 1% as an example), and you have to repay the amount you borrowed plus that interest when “the home is sold, is no longer the principal residence or when the first mortgage is refinanced.”

Read the brochure or call (406) 657-3045 if you have further questions.

Missoula first-time home buyers

The median listing price in Missoula was $550,900 in April 2022, according to Realtor.com. That was 22.4% higher than a year earlier.

If you want to buy a home at that price, your down payment might fall between:

  • $16,530 for a 3% down payment
  • $110,180 for a 20% down payment

The Human Resource Council (HRC) offers down payment assistance loans of up to $35,000 in Mineral, Missoula, and Ravalli counties. But the program specifies that ” … only the minimum amount of assistance needed to enable the participant to purchase a modest home will be provided.”

Download the HRC’s flyer for more details. That includes qualifying income caps that are quite low. You can also call HRC’s Missoula office (406) 728-3710 for more information.

Great Falls first-time home buyers

The median listing price in Great Falls was $299,000 in April 2022, according to Realtor.com. That was 16% higher than a year earlier.

If you want to buy a home at that price, your down payment might fall between:

  • $8,970 for a 3% down payment
  • $59,800 for a 20% down payment

In Great Falls, “The HOME program available through NeighborWorks provides deferred loans between $2,500 and $50,000 to provide down payment and closing cost assistance or to help fill the gap between the total financing needed for a home and the amount the primary mortgage lender is willing to lend,” according to the program’s website.

Again, this is a deferred loan with a 0% interest rate and no monthly payments. But you will have to repay the amount you borrowed when you refinance or sell the home.

If your income is too high to qualify for that program (but is under 125% of the area median income), you may be able to borrow up to $20,000. But you have to repay that loan in monthly installments in parallel with your main mortgage. And interest rates ranged from 1.5% to 7.25% at the time this was written.

Click the link in the first paragraph of the Great Falls section for more details. And call (406) 761-5861 with any questions.

Where to find home buying help in Montana

All the organizations we’ve listed above should provide advice freely to any first-time home buyer in Montana.

In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides a list of city- and county-specific programs across Montana. The list is as follows:

Statewide first-time home buyer programs in Montana

  • Montana Housing — Single family housing programs — (406) 841-2840
  • MoFi — HomeNow: Zero Down Payment Program — (844) 728-0932
  • Montana Homeownership Network — Down payment and closing costs assistance available statewide — (866) 587-2244

First-time buyer programs in Montana cities

Other first-time buyer programs in Montana

What are today’s mortgage rates in Montana?

You can check current mortgage interest rates in Montana here.

When you’re ready to buy, be sure to apply with at least three to five lenders to make sure you’re getting the lowest mortgage rate available.

Rate quotes can sometimes vary significantly between lenders, so shopping around for rates could save you thousands on your new home.

1Source: Experian.com 2022 study of 2021 data

2Based on a review of the state’s available DPA grants at the time this was written

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.



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