Montana First-Time Home Buyer: 2024 Programs and Grants

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.

In this article (Skip to...)

• MT home buyer overview
• Home loan options
• MT home buyer programs
• First-time buyer grants
• Buying in Montana’s cities
• Resources
• MT mortgage rates

Montana home buyer overview

First-time home buyers in Montana face housing prices that overshadow the national average. The average home value in Montana was $406,097 in February 2024 and decreased 6.3% year-over-year, according to Attom.

Fortunately, buyers in Big Sky Country have access to a variety of home buying assistance programs that can make higher home prices more attainable.

Montana home buyer stats

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 U.S. 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 home buyer in Montana with a 20% down payment, you can get a conventional loan with a low interest rate. And you never have to pay for private mortgage insurance (PMI).

Of course, few first-time buyers have saved enough for 20% down. But the good news is that you don’t need that much. Not by a long shot.

Borrowers can often get into a new home with as little as 3% or even 0% down using one of these low-down-payment loans:

• 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 premiums (MIP) 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 or real estate agent 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.

Montana Housing loans generally finance single-family homes, two- to four-unit properties that will be owner-occupied, approved condos, townhomes, and planned unit developments.

• MH Regular Bond Program: 30-year fixed-rate mortgage loan with a below-market rate
• MH 80% Combined Program: Home loan program that funds 80% of the loan amount with a second loan covering the remaining 20%. The second loan is provided by a partnering lender, such as NeighborWorks Montana of MoFi (details below)
• Montana Veterans’ Home Loan Program: VA loan with an interest rate that is 1% lower than the going market rate. While this loan is not solely for first-time buyers, they are encouraged to apply if eligible

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

• Have a low or moderate income. See household income limits here
• Buy a home at or below a maximum price. See purchase price limits here
• Undergo a homebuyer education course
• Borrow through an approved lender. There’s a long list of those⁴

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

Montana first-time home buyers may also be eligible for a mortgage credit certificate (MCC) through Montana Housing.

According to its website, eligible applicants receive “a dollar-for-dollar tax credit that reduces the amount of federal income tax paid by a first-time homebuyer. The tax credit is equal to 20% of the mortgage interest (not to exceed $2,000) paid during the tax year.” You can use that tax credit even if you take the standard federal tax deduction.

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 $15,000 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 ($65,000 for a household comprising one or two people, and $75,000 for three or more, at the time this was written), and you still need a credit score of 620 or higher.

Buying a home in Montana’s major cities

On average, homes in Missoula are above the statewide median for Montana. Housing prices in Billings and Great Falls are below that average but rising quickly.

Billings first-time home buyers

The median listing price in Billings was $449,900 in February 2024, an annual increase of 7.1%, according to Realtor.com.

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

• $13,497 for a 3% down payment
• $89,980 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 $650,000 in February 2024, flat from a year earlier, according to Realtor.com.

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

• $19,500 for a 3% down payment
• $130,000 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 at (406) 728-3710 for more information.

Great Falls first-time home buyers

The median listing price in Great Falls was $355,000 in February 2024. That fell 4.3% year-over-year, according to Realtor.com.

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

• $10,650 for a 3% down payment
• $71,000 for a 20% down payment

In Great Falls, NeighborWorks Montana provides deferred loans between $1,500 and $50,000 to help cover down payment and closing costs, 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.

You can 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 Loan Program — (844) 728-0932
• NeighborWorks Montana: Down payment and closing cost assistance available statewide — (866) 587-2244

First-time buyer programs in Montana cities

• City of Billings: Closing costs and down payment assistance (406) 657-3045 or TDD (406) 657-8252
• Bozeman: Human Resource Development Council offers homeownership opportunities for low-income families — (406) 587-4486
• City of Glendive: Home loan programs offer rehabilitation funds and closing costs — (406) 377-3318 ext. 17
• Great Falls: NeighborWorks Great Falls: down payment and closing costs assistance — (406) 761-5861
• City of Lewistown: Affordable Homebuyer Program — (800) 766-3018 or (406) 535-7488
• Missoula Housing Corporation: Down payment assistance — (406) 543-5135
• Missoula: Human Resource Council — (406) 822-4251
• Ronan: Lake County Community Housing Organization — Down payment assistance — (406) 676-5901
• Whitefish Housing Authority: Homeownership Program — (406) 862-4143

Other first-time buyer programs in Montana

• District VI Human Resources Development Council: Homeownership assistance available in Fergus, Judith Basin, Wheatland, Petroleum, Musselshell, and Golden Valley Counties — (406) 535-7488 or (800) 766-3018
• Billings Native American Partners in Home-Ownership — (406) 657-3045
• Habitat for Humanity
• USDA Rural Development local office: Rural home repair and grant program that assists very low-income homeowners

What are today’s mortgage rates in Montana?

You can check current mortgage interest rates in Montana here. Experiment with a mortgage calculator to see how down payment, interest rates, homeowners insurance, and property taxes will all affect your monthly mortgage payment.

When you’re ready to start the home buying process, make sure you get personalized rate quotes from at least three mortgage lenders. Don’t just look at advertised rates online; actually apply for preapproval and compare the interest rates and fees you’re offered. Because that’s the only way to know you’re getting the best deal possible on your new home loan.

¹Source: Attom Montana Housing Market report

²Source: Experian.com study of 2021 and 2020 data

³Based on a review of the state's available DPA grants at the time this was written

⁴Montana Housing Approved Lender List