Homeownership advice you can trust -
everywhere in Montana

There are two ways to get a loan to buy a home.  

1. The first is to have 20% or more of the purchase cost of the home as a cash down payment.  
2. The other is to get a loan with mortgage insurance that covers the loan if the borrower stops making payments.  

Most first-time homebuyers do not have 20% of the cost of the home in savings, so the second option of getting a loan with mortgage insurance makes purchasing a home possible.  

Where does your loan go after closing?  Most lenders in Montana sell their loans to investors shortly after closing, such as Citibank, Wells Fargo or Bank of America.  Many lenders also sell the servicing of their loans to out-of-state national firms.  Servicing is the collection and processing of borrowers’ monthly mortgage payments.

The Montana Board of Housing’s loans are unique because they are serviced in Montana by Montana lenders and are owned by the Montana Board of Housing, right here in Montana, as well.  Because a MBOH loan is made in Montana and stays in Montana, if a borrower ever needs to speak to someone about their loan, they can speak with a real live person at a Montana lender office.  

MBOH has several loan purchase programs that must be used in conjunction with one of the four mortgage insurance programs outlined at the bottom of this page.

Here are the First Mortgage Loan Programs of the Montana Board of Housing:

• Regular bond program offers low interest rates (currently 3.875% for a 30-year fixed rate mortgage) as well as reducing closing costs by paying a portion of the lender fees.  
• Set-aside program offers more flexible underwriting and covers all of the fees paid to the lender at closing, with an interest rate of 5.5%
• Disabled loan program offers interest rates as low as 2.75% depending on income for households that require changes in the home’s structure to accommodate impairments.

Veterans Home Loan Program offers loans at 1% below the market for qualified veterans who are first-time homebuyers. 

One of the following types of mortgage insurance must accompany a Montana Board of Housing loan:

	Federal Housing Administration (FHA) provides mortgage insurance for borrowers who have 3.5% of the purchase price as their down payment, rather than 20%.
	USDA Rural Development, better known as RD, provides mortgage insurance for qualified borrowers with no down payment at all.
	Veterans Administration Home Loan Guaranties are issued to qualified veterans allowing them to purchase a home with no down payment.
	HUD 184 program for Native Americans provides mortgage insurance similar to that of FHA for qualified households.

Other First Mortgage Loans for First-Time Homebuyers:

• Lenders offer loans insured by the four government programs above that are not sold to the Montana Board of Housing but are sold to other investors.   Lenders may offer loans with private mortgage insurance or with other loan guarantees.   Check with your local lender who will tell you more about various loan options.  
• Rural Development has a direct loan program for borrowers of lower income.   More information can be found at:   http://www.rurdev.usda.gov/MT_Home.html
• Many communities have chapters of Habitat for Humanity who assist very low income households in helping to build their homes.   The national site for Habitat for Humanity has a list of local chapters:  http://www.habitat.org/cd/local/