Montana first-time homebuyer grants and down payment assistance (2026)

Two MBOH second loans with the same $15,000 ceiling

MBOH Plus 0% Deferred and Bond Advantage pay the same amount: 5% of the purchase price, with a $1,500 floor and a $15,000 ceiling. Above a $300,000 price, the $15,000 cap is what limits you ⁠²⁠³. You still need at least $1,000 of your own money in the purchase, and a gift can supply it ⁠¹. Lenders may charge a $175 application fee for the second loan ⁠²⁠³.

The difference is in how you pay it back:

• MBOH Plus 0% Deferred. This is a 30-year second lien at 0% interest with no monthly payment. It is not forgiven. You repay the full balance when you sell or transfer the home, refinance, or pay off the first mortgage ⁠³. The trade-off is the rate: on Sept. 29, 2026, the first mortgage under MBOH Plus was 6.625%, compared with 6.375% on a Regular Bond loan with no assistance ⁠⁴.
• Bond Advantage. This second loan carries the same fixed rate as the first mortgage, 6.625% on Sept. 29, 2026. It is repaid in equal monthly payments over 15 years ⁠²⁠⁴. At that rate, our calculation puts a $15,000 Bond Advantage loan at roughly $132 a month. Lenders must count that payment in your debt ratios ⁠². You also owe the remaining balance if you sell or refinance early ⁠².

Neither second loan has a prepayment penalty ⁠²⁠³.

Income caps: a flat limit for MBOH Plus, county limits for everything else

MBOH counts the income of every household member who will be an adult at closing, whether or not they sign the loan ⁠⁴⁠⁶. MBOH Plus ignores the county list and sets one statewide cap: $80,000 for households of 1-2 people and $90,000 for 3 or more ⁠³⁠⁴. Bond Advantage, the Regular Bond and Set-aside loans, the 80% Combined Program and the MCC all use the county list in MBOH’s Quick Reference Guide dated July 24, 2026 ⁠⁵. The purchase price caps on that list also apply to MBOH Plus, because its terms adopt the Regular Bond rules ⁠³⁠⁶.

Scroll the table sideways to see every column.

Counties not on the list, including Cascade County outside Great Falls, use the “All Other Counties” row. The lowest listed income limits are $103,100 and $118,565, in counties such as Custer, Dawson and Valley ⁠⁵.

To find your figure, open the Quick Reference Guide linked from MBOH’s rates page and find your county or targeted tract ⁠⁴. If you are buying in Gallatin, Glacier or Lincoln County, ask your lender to confirm the census tract, because the tract-level rows differ from the county rows ⁠⁵⁠⁶.

Credit, debt ratio and first-time rules at the Montana Board of Housing

Credit. Both down payment loans require a 620 middle credit score for every borrower. Applicants with no credit history can qualify if the loan meets the FHA, VA, RD or HUD underwriting rules ⁠²⁠³. The Regular Bond loan alone has no MBOH score floor and follows the insurer’s underwriting. The 80% Combined Program, a conventional loan paired with a 20% nonprofit second loan, needs a 640 score ⁠⁵.

Debt-to-income. MBOH Plus caps total debt-to-income at 45% ⁠³. Bond Advantage has no MBOH cap of its own. The insurer’s limits apply, with the second loan’s payment included ⁠². The 80% Combined Program uses 32% and 45% ratios ⁠⁵.

First-time status. You may not have owned a principal residence at any time in the three years before closing. This rule is waived for qualified veterans and for homes in MBOH’s targeted areas: Blaine, Deer Lodge, Flathead, Hill, Mineral, Missoula, Sanders and Silver Bow counties, the City of Great Falls, and census tracts in Gallatin (7.03), Glacier (9402) and Lincoln (4.02) counties ⁠⁶.

Property. The home must be your principal residence. Manufactured homes must be built after June 15, 1976, detitled and on a permanent foundation. Non-occupying co-borrowers are not allowed, and you get no cash back at closing ⁠⁶.

Recapture. All MBOH bond loans and MCCs can trigger a federal recapture tax. It applies only if you sell within nine years, at a gain, after your income has risen above IRS limits. The tax is capped at 6.25% of the original loan or 50% of the gain, whichever is less ⁠⁹.

NeighborWorks Montana classes satisfy the education rule

Everyone on an MBOH Plus, Bond Advantage, Set-aside or 80% Combined loan must finish homebuyer education before closing ⁠⁵⁠⁶. On a Regular Bond loan without assistance, you can skip it only if you meet all three of these: a 680 middle score, a front-end ratio of 31% or less, and a back-end ratio of 41% or less ⁠⁷. MBOH accepts certificates from classes in the NeighborWorks Montana network, which are taught by certified educators and meet HUD requirements ⁠⁷. If you take the class online, you must also have a one-time session with a HUD-approved housing counselor before you receive the certificate. That session can be in person or virtual ⁠⁷. MBOH suggests finishing the class before your lender reserves funds ⁠⁶.

The MBOH mortgage credit certificate is a separate choice

MBOH still issues Mortgage Credit Certificates. An MCC is a federal tax credit of 20% of the mortgage interest you pay each year, up to $2,000, claimed on IRS Form 8396. Unused credit carries forward up to three years ⁠⁸. You cannot pair it with any MBOH loan. It goes on a market-rate loan from a participating lender, and the county income and price limits apply ⁠⁵⁠⁸. You apply through the lender after signing the purchase contract and before closing. The fee is $750, with $500 going to MBOH and $250 to the lender ⁠⁸. For example, a buyer paying $15,000 of interest in a year would hit the $2,000 cap, since 20% of that interest is $3,000 ⁠⁸. Because an MCC rules out MBOH’s down payment loans, it suits buyers who already have the down payment.

Billings and the other local money that pairs with MBOH set-asides

MBOH’s Set-aside Loan Program pairs a lower-rate first mortgage (6.125% on Sept. 29, 2026) with $1,500 to $45,000 from an approved partner ⁠⁴⁠¹¹. The approved list names the City of Billings First Time Homebuyer Program and two HOME-funded programs: Missoula Combined HRDC XI HOME Funds and Bozeman District IX HOME Funds. It also lists NeighborWorks Montana’s State HOME Deferred 2nd Mortgage and Dream Makers Matching Grant Funds for veterans ⁠¹¹. For the Missoula and Bozeman HOME funds, ask the HRDC office in your area whether money is left this fiscal year. MBOH does not post balances.

City of Billings First Time Homebuyer Program. This is the largest city program with published terms. It lends up to 20% of the purchase price at 0% with no monthly payments ⁠¹⁴⁠¹⁵. It is not forgiven. You repay it in full if you sell, transfer, refinance, rent the home or stop living there, and the city will not subordinate it ⁠¹⁵. Other rules ⁠¹⁵:

• Income at or below 80% of area median income. Effective June 1, 2026, that is $59,800 for one person, $76,900 for three, $85,450 for four and $112,800 for eight.
• Liquid assets of $15,000 or less, and no home owned in the past three years.
• A home inside Billings city limits priced at $365,000 or less, with a housing payment of no more than 42% of gross income.
• At least $1,000 of your own money on HOME-funded loans.
• A pre-purchase class with HRDC District 7 (406-247-4732).

The city said funding was available as of Sept. 10, 2026, first come, first served ⁠¹⁴.

Montana community reinvestment plan. The Legislature’s 2023 housing law sends state money to regional community reinvestment organizations, which must match it. Those organizations can buy down up to 30% of a home’s price for households earning 60% to 140% of the county or state median, whichever is lower ⁠¹²⁠¹³. The home carries a deed restriction that limits its appreciation to 1% a year, and only counties that joined a regional organization take part ⁠¹³. Ask your county or the local NeighborWorks office whether your county participates.

Getting an MBOH loan through a participating lender, step by step

1. Pick a lender from MBOH’s list

   The Sept. 18, 2026 list gives participating banks and mortgage companies by town, from Anaconda to Worden. Tell the loan officer you want a Montana Board of Housing loan ⁠¹⁰.

2. Run your household income against the right cap

   Use $80,000 or $90,000 for MBOH Plus, or your county row for Bond Advantage. Count every adult who will live in the home, using MBOH’s Income Determination Guide ⁠⁴⁠⁵.

3. Book a NeighborWorks Montana class

   Do it early: the certificate must be finished before closing, and online students still need a counselor session ⁠⁶⁠⁷.

4. Gather income records for every adult in the home

   MBOH checks household income separately from the lender’s underwriting, so co-occupants who are not on the loan still need to document their income ⁠⁴⁠⁶. Before or when the lender reserves funds, you sign MBOH’s Recapture Notice to Mortgagor, and the lender explains the federal program rules ⁠⁶.

5. Sign a purchase contract and have the lender reserve funds

   The lender reserves money in MBOH’s Lender Online system. Funds go first come, first served, loan by loan. The rate is locked for 60 days on an existing home or 180 days on new construction. Extensions cost 0.25% of the loan for each 30 days ⁠⁶. If a reservation is cancelled to switch programs or chase a lower rate, the buyer becomes ineligible for MBOH programs ⁠⁶.

6. Wait for MBOH’s compliance review

   MBOH reviews the compliance file within 10 business days and posts any conditions to the lender. It must approve the file before the servicer buys the loan ⁠⁶.

7. Close and keep the second-lien note

   You will need the payoff amount for either second loan when you sell or refinance, and the recapture notice for your tax return in the year you sell ⁠³⁠⁹.

If one lender turns you down, you can apply with another participating lender on the list ⁠¹⁰. Billings applicants must reapply if six months pass without a purchase ⁠¹⁵. Other states’ programs are compared on the first-time homebuyer grants page, and more Montana guides are on the Montana page.