Your Guide to Buying a Home in Montana

The Montana Buying Process: A Summary

• In Montana, real estate transactions are usually closed by an attorney or representative from a title company. 
• After agreeing on a price, the buyer and seller need to negotiate details of the purchase. 
• If using a mortgage for your Montana purchase, you’ll need to provide a variety of documents to the lender. 
• Buyers and sellers generally come together at the same table to sign all final documents.
• The entire state of Montana is under the base conforming loan limits, which (as of this writing) is $647,200 for a single-family home. 

Buying a Home in Montana, Phase 1: Negotiations 

Although you have come to an agreement on price, you and the seller will still need to negotiate a variety of details, including possible repairs or updates to the home. 

1. Once an offer is accepted, a contract will be signed by both parties.
2. With the contract, the buyer will pay “earnest money,” which is held in escrow. This payment demonstrates the buyer’s true intention to purchase the home. 
3. The signed contract will be sent to a title company or attorney. They will begin a title search and launch the process for transferring the title to a new owner. It’s best to complete a title search early so there is plenty of time to deal with potential issues. 
4. The buyer will now review and sign off on any disclosures. The seller will provide disclosures, which are basically statements of known issues with the property. They can include past repairs, needed upgrades, or any known problems with the home or surrounding property. 
5. An EPA-mandated lead-paint disclosure may be required. This basically states whether or not the seller has knowledge of any lead paint in the home. 
6. Unique to Montana (and other western states), the seller may provide a water rights acknowledgement that outlines any rights being transferred with the property. 
7. Eventually, you will want to have inspections completed. In Montana, a licensed home inspection is a good start. You may also want to complete pest inspections or a radon test. A property survey is also used for many Montana purchases. 
8. If there are significant issues discovered during the inspection, the buyer can walk away from the purchase without penalty. In most cases, however, the buyer will request changes to the contract, such as a reduced price or repair to the issue before the sale. The seller and buyer will negotiate until an agreement is reached or they walk from the contract. 
9. A home warranty to cover appliance repair or maintenance can also be requested. 

Buying a Home in Montana, Phase 2: The Mortgage Process

Although you have probably been pre-qualified, you will still need to go through the process of final and official approval, 

1. The first step is to submit an application. You can do this on your own or with the help of a lending professional.
2. You will eventually receive a “good faith estimate,” which is the estimated costs you will need to close the loan, assuming you are approved. 
3. The lender will need as much information as possible, and may request documents such as: 

• Pay stubs to demonstrate your regular and consistent income. 
• Tax returns to show your income from the past years. Usually two years is all that is required.
• Bank statements that demonstrate your savings, earnings, and expenses. 
• Loan documents from other debts, such as car loans, student debt, and credit cards.
• Financial disclosures that impact your financial situation. This may include child support, alimony, legal judgements, and more.
• Explanation on any credit inquiries. Multiple credit inquiries at one time statistically increase the chances of default, so lenders will request an explanation for these inquiries. 
• Information on any large deposits, such as gifts from friends and family. If anything is seen that is not part of your normal income, the lender may require information on the deposit. 
• Gift letters that explain the nature of cash gifts. A gift letter should include information from the giver, as well as a statement that the cash is a gift and not a loan that needs to be repaid. 
• Repeat or updated information. Lenders want as much information as possible, so don’t be surprised if they request additional documents or up-to-date forms. 

4. If you are approved for the loan, you will be issued a loan commitment letter, which states their willingness to support your loan. 

5. The loan contingency can be removed from the contract. This is done by sending a copy of the loan commitment letter to the seller or seller’s agent. 

6. An appraisal can now be ordered. This is required by most lenders and will verify the value of the home. 

7. Homeowner’s insurance will be ordered. Proof of this insurance must be delivered to the lending office. 

8. You may also want additional insurance, such as added wildfire or storm protection. 

Remember that this process can be long and extensive, so it’s best to start as early as possible and collect all your documents right away. 

Buying a Home in Montana, Phase 3: The Final Closing

In Montana, the closing generally takes place with both parties at the same table. Once complete, you can take possession of your new property!

1. The first step is to complete a title search if it has not been done already. This is completed by an attorney or by the title company.
2. A final cash figure for closing the sale is calculated. You’ll need to bring this amount to the closing, usually in the form of a cashier’s check. 
3. A final walkthrough will also be completed on the property. This is to confirm that the property is still in good condition. (Or, at least, the condition it was in when last seen by the buyer.) 
4. The buyer and seller will meet to sign all documents. This meeting is usually done at an attorney’s office or at the office of the agent or title company
5. You will pay the remaining funds to the attorney or agent overseeing the transaction. 
6. The transaction will be recorded with the Montana city or county. 
7. You’ll now get the keys to your new Montana home!

Conforming Loan Limits in Montana

In Montana, the entire state is under the base limits for conforming loans, which is currently (as of this writing) $647,200 for a single-family property. From Carter County in the southeast corner to Sheridan County on the border of North Dakota and Canada, all the way west to the mountains and counties like Flathead, Missoula, and Gallatin, this is the limit for the entire state. 

Conforming loans can be used to purchase multiunit properties as well. In the state of Montana, the limits are $828,700 for a two-unit property, $1,001,650 for a three-unit property, and $1,244,850 for a four-unit property. 

These limits are for conforming loans only. If you need a loan above and beyond this amount, talk to our staff about jumbo loans in the state of Montana. 

Note: The loan limits were accurate as of writing this article but may not reflect current limits. Contact our staff for complete, accurate, and up-to-date limits.

Downpayment Assistance Programs in Montana

Montana is one of the most beautiful states in the country. Many people want to live in this amazing region, but current and new residents often struggle to save for a downpayment. Fortunately, there are a variety of downpayment assistance (DPA) programs that can help you save for a high-quality purchase.

Statewide Montana DPA Programs

There are a few statewide organizations that provide downpayment support in Montana, starting with the Montana Board of Housing, which is commonly called “Montana Housing.”

Montana Housing
A branch of the state government, Montana Housing provides a variety of services that encourage homeownership, including downpayment programs for low- and moderate-income buyers.

• Regular Bond Program: This program offers homebuyers up to 5% of the sales price, capping the support at $12,500. It has a low interest rate and a 15-year schedule with low monthly payments.

• Bond Advantage Program: Also offering 5% of the purchase price, this program is capped at $10,000. It has a 0% interest rate and acts as a second loan that is deferred.

NeighborWorks Montana
NeighborWorks is a national non-profit organization that operates from regional locations. They provide support by offering home loans that can ease the downpayment burden. Montana buyers have access to as much as $50,000 to help cover the downpayment, and they are only required to contribute 1% of their own cash towards the purchase.

Major Local Programs in Montana

In addition to statewide programs, cities and counties provide DPA support as well. Here are two examples…

Billings First-Time Home Buyer Program
Billings, the largest city in Montana, offers a DPA program to first-time buyers. Through this program, buyers can secure a downpayment loan as high as $15,000.

Bozeman Downpayment Assistance
Bozeman offers one of the most impressive programs in the state. Qualified buyers purchasing a home in Montana can get assistance worth as much as $30,000. This comes as a 0% second loan with a deferred payment.

Common Requirements for Montana Downpayment Assistance

These programs are intended primarily for low- and moderate-income buyers, so there will be restrictions on who can use them. For example, buyers in Bozeman need to be at or below 80% of the area’s median income to qualify. The Montana Housing program limits users to $65,000 a year for one- or two-person households.

Other requirements may include credit scores, limits on the purchase price, or the completion of homebuyer education.

For details on current downpayment assistance options in Montana, contact our team today. We’ll help you find the right program for your specific needs!