First-Time Home Buyer Programs in Montana 2026
Montana’s first-time buyer loans come from the Montana Board of Housing (MBOH), part of the Department of Commerce. The core product is the Regular Bond Program, a 30-year fixed loan layered on an FHA, VA, RD or HUD-184 mortgage. It can carry a Bond Advantage or MBOH Plus second loan of up to 5% of the sales price, capped at $15,000.
MBOH is “an investor, not a lender.” A participating lender qualifies you and closes the loan, which then goes to MBOH’s master servicer, the Idaho Housing and Finance Association (veterans’ loans go to MBOH itself). So your first call is to one of those lenders, and you tell them you want an MBOH loan. This page covers the gates the lender checks and how the MBOH pieces fit together. The Montana down payment assistance guide covers the down-payment side on its own.
The seven IRS tests behind every MBOH bond loan
MBOH funds its loans with tax-exempt Mortgage Revenue Bonds, so federal rules decide who qualifies. The Board lists seven requirements:
- household income under the limit
- purchase price under the limit
- the home is your primary residence
- trade or business use takes no more than 15% of the home’s area
- you are a first-time buyer, with some exceptions
- the loan is for a purchase, not a refinance
- recapture tax may apply when you sell
Income counts every household member 18 or older, whether or not that person is on the note. An August 2026 lender memo repeats that “all occupants of a home over the age of 18 should have their income included in the household limit.” MBOH also notes that its household income can differ from the qualifying income your lender uses for underwriting.
Who is a first-time buyer for MBOH, and who is exempt
The Regular Bond terms (revised June 2026) say you cannot have owned a principal residence at any time in the three years before you sign the loan. The rule does not apply to qualified veterans or to buyers in the Targeted Areas the Board currently designates:
- Blaine, Deer Lodge, Flathead, Hill, Mineral, Missoula, Sanders and Silver Bow counties
- the City of Great Falls
- Gallatin County census tract 7.03, Glacier County census tract 9402 and Lincoln County census tract 4.02
The Targeted Areas also get higher limits. On the July 24, 2026 limits list, Missoula County allows $129,960 for a household of one or two and $151,620 for three or more, with a $764,737 price cap. Counties without their own line use the “All Other Counties” row: $103,134, $118,605 and $566,354. The MBOH rates and limits page has every row.
Bond Advantage versus MBOH Plus: two ways to borrow the 5%
Both are second loans from MBOH, and neither is forgiven. Each one needs an MBOH 30-year first mortgage underneath. Each can cover the down payment and closing costs, requires homebuyer education, and asks you to put in at least $1,000 of your own money, which can be a gift. The difference is how you repay.
| Bond Advantage DPA | MBOH Plus 0% Deferred DPA | |
|---|---|---|
| Amount | Up to 5% of sales price, maximum $15,000 (minimum $1,500) | Up to 5% of sales price, maximum $15,000 (minimum $1,500) |
| Rate on the second | Same fixed rate as the first mortgage | 0% |
| Repayment | 15-year amortizing loan with monthly payments | No monthly payments; due on sale or transfer, or on refinance or payoff of the first loan |
| Household income cap | The county limit on the MBOH list | $80,000 for 1-2 people; $90,000 for 3 or more |
| Credit | Minimum mid score 620 for all borrowers | Minimum 620; debt-to-income no higher than 45% |
MBOH Plus is the cheaper choice month to month, but it is only open to lower-income households, and the whole balance comes due when you sell or refinance. Bond Advantage uses the county limit and costs a second monthly payment for 15 years.
Other MBOH first mortgages a first-time buyer might land in
Set-aside loans paired with local help
The Set-aside Program is for borrowers “earning on-average 80% of median income” who get down-payment help from an MBOH-approved source. You still have to qualify for a Regular Bond loan, but the set-aside rate is lower, and homebuyer education is required. MBOH puts the gap a partner fills at anywhere from $1,500 to $45,000, depending on location and the buyer’s needs. Its current list of approved sources includes the City of Billings First Time Homebuyer Program, Missoula Combined HRDC XI HOME Funds, Bozeman District IX HOME Funds, the NeighborWorks State HOME Deferred 2nd Mortgage and the FHLB HomeStart Program. The terms of each belong to that partner, not to MBOH.
80% Combined Program
This one skips FHA. You take an MBOH 30-year first mortgage at 80% loan-to-value and a second loan at 20% from a nonprofit partner such as NeighborWorks Montana or a Human Resource Development Council. Staying at 80% removes the need for mortgage insurance. It requires a 640 score, 32/45 ratios and homebuyer education.
Montana Veterans’ Home Loan Program
The veterans’ program is a 30-year fixed loan at 1% below the Regular Bond posted rate. It has no income, asset or purchase price limit, but as of July 24, 2026 the loan amount is capped at $538,036. It is stricter than the bond loan in one way: you must be “a true first-time homebuyer and never previously owned a primary residence.” You must also be a Montana resident, take a first-time buyer class and put in at least $2,500 of your own money. Condos are not allowed. Funding is limited. MBOH told lenders in June 2026 that the program “is currently funded on a sporadic basis,” so the lender checks the available balance before reserving.
The Montana MCC works only with a non-MBOH loan
MBOH issues Mortgage Credit Certificates now, and they are still listed among the programs the July 2026 limits apply to. The credit equals 20% of the mortgage interest you pay each year, capped at $2,000. You can claim it every year you live in the home, and an unused credit carries forward up to three years. The catch: “Montana Board of Housing loans are not eligible for MCC.” An MCC rides on a lender’s own loan instead. You apply through a participating lender after signing the purchase contract and before closing. The fee is $750, with $250 going to the lender and $500 to MBOH. So a Montana buyer picks one path. Either take the lower MBOH rate and its 5% second, or take a market loan with an MCC.
Education, rate locks and recapture
- Homebuyer education: MBOH accepts certificates from NeighborWorks Montana classes. If you take the class online, a one-time face-to-face session with a HUD-approved counselor is required before the certificate is issued. Regular Bond borrowers can skip the class only if they meet all three tests: a middle credit score of 680 or higher, a front-end ratio of 31% or less and a back-end ratio of 41% or less. Every DPA, set-aside and veterans’ borrower takes it.
- Reservation and lock: the lender reserves funds on MBOH’s Lender Online portal, first come, first served. MBOH locks the rate for 60 days on an existing home and 180 days on new construction. If you cancel a reservation to chase a lower rate, the terms say you “will cease to be eligible to participate in MBOH Programs.”
- Recapture tax: it applies only if you sell within nine years, you realize a gain, and your income has risen above the IRS limit. The tax is capped at 6.25% of the original loan or 50% of the gain, whichever is less. Lenders have you sign a Notice of Possible Recapture Tax early in the process.
To price a Montana purchase, run the mortgage calculator or what you can afford. Montana’s closing costs are the other bill the MBOH second can cover. For the insured loan underneath, see FHA requirements and the VA loan guide.
Montana first-time buyer questions
I sold a house in Bozeman in 2020. Can I get a Regular Bond loan now?
Yes. More than three years have passed with no principal residence owned, which meets MBOH’s rule. The Veterans’ Home Loan Program is different: it wants buyers who have never owned.
Does a Missoula buyer have to be first-time?
No. Missoula County is on MBOH’s Targeted Area list, so the three-year rule does not apply there, and the limits are higher. (The Veterans’ Home Loan Program is the exception: it still requires never having owned.)
Is MBOH down-payment help ever forgiven?
No. Bond Advantage is repaid monthly over 15 years, and MBOH Plus is due in full when you sell, transfer, refinance or pay off the first loan.
Can I stack an MCC on my MBOH loan?
No. MBOH says its loans are not eligible for an MCC. The certificate attaches only to a lender’s own portfolio or investor loan.
My credit score is 700 and my ratios are low. Do I still need the class?
For a Regular Bond loan alone, you can skip it if your middle score is 680 or higher and your ratios are 31% or less and 41% or less. Add Bond Advantage or MBOH Plus and the class is required.
Buyers looking across state lines can compare Idaho, North Dakota and South Dakota. Everything else about buying in the state is on the Montana hub.