Best Mortgage Lenders for First Time Home Buyers in Montana

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Contributor, Benzinga
February 18, 2022

Ready for outdoor living at its finest? Montana has gorgeous natural wonders that you can’t find anywhere else. As a first time homebuyer, Montana has a lot to offer. Let’s take a closer look at the mortgage process and finding the Big Sky state’s best lenders. 

Best Mortgage Lenders in Montana for First Time Home Buyers

Who are the best mortgage companies for Montana first time homebuyers? Here are the top lenders based on our research.

The Housing Market in Montana: An Overview

With Montana’s popularity as a vacation destination, it has a unique housing market. Some areas have higher home prices than you might expect. 

Here’s a brief overview of Montana’s housing market:

Total households: 419,975

Median list price: $384,309

3 most expensive cities in Montana to buy a house:

  • Bozeman
  • Whitefish
  • West Yellowstone

3 most affordable cities in Montana to buy a house:

  • Chinook
  • Scobey
  • Wolf Point

Preparing for a Mortgage

The mortgage process might seem complicated. Here’s an overview of how it all works: 

  1. Contact lenders. It might be tempting to look for homes before talking to lenders. Getting quotes from lenders helps guide your shopping, though. You have a better sense of how much you can afford to buy so you’re not looking at homes outside your budget. Contact at least 3 lenders to start the process. 
  2. Get preapproved. Choose a lender for preapproval. This doesn’t mean it’s going to be the lender you ultimately choose for a mortgage. You still have time to change your mind. Sellers will take your bids more seriously if you have a preapproval letter for a lender. 
  3. Shop for a home. Look for a home that fits your budget. An experienced real estate agent can be a great resource for finding the right home. 
  4. Make an offer. Once you find a great home, make an offer. Your offer may be accepted or declined. You may be able to make another offer. You can also move on to another home. When you make an offer and it’s accepted, it’s time to move to the next step in the process. 
  5. Make a final decision on a lender. Review your quotes and your preapproval letter. Make a final decision about your mortgage type and lender. Contact your lender of choice to let them know you’d like to move forward. 
  6. Complete a full application. Your lender will have an extensive application for you to complete. You’ll also need to submit financial documents, including:
    • Paystubs from the last month
    • Your most recent W-2s
    • Your most recent 1099s
    • Your most recent tax return (2 years of returns if you’re self-employed)
    • Your 2 most recent bank statements (all accounts)
    • A copy of your government ID
    • Name change documentation (if applicable)

Your credit scores and credit history make a significant difference when it comes to your mortgage offers. Your credit score is a 3-digit number that gives lenders an idea of how you handle your credit. A higher credit score is best. Lenders have a minimum credit score requirement. Borrowers who don’t meet the minimum may need to improve their scores before they can get a loan. 

Credit scores also impact your interest rate. If you have a higher credit score, lenders may offer you a lower interest rate. If you have a lower score, lenders may offer you a higher interest rate. Let’s take a closer look at the minimum credit scores required by Montana lenders:

LenderMinimum Credit Score Required
Bank of America620
guaranteed Rate620
Keller Mortgage600

Mortgage Options

You’ll see several options when you get a purchase quote. Here are the most common mortgage options:

  • FHA: FHA mortgages have low minimum down payments. They also have flexible credit requirements. The Federal Housing Administration insures these mortgages. 
  • USDA: USDA mortgages have low and no down payment options. These mortgages are to help borrowers buy homes in rural areas. The Department of Agriculture backs these mortgages. 
  • VA: VA mortgages offer service members a way to purchase a home with little to no down payment. These mortgages also have flexible credit requirements. The Department of Veterans Affairs insures these mortgages. 
  • Conventional: A conventional mortgage is a “standard” mortgage. No government agency insures or oversees these mortgages. These mortgages may be conforming or non-conforming. Fannie Mae and Freddie Mac guarantee conforming mortgages. The government started these companies and regulates them, but they are private. Conforming mortgages have a limit that is set by the government each year. 
  • Jumbo: Jumbo mortgages are large mortgages. They typically exceed the limits set for conforming mortgages. Some areas have higher price limits, so jumbo loans can be conforming as well. 

Private lenders offer FHA, USDA and VA mortgages. Lenders need to be approved by the insuring government agency. 

First Time Home Buyer Programs in Montana

Montana offers several first time homebuyer programs to help make buying a home more approachable. They include:

  • Montana Housing Regular Bond Program: First time homebuyers may be eligible for the Regular Bond Program. This offers a 30-year, low-interest mortgage to borrowers who meet income and purchase price limits. To learn more, contact a participating lender
  • Down payment assistance: Montana offers 2 down payment assistance programs. Borrowers must qualify for the Regular Bond Program to receive down payment assistance. Both programs require borrowers to have a minimum credit score of 620. Borrowers must contribute at least $1,000 of their own funds. The Bond Advantage Down Payment Assistance Program requires small monthly payments. The MBOH Plus 0% Deferred Down Payment Assistance Program doesn’t require payments until the borrower sells or refinances the loan. 
  • First time homebuyer savings account: Montana allows potential homebuyers to deduct up to $3,000 per year ($6,000 for married couples) on their state income taxes. The money must be in a special first time homebuyer account. You can take the deduction for up to 10 years and you must use the funds for closing costs. 

You may also want to check for local programs in the city or county where you’re planning to buy. 

Current Mortgage Rates in Montana

Mortgage rates can be fixed or adjustable. A fixed-rate mortgage has the same interest rate for the entire term. An adjustable-rate mortgage has an interest rate that changes. Lenders change interest rates daily. They change interest rates to reflect the housing market and changes in the economy. We update rates frequently to reflect the most relevant data. Here are Montana’s mortgage rates: 

Loan TypeRateAPR
30-year fixed 7.098% 7.174%
15-year fixed 6.457% 6.578%
7/1 ARM (adjustable rate) N/A N/A
5/1 ARM (adjustable rate) 7.102% 7.981%
Rates based on an average home price of $277,801 and a down payment of 20%.
See more mortgage rates on Zillow

Closing a Mortgage

Closing is the final step in the mortgage process. Once your lender has approved your mortgage, it will work with you to set a date for closing. Closing is a formal meeting where you complete your mortgage paperwork. You also pay your down payment and closing costs.

The longer the closing process takes, the longer it takes for you to get into your home. Here are the average days to close for several Montana lenders:

Buying Your First Montana Home

It’s tempting to start your home buying journey by looking at houses. The best place to start is with your financial situation. Consider how much you can afford for a house payment. As you get lender quotes, compare them to your budget. Let’s say a lender approves you for $200,000. Your budget might only allow for a $150,000 mortgage.

In that case, look for a home that’s cheaper with a monthly payment you can afford. Remember, your mortgage payment might include mortgage insurance, which can increase your monthly payment. 

If you’re not thrilled with your initial mortgage, that’s okay. You can get a refinance quote down the road. In the meantime, stick to your budget, navigate these waters — and mountains — and you’ll find the perfect Montana home for you. 

Get Ready for Take Off

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You can work at your own pace and someone is always there to answer your questions — 24 hours a day, 7 days a week. Want a fast, convenient way to get a mortgage? Give Rocket Mortgage® a try.