How much of a down payment do I need to buy a house in Montana?

Montana offers home buyer down payment assistance of up to 5% of the purchase price, or $15,000, whichever is less, in the form of a second mortgage, but you'll have to bring $1,000 of your own to closing. Many home buyers in Montana will qualify for this assistance, but even if you don't, you can also get a zero down payment mortgage through VA or the USDA. In addition, conventional mortgages typically only require 3% down, and FHA mortgages just 3.5%.

How much are closing costs in Montana?

Montana closing costs are pretty reasonable, at an average of $3,337 for a purchase loan. Your Montana home buyer assistance, however, can help cover this fee, with plenty left over for your down payment.

What does homeowners insurance cost in Montana?

Homeowners insurance on a $400,000 home in Montana is slightly above the national average, at $3,831. This doesn't include the cost of additional home protection, such as wildfire insurance.

What is the property tax rate in Montana?

Montana is 29th out of 50 states when it comes to the percentage of the assessed property value as tax, at just 0.83% on average. Each county will assess its own taxes, so this may be higher or lower depending on where in the state you are. For example, Missoula County collects 0.93%.

Montana Mortgage Calculator

If you're looking for your next home in the expansive state of Montana, it's important to put your pencil to paper before you get too deep into the search. You may be able to buy more than you imagine in Big Sky Country, but making sure you can afford all the additional expenses of homeownership is important. That's why we've designed this Montana mortgage calculator. Simply plug in some numbers, and presto, you'll know what you can afford to buy this real estate season.

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If you're looking for your next home in the expansive state of Montana, it's important to put your pencil to paper before you get too deep into the search. You may be able to buy more than you imagine in Big Sky Country, but making sure you can afford all the additional expenses of homeownership is important. That's why we've designed this Montana mortgage calculator. Simply plug in some numbers, and presto, you'll know what you can afford to buy this real estate season.

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Montana housing market

Montana is a state full of all kinds of real estate, which can make it hard to provide a wider snapshot of the state's market. In the last five years, however, it's clear that the median listing price has shot up dramatically -- by about 50% according to the Federal Reserve Bank of St. Louis. The good news is that price has remained relatively stable since April 2022.

Median listing prices can change because of a change in the composition of listing types (i.e. when more inexpensive houses are listed, the median price will go down) or due to an overall change in the market, but the long-term stability in Montana points to a more diverse and less volatile home market right now. When you further compare this to the average listing price data, it's very clear that anyone can find a home to suit them in this state, should they choose to live there.

The five major cities in Montana skew both above and below the national median home sales price of $412,095 in February 2024, and although active listing count is improving, it is still substantially below pre-pandemic levels. However, days on market are traditionally much higher than many parts of the country, meaning you probably won't have to fight for your next Montana home. Still, it's important to shop around ahead of time to ensure that you have the best mortgage lender and are pre-approved before making an offer.

Here's a quick snapshot of some of the most important Montana markets and home values there.

Metropolitan Area	Median Home Value	1-Year Change
Billings	$365,000	4.3%
Bozeman	$659,000	1.4%
Butte	$282,500	(4.2%)
Great Falls	$305,000	7.0%
Missoula	$512,000	2.4%

Data source: Redfin. Figures accurate as of April 4, 2024.

How do I calculate my mortgage payment?

Using a mortgage calculator like this one is the fastest and easiest way to calculate your mortgage payment, but some people like to do things the old-fashioned way. If that's you, check out the formula below to calculate your basic mortgage payment.

The mortgage payment that results from the above calculation is a very basic form. It only includes your principal and interest payment, and nothing more. That's fine, except that most mortgage payments today include additional costs, like mortgage insurance and escrowed items. Here are a few examples of additional expenses that might be added to your mortgage payment by your bank:

Property taxes
Homeowners insurance
Flood insurance
Wildfire insurance
Homeowners association dues
HOA assessments
Private mortgage insurance (for conventional loans)
Mortgage insurance premium (for FHA loans)

There may be other things included, as well, that are specific to your future home. Be sure to ask your lender exactly what items the bank will pay on your behalf and include in the mortgage payment.

Things to know before buying a house in Montana

Montana's housing market is varied, depending on where in the state you want to live. Since the weather there can be hostile, the most habitable areas will naturally be the most expensive. Despite this, property taxes in Montana are fairly reasonable at 0.83% of a property's assessed fair market value. That means if your home is assessed at $176,300, your taxes will be $1,465 per year.

Montana has some of the largest increases in temperature due to climate change of anywhere in the contiguous United States. This is creating major problems with glaciers and snowpacks shrinking, which then turns into drought for the areas that depend on the melt from those water sources. In other parts of the state, more rain may fall, leading to increases in runoff into the river systems. All of this can make areas more prone to wildfires.

Ensuring that you have wildfire coverage beyond your homeowners insurance policy is going to be really important if you live in a part of Montana where it's getting more dry and there's a lot of woodland. Your insurance agent can help guide you, but this type of damage is rarely covered by a basic policy and having no coverage can leave you in serious financial trouble. Once you have that figure, plug it into the Montana mortgage calculator to help give you a better estimate of your overall payment.

Tips for first-time home buyers in Montana

Montana has two programs available through Montana Housing to assist residents in becoming homeowners. These are available to nearly all residents of Montana, giving everyone a chance to buy their own home.

MBOH Plus 0% Deferred Down Payment Assistance Program

The MBOH Plus 0% Deferred Down Payment Assistance Program provides up to 5% of the loan's value, up to $15,000, in down payment and closing costs assistance to home buyers in Montana. This second mortgage is financed at 0% interest and requires no payments, but must be paid in full when the home is sold or if the primary mortgage is paid off or refinanced. Borrowers must complete a home buyer education course, contribute $1,000 at closing, and cannot have incomes that exceed $90,000 for a family of three or more.

Bond Advantage Down Payment Assistance Program

The Bond Advantage Down Payment Assistance Program is very similar to the MBOH Plus program, with a couple of exceptions. First, the home buyer is not subject to income limits, and secondly, the loan itself is a 15-year second mortgage at the same rate as the primary mortgage. So instead of it having no payments due, the Bond Advantage Down Payment Assistance Program will require a monthly payment for the first 15 years of the mortgage.

Advice for all first-time borrowers

Whether you qualify for a home mortgage purchase program in Montana or not, you can apply for other loan options. Much of Montana is rural, making a USDA loan an appropriate choice in many places. In addition, there are other loan types with appealing terms for first timers, like FHA loans or conventional loans. They all have low down payment requirements, making them easier to secure, and can be used to buy a wide variety of homes.

Whatever you do, make sure you are the best candidate you can be when you apply for your mortgage. This goes well beyond your credit score and also includes a hard look at your source of income, how your debt compares to your income (your debt-to-income ratio), and even how long the money you intend to use at closing has been in your account (a process called seasoning). Remember not to make any significant changes to your finances during the home-buying process, since your bank's underwriter will look at your file more than once to be certain your profile is stable.

FAQs

Montana offers home buyer down payment assistance of up to 5% of the purchase price, or $15,000, whichever is less, in the form of a second mortgage, but you'll have to bring $1,000 of your own to closing.
Many home buyers in Montana will qualify for this assistance, but even if you don't, you can also get a zero down payment mortgage through VA or the USDA. In addition, conventional mortgages typically only require 3% down, and FHA mortgages just 3.5%.
Montana closing costs are pretty reasonable, at an average of $3,337 for a purchase loan. Your Montana home buyer assistance, however, can help cover this fee, with plenty left over for your down payment.
Homeowners insurance on a $400,000 home in Montana is slightly above the national average, at $3,831. This doesn't include the cost of additional home protection, such as wildfire insurance.
Montana is 29th out of 50 states when it comes to the percentage of the assessed property value as tax, at just 0.83% on average. Each county will assess its own taxes, so this may be higher or lower depending on where in the state you are. For example, Missoula County collects 0.93%.

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