Calling it a “game-changer,” a local nonprofit organization has announced that a zero down payment assistance program for homebuyers will be much more accessible in Montana.
Home loan clients at First Interstate Bank in Montana now will be able to use the HomeNow program, which allows qualifiers to receive up to 100 percent of a down payment and/or closing costs on select 30-year, fixed-rate mortgages. Unlike other loan programs, it’s a one-time grant, not a second mortgage, and the buyer does not need to pay it back.
The program is administered by the Montana and Idaho Community Development Corporation in Missoula, and is designed to help low- and middle-income individuals gain financial independence and build equity.
“We’re thrilled to have First Interstate Bank join us as a participating lender for our new zero-dollar down payment program,” said Dave Glaser, president of Montana & Idaho CDC. “First Interstate Bank is an outstanding Montana institution with deep roots in our communities, and will be an incredible partner in our effort to make home ownership accessible to more Montanans.”
The program is designed to encourage home ownership in low-income areas.
It was launched in 2016 and the MTICDC has issued more than $500,000 in down payment assistance grants to more than 70 people in the state, which has supported more than $13.5 million in home purchases. The average grant size ranges from $7,000 to $10,000.
George Bosse, a nurse in Missoula, is a recent homebuyer who took advantage of the program.
“I have enough income to pay a mortgage but not enough savings to do a down payment,” he said. “In my income bracket, I’m a middle-class worker, Missoula’s housing market is pretty exclusive. It’s disproportionate to incomes in general here. I never really thought that I’d get a house in Missoula.”
Bosse estimates that he could make the same income in a place like Tucson, Arizona, but get a house for 30 percent or 40 percent less.
“It’s a stretch in Missoula to buy a house,” he said.
The median home price hit a record of $255,000 in Missoula last year, a 27.2 increase since 2010. That’s despite stagnating wage levels and a growing population. According to the Missoula Organization of Realtors, the median home price in October in Missoula was $264,000.
Glaser said there are only income restrictions on who qualifies if the house being purchased is not in a low-income area.
“It’s interesting, because a great part of it is there are places in Missoula where there are no income qualifications,” Glaser said. “It’s by borrower, not by family or household. And we’re talking people who make in the range of $40,000 and $80,000 (in places where there is income qualifications) a year, which is most of Montana. It’s really flexible.”
There’s a map on the mtcdc.org website that shows the income qualifications for certain areas. Glaser said most of the customers so far have been in Missoula. Only certain lending institutions like Mann Mortgage, Yellowstone Bank, Opportunity Bank and now First Interstate Bank can offer the program.
“We’re excited to add HomeNow to our portfolio of resources for home loan clients,” said Greg Wamsley, vice president and home loans manager at First Interstate Bank. “We’ve partnered with Montana & Idaho CDC on small business lending and large-scale development projects for years, so the expansion into down payment assistance was a natural fit for both of us.”
There is no limit to the number of people who can use the program as long as where the house is located qualifies. The loans for the program have a slightly higher interest rate than a conventional loan, Glaser said.
There is no additional paperwork required for borrowers at First Interstate Bank. The down payment assistance can be paired with conventional loans and government loans like FHA, VA and RD loans. It is not limited to first-time homebuyers.