First-time home buyer programs in Montana and Billings

Who runs the programs

The Montana Board of Housing, part of the state Department of Commerce, funds mortgages through tax-exempt Mortgage Revenue Bonds, sold through participating lenders across the state. The City of Billings offers its own deferred loan to lower-income buyers. Federal loans such as FHA loans and VA loans work through your lender.

Montana Board of Housing loans

Because the money comes from tax-exempt bonds, the Board says the IRS sets seven rules for every borrower: income and purchase price limits, a primary residence, business use of no more than 15% of the home’s area, a first-time buyer (no principal residence owned in the previous three years, with some exceptions), a purchase rather than a refinance, and possible recapture tax. The Board states that a buyer using its Regular Bond Program must first qualify for an FHA, VA, RD or HUD-184 first mortgage.

Source: Montana Board of Housing, “Current Rates, Income and Purchase Price Limits” and Home Loans pages, read October 13, 2026. Rates change; check the Board’s page before you plan.

The Board also describes a Mortgage Credit Certificate (MCC): a federal income tax credit equal to 20% of the mortgage interest paid each year, up to $2,000. Its Quick Reference Guide says an MCC cannot be combined with Board loans and costs $750 ($500 to the Board and $250 to the lender).

Down payment assistance

Both Board assistance programs can pay for the down payment and closing costs, up to 5% of the sales price, with a maximum of $15,000. Both need a Board 30-year fixed first mortgage, a minimum credit score of 620, and homebuyer education. Borrowers must put in at least $1,000 of their own cash, which can be a gift.

• Plus 0% Deferred: a 0% second loan with no monthly payments, due when you sell, refinance or pay off the first loan. The maximum debt-to-income ratio is 45%.
• Bond Advantage: a 15-year amortizing second loan with the same fixed rate as the first mortgage.

A worked example

The 2024 Census median value of a home in the city of Billings is $360,900 (see our page on Montana home prices). Five percent of that is $18,045, so the $15,000 cap would apply. A buyer of a $360,900 home could borrow at most $15,000 for down payment and closing costs under either program, and would still need $1,000 of their own money. This is an illustration, not an offer: the lender decides the amount.

Income and price limits in Yellowstone County

Source: Montana Board of Housing Quick Reference Guide, list dated July 24, 2026. Applies to the Regular Bond, Bond Advantage, 80% Combined, set-aside and MCC programs. The Plus 0% program has its own lower income limit, shown above.

The Board counts household income, which can differ from the income a lender uses for underwriting, and publishes an Income Determination Guide.

Homebuyer education

The Board requires education for all borrowers in set-aside programs, for those without established credit, for Veterans’ Home Loan borrowers, and for Regular Bond borrowers unless they meet all of: 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. The Board points to a statewide nonprofit whose classes meet HUD requirements; online classes also need one face-to-face session with a HUD-approved housing counselor.

Programs in Billings

The City of Billings offers zero-interest, deferred-payment loans of up to 20% of the home’s purchase price to buyers whose household income is no more than 80% of the Area Median Income, using HUD limits. The city’s pages say:

• Funding was available as of September 10, 2026, on a first-come, first-served basis.
• Applicants must take a homebuyer education class; the city’s page lists the provider and phone number.
• Funds are reserved for applicants who have submitted the education certificate, a signed buy-sell agreement with an eligible price, and a Loan Estimate with PITI (principal, interest, taxes, insurance) under 42%.
• Homes built before 1978 with chipping or peeling paint are not eligible, and neither are homes with tenants living in them. See our guide on seller disclosure in Montana for the federal lead-paint rules.
• The full approval process can take more than four weeks, and a check request takes up to 14 business days to process. Plan your closing date accordingly.

Contact: homebuyer@BillingsMT.gov. Applications are mailed to P.O. Box 1178, Billings, MT 59103 or dropped off at City Hall, 316 North 26th Street.

How to apply

1. Take a homebuyer education class.
2. Choose a participating lender from the Board’s list; the lender checks your eligibility and picks the right Board program.
3. For the city loan, apply to the Community Development Division at the same time, because its review takes 5 to 10 business days.
4. Compare the offers on the Loan Estimate; see closing costs in Montana and the home buying steps.

Verify your lender’s and agent’s licenses. For Billings prices, see buying a home in Billings.