What to know about Montana mortgage rates

A scenic view of Glacier National Park in Montana illustrates the state's nickname Big Sky Country. State residents may have to file a Montana income tax return.Image: A scenic view of Glacier National Park in Montana illustrates the state's nickname Big Sky Country. State residents may have to file a Montana income tax return.
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Home to Yellowstone National Park and Glacier National Park, Montana is a beautiful and exciting place to live. The state also offers low taxes and no shortage of cultural activities.

If you’re searching for a home in Montana, remember to shop around and compare mortgage rates. What may seem like a small difference could add up to thousands of dollars over the course of a 15-year or 30-year mortgage.



Mortgage debt in Montana

Credit Karma members with mortgages in Montana had average mortgage debt of $193,646 in 2020, with average monthly mortgage payments of $1,328.

That puts Montana just below average for both mortgage debt and average monthly mortgage payments compared to Credit Karma members across the U.S. in 2020.

Types of home loans

If you choose to finance your dream home, you might be overwhelmed with the number of mortgage loan options out there. Here are some of the more common mortgage types Montana homeowners may consider.

Conventional loans in Montana

Conventional loans are mortgages that aren’t part of government programs. These loans tend to be good for people with solid credit and a down payment of at least 3% to 5%.

Montana FHA loans

FHA loans are a good option for first-time homebuyers to explore — particularly if your credit is less than perfect. That’s because you may be able to qualify with credit scores as low as 580 with a 3.5% down payment or 500 with a down payment of 10%. This FICO® score requirement is the FHA minimum standard. In general, additional lender credit score requirements may apply.

The FHA loan limit in 2023 is generally $472,030 for a one-unit property, but it can reach as high as $1,089,300 depending on where you live.

Nearly every area in Montana conforms to the FHA loan limit of $356,362 in 2021. The following three metro areas are higher in 2021:

  • Bozeman
  • Missoula
  • Kalispell

You can find the exact limit by county on the U.S. Department of Housing and Urban Development website.

VA loans in Montana

If you’re an eligible veteran or service member comparing mortgage rates in Montana, a VA loan can be attractive since down payments and mortgage insurance aren’t typically required and you may be able to qualify even if you don’t have great credit.

Similar to FHA loans, VA loans are insured by the federal government but issued by private lenders.

Conforming loan limits in Montana

Conforming loans are a type of home loan that meets certain loan limits set by the Federal Housing Finance Agency. This means they can be bought by Fannie Mae and Freddie Mac, federal-government-sponsored enterprises that guarantee mortgages.

Loans that exceed conforming loan limits are known as jumbo loans. Lenders often consider these loans riskier than conforming loans.

All of Montana’s counties have a conforming loan limit of $548,250 in 2021 for single-unit properties.

First-time homebuyer programs in Montana

If you’re hoping to buy your first home, there may be some assistance programs available to you in Montana.

  • Montana Housing Regular Bond Loan Program: This program offers first-time homebuyers a low fixed interest rate on a 30-year loan. Income and purchase price limits apply and are based on the location of the home and the income of all household members who are 18 or older. You may also need to complete a homebuyer education course.
  • Montana Housing 80% Combined Program: The Montana Housing 80% Combined program combines a 30-year first mortgage loan at 80% of the purchase price with a second loan for the remaining 20%. The 20% portion of the loan is offered by a nonprofit partner. It eliminates mortgage insurance and serves as an alternative to an FHA loan. To be eligible, you must meet income and purchase limits and complete homebuyer education.
  • Veterans’ Home Loan Program: With the Veterans’ Home Loan program, first-time homebuyers who are veterans can get a mortgage at a below-market rate. While you don’t have to meet any income or purchase price requirements to qualify, there is a loan limit. You must also take a homebuyer education course. This program doesn’t permit the purchase of condo units. Additional terms and restrictions apply to the above programs, so be sure to review all of the details at the Montana Housing website.

Mortgage refinancing rates in Montana

If you’re thinking about refinancing your mortgage, keep a few things in mind:

  • Break-even cost — Once you know the closing costs for your refinance, you can use any savings on your monthly mortgage payment to calculate how long it will take you to recoup that investment and “break even.”
  • Cash-out refinance — Have you accumulated equity in your home that you’d like to convert to cash? A cash-out refinance lets you refinance your home for more than what you owe and get cash in return. But you’ll owe the full amount plus interest and you’ll end up owning less equity in your home, which means less cash in your pocket if you sell in the future.
  • Loan term — You also may want to either shorten or extend your loan term. For instance, if you have a 30-year mortgage, you may want to convert it to a 15-year loan. Keep in mind that reducing your term likely means you’re paying more each month — but less in interest over time. Lengthening your loan term may mean you pay less each month, but more interest over the course of the mortgage.

About the author: Anna Baluch is a freelance personal finance writer from Cleveland, Ohio. You can find her work on sites like The Balance, Freedom Debt Relief, LendingTree and RateGenius. Anna has an MBA in marketing from Roosevelt Un… Read more.