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Frequently Asked Questions

 

About the Homebuying Process and the MBOH Loan Products

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Applications are taken like any other loan. Lenders should conduct the credit analysis, and qualify the loan under FHA, RD VA HUD-184 and MBOH qualifications. The lender submits a reservation for funds through an on-line process called Lender On Line (LOL) or by faxing in required documents. A “borrower stat sheet” must accompany all reservations and, if using a setaside waiver program, a letter from the down payment assistance sponsor. The lender closes the loan and then the Montana Board of Housing purchases the loan from the lender once all required documents are received by the Board.

The Board follows the Montana Small Tract Financing Act and limits land purchases to 40 acres. There are other limitation placed on the program including land value not being more than 35% of the total appraised value IF the loan is new construction on private sewer & septic systems. Also, if the land purchased can be subdivided or is an extra lot not encumbered by the house or garage being purchased, Board funding can’t be used. These situations can be reviewed by Board staff on a case-by-case basis.

Yes, if the new buyer meets the same requirements that the current owner did (i.e. income, first time homebuyer, etc.).

No, MCCs are to be used with any other kind of financing outside the Board Program – otherwise, the IRS sees this as “double dipping” into tax exempt sponsored program funding.

MBOH can loan on a leasehold under a lease having at least 50 years remaining on the lease.

No, the Board requires statements from the actual employer for income verifications.

The IRS requires that we inform users of our program of a possible Recapture Tax. This is an IRS tax – NOT a Board of Housing tax. The recapture tax very rarely comes into play with Board loans & the borrower has to sell the home within the first 9 years of ownership, have made a substantial profit from the home sale and be above the allowable income limit at the time of sale. Since so few Montanans ever fall into the category of having to pay this tax, it should not be used as a deterrent to utilizing the Board’s programs.

 The Board itself may assist homebuyers by paying fees on their behalf to lenders but cannot provide direct down payment assistance. Various organizations such as Neighborworks Montana, the Federal Home Loan Bank of Seattle and HRDC’s and local governments partner with the Board to provide down payment assistance. Borrowers can learn of this assistance by attending first time homebuyer education classes in their areas.

No, refinancing does not automatically trigger a possible recapture tax. The borrower will want to consult with a tax expert when the home is actually sold to determine if any action is required regarding their taxes.

MBOH offers fixed rate loans for a variety of borrowers’ needs. Our regular bond program has favorable rates with 1% of the loan amount paid to the lender from the Board and an additional 1% allowed to be charged to the borrower. Setaside Programs offer financing for those not fitting in the regular bond program and has the Board paying the lender 1.5% of the loan amount with no further fees being allowed. 

Each participating lender that is approved for use of Lender On Line has an administrator who is responsible for adding or deleting loan officers and the access they have. Different levels can be accessed depending upon the authorization given by each lender’s administrator. The Board will set up new lenders with a password once they’ve been approved by the Board to participate in our programs.

Down payment requirements vary depending on the type of loan the borrower chooses. RD and VA loans don’t have down payment requirements – though the Board does require a $1500 investment on RD loans by the borrower ($500 if approved homebuyer education is completed). FHA loans have down payment requirements that depend on factors such as credit scores and are a percentage of the loan amount. Some fees are charged by the mortgage insurer/guarantor but can usually be financed in with the mortgage.

Yes, the borrower can apply for an “Occupancy Waiver”. This allows the borrower to have the home vacant while trying to sell or rent it for a 6 month period. At the end of 6 months, a new waiver must be requested. If the home has been rented for over 12 months, there can be tax consequences. Military occupancy waivers are given for 12 month periods at a time.

No

Definitely. On-line live training is available upon request. Contact Jeannene Maas at 406.841.2851 or jmaas@mt.gov.

 

The Board has no requirements for the purchase of a loan. However, if the mid credit score is 680 or below OR the front end ratio is 31% or less OR the back end ratio is 41% or less, the borrower must complete an approved Homebuyer Education Course. On-line courses are NOT approved – courses sponsored by Neighborworks Montana are the only classes accepted by the Board at this time.

They include the following:

  • Purchase price and income limits 

  • A ‘first-time’ home buyer rule, which means you must not have owned a home considered “real property” in the past three years (some exceptions apply such as “targeted areas” and waivers for set aside programs”

  • The property must be owner-occupied; it cannot be used as a rental

  • Business use of the home is allowed, as long as it remains under 15 percent of the area of the home

  • The IRS may impose a recapture tax at the time the home is sold if a substantial gain in income occurs, the home is sold in the first 9 years, and a profit is made from the sale.

The loan is a “purchase-money” loan. Refinancing is only eligible in the case of construction of other interim financing that does not exceed 24 months

Board rates follow the market and depend on the rates at which we can sell our tax exempt bonds. Current rates can be found at: Interest Rates. Board rates are set on a fixed, 30 year term and will not change during the life of your loan. No penalty for pre-payment exists. No re-amortization of the loans is possible if large sums are paid on the loan.

MBOH has low, fixed-interest rates with some or all of the borrower’s fees to the lender paid (MBOH Quick Reference Guide). They must be insured or guaranteed by FHA, RD, VA or a HUD-184 guarantee. Currently, we do not accept Private Mortgage Insurance.

There are no pre-payment penalties attached to any Board loans.

Typically, anyone over the age of 18 living within the household will have his/her income counted. Also included will be any social security income or child support income received. Contact a Board staff member with any specific concerns or questions regarding income calculations.

The Board will purchase loans that have co-signers on the note. If the person co-signing will not be occupying the home, then we don’t count their income toward the income limits and don’t want them signing the Buy/Sell or Deed of Trust. We require that the loan be underwritten so that the borrower is able to make the monthly payments without relying on the co-signer. 

The Board will purchase Condos but has special requirements for them. No more than 25% of the condos in a project can be financed by the Board. Additional requirements such as proper insurance and FHA project approval must also be provided and can be found at: (Condominium Unit Approval and Hazard Insurance Guidelines).

The Board will purchase manufactured home loans if they qualify. All manufactured homes:

  • must have been constructed after June of 1976
  • must be insured by either FHA, VA, HUD-184 or RD, and
  • must be detitled.

 

About Rental Assistance and the Section 8 Programs

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No, the unit must pass inspection before MDOC will make any payments on your behalf.

You may not update or change any information online – you must submit changes in writing to MDOC:

Montana Department of Commerce
TBS8 Housing Division
PO Box 200545
Helena, MT 59620-0545

To apply for Montana State Section 8 Rental Assistance:
Go to www.housing.mt.gov
(choose the site that refers to HAPPY software),
Click on 'Apply for Section 8 Rental Assistance' box (fifth link down on upper left hand side of screen),
Read this entire page – it contains important information, instructions and links.
When you get to the bottom of the page, click on link that says 'Open this application in another window'. This is the online application.
Fill out application completely. (Choose only one District.)
Print receipt when prompted.
Allow two weeks to receive confirmation letter of placement on list.

Unfortunately, there are too many factors and variables that affect the timeline to estimate accurately. The wait list is running one to three years. Keep your contact information current with MDOC and your field agent will contact you when you near the top of the list.

MDOC will assign one bedroom for each two persons within the household, except in the following circumstances:

One additional bedroom for every two remaining family members and essential persons, which allows the family to choose that family members six years of age or older are not required to share a bedroom with family members of the opposite sex, that children are not required to share a bedroom with other adult family members, and that children of the same sex with more than 6 years of age difference are not required to reside in the same bedroom. Children under the age of two, of either sex, may share a bedroom with parents for purposes of meeting the occupancy standards. Children over the age of two are not required to share the same bedroom with a single parent head of household, unless that is family choice.

Income limits can be found at Income Limits.

Once you have located a unit and the unit has passed inspection you will pay the landlord 30% of your gross adjusted income.  MDOC will send you a Payment Determination stating what your portion to the landlord will be and what MDOC will be paying the landlord.

Your name must reach the top of the wait list before you can be assisted.

You and your perspective landlord will fill out a Request for Tenancy Approval (RTA).  This form tells us what the rent is and what utilities you are responsible for paying. 

Medical marijuana is prohibited in federally subsidized housing.

The Section 8 Housing Choice Voucher Program assists low-income individuals and families with their rental payments. Under the Section 8 Program, property owners retain the same rights and responsibilities that they have under Montana State law. They use their own rental agreement or lease and decide what the term of tenancy will be. The tenant has the same obligations as any tenant under State law. SCHA’s subsidy does not change the normal relationship of property owners or managers to tenants. The main difference is that each month the property owner will receive two payments for the tenant’s rent – one from the tenant, which is about 30% of his or her income, and the balance from the  MDOC.

To check position number and status on the State of Montana's Section 8 wait list: Go to www.waitlistcheck.com
(choose the site that refers to HAPPY software).
Enter birth year (e.g. 1980 - not birthdate),
then enter Social Security Number as password (no dashes).
You are allowed only one 'Active' application.

Section 8 is the name for many of HUD’s Rental Assistance programs. The term “Section 8” is used because the federal law, which created the program, is Section 8 of the Housing and Community Development Act of 1974.

■ The applicant applies for Section 8 when on the  waiting list is.
■ The applicant’s name comes to the top of the waiting list.
■ The Housing Authority (HA) determines if the applicant is eligible for the program.
■ The applicant is issued a Voucher and a Request For Tenancy Approval (RTA) form.
■ The voucher holder has 90 days to locate suitable housing within the area.
■ The voucher holder finds a unit on the private market to rent.
■ The property owner/manager of the unit screens the applicant for suitability as tenant (The HA does not screen for tenant suitability.)
■ The property owner/manager and the voucher holder complete the RTA form and return it to the HA.
■ The HA inspects the unit according to Housing Quality Standards.
■ The HA passes and approves the unit or notes needed repair items.
■ The HA negotiates rent based on Rent Reasonableness.
■ The HA enters into a contract with the property owner/manager of the unit.
■The owner and tenant sign the property owner/manager’s Rental Agreement or Lease.
■ The HA receives a copy of rental agreement between the tenant and property owner/manager.
■ The HA inspects the unit annually.
■ The HA reviews tenant eligibility annually.

Obtain and follow the guidance in the grievance procedure provided by management.

Promptly report suspicion of any type of infestation to management.  Management will take measures to exterminate.

There are a few factors that could cause your number on the wait list to go up instead of down, the most common of which is when someone with an earlier application date transfers to a different District of the state wait list (in this case, the same one that you are on), or as I enter those paper applications that have an earlier application date than yours, your number will go up.

HUD requires that residents pay rent based on income.  Changes to household income and family composition affect the tenant rent and housing assistance payment.  Failure to do so, may cause the household to pay more than rent than required, or be required to repay the government for overpaid subsidy.

 

About the Allocation of Housing Credits

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The Qualified Allocation Plan (QAP) is intended to ensure the selection of developments which best fulfill the most pressing housing needs of low income people within the State of Montana.

On average, it takes twelve (12) weeks for the Montana Board of Housing to make the final decision on which projects are awarded housing tax credits.


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HOUSING DIVISION | MONTANA DEPARTMENT OF COMMERCE
301 S. PARK AVE, STE 240 | PO BOX 200528 | HELENA, MT 59620-0528 | P: (406) 841-2840 | F: (406) 841-2841 | TDD: (406) 841-2702 | TOLL FREE: (800) 761-6264