Happy couple sitting on the front porch of their new home

Regular Bond Loan Program

Loans that are insured or guaranteed by the Federal Housing Administration Mortgage Insurance Program (FHA), the Veterans Administration Mortgage Guarantee Program (VA), the Rural Development Loan Guarantee (RD) or the Housing and Urban Development (HUD) 184 Native American Housing Program (HUD 184) allow for an alternative to conventional loan products that often require large down payments. The programs partner well with most down payment assistance, Montana Board of Housing regular bond and set-aside loan programs.

"How to" upload documents in Lender Online!

Lender Documents to Reserve a Regular Bond Loan:

Borrower Stat Sheet

Recapture Notice to Mortgagor

Lender Documents to Close a Regular Bond Loan:

Early Delinquency Counseling Form

FHA Notice to Buyer

Mortgagor's Affidavit

Personal Property Statement

Recapture Tax: Notice to Compute

Release of Information

Seller's Affidavit

Uniform Rider to Trust Indenture

VA Required Disclosure Statement

Whole Loan Submission Voucher (02/09/16)

Whole Loan Submission Voucher Details (02/09/16)

Additional Documents Lenders may find useful:

Terms and Conditions for 2016 Programs (04/16/16)

Frequently Asked Questions

First Time Homebuyer Education

MBOH Quick Reference Guide (06/06/16)

Except as outlined above, all terms, conditions, definitions and program criteria applicable to the Regular Bond Program, set out in the Mortgage Purchase and Servicing Agreement and the Terms and Conditions of the 2015 Homeownership Program .

 FHAHTMLPro

Federal Housing Administration (FHA) Mortgage Insurance Program

Brief description: FHA insurance program provides mortgage insurance for homebuyers, allowing an alternative to conventional loan products that often require large down payments. FHA loans have small down payment requirements and partner well with most down payment assistance, Montana Board of Housing regular bond and set-aside loan programs.

Montana Board of Housing Guidelines for FHA insured loans

Borrower Eligibility Criteria:

  • Income limits
  • First-time homebuyer(s); waived for targeted areas.
  • Home must be primary residence for the life of the loan.
  • No asset limitations.

 Property Criteria:

  • Single family home, townhouse, de-titled manufactured home on permanent foundation or FHA-approved condo unit (Montana Board of Housing will purchase loans on up to 25% of units in a project).
  • Purchase Price Limits
  • Limit of 15% for business use.
  • Land limited to 35% of value of property on new construction that has private water or sewer.
  • Maximum parcel size of 40 acres, with no subdivision of land possible.

Loan Criteria:

  • 30-year fixed rate loan
  • IRS recapture potential
  • Buy existing or build new home
  • Hazard insurance $1,500 or 1% of dwelling coverage deductible all peril; escrow for tax and insurance

Underwriting Criteria:

  • Per FHA guidelines
  • Need any multi-lot/repair issues on appraisal addressed before closing

Down Payment Sources:

  • Must be FHA approved sources only-approved non-profits require at least 3.5% from borrower, local governments and a HUD-approved non-profit instrumentality of government can provide 100% financing
  • Montana Board of Housing pays a portion of closing cost for the borrower.

Mortgage Insurance Information:

  • Requires FHA coverage
 VAHTMLPro

Veteran Administration (VA) Mortgage Guarantee Program

Brief Description: The VA guarantee program provides lending opportunities to eligible veterans. The loans have no down payment requirements and partner well with most closing cost assistance in the Montana Board of Housing regular bond and set-aside loan programs.

Montana Board of Housing Guidelines for Veterans Administration Guarantee Loans

Borrower Eligibility Criteria:

  • Income limits
  • First-time homebuyer(s); waived for targeted area and eligible veteran.
  • Home must be primary residence for the life of the loan.
  • No asset limitations.
  • Must be certified eligible by the VA.
  • Full guarantee only with no prior entitlements used and not restored.
  • Homebuyer education required for non-conventional borrowers, i.e., those with credit scores below 680 or front end ratio above 31% or back end ratio above 41%.

Property Criteria:

  • Single family home, townhouse, de-titled manufactured home on permanent foundation or condo unit (Montana Board of Housing will purchase loans on up to 25% of units in a project).
  • Purchase Price Limits
  • Limit of 15% for business use.
  • Land limited to 35% of value of property on new construction that has private water or sewer.
  • Maximum parcel size of 40 acres, with no subdivision of land possible.
  • Must meet applicable building code and have infrastructure.

Loan Criteria:

  • Rates depend upon finance option.
  • 30-year fixed rate loan.
  • IRS recapture potential.
  • Buy existing or build new home.
  • Hazard insurance $1,500 or 1% of dwelling coverage deductible all peril; escrow for tax and insurance.

Underwriting Criteria:

  • Per VA guidelines.
  • Need any multi-lot/repair issues on appraisal addressed before closing.

Down payment Sources:

  • Must be approved for use with VA financing.
  • Montana Board of Housing pays a portion of the closing costs.

Mortgage Insurance Information:

  • Requires VA Certificate of Eligibility.
 RDHTMLPro

Rural Development (RD) Mortgage Guarantee Program

Brief Description: The RD guarantee program provides a loan guarantee for homebuyers in rural areas, allowing an alternative to conventional loan products that often require large down payments. As of January 2006, all of Montana is eligible as a rural area, with the exception of the properties lying within the city limits of Billings, Bozeman, Great Falls, Helena and Missoula. The RD-guarantee program partners well with most down payment assistance and Montana Board of Housing regular bond and set-aside loan programs.

Montana Board of Housing Guidelines for RD guarantee loans

Borrower Eligibility Criteria:

  • Income limits
  • First-time homebuyer(s); waived for targeted area
  • Home must be primary residence for the life of
    the loan
  • No asset limitations

Property Criteria:

  • Single family home, townhouse, de-titled manufactured home on permanent foundation or condo unit (MBOH will purchase loans on up to 25% of units in a project).
  • Purchase Price Limits
  • Limit of 15% for business use.
  • Land limited to 35% of value of property on new construction that has private water or sewer.
  • Maximum parcel size of 40 acres, with no subdivision of land possible.
  • Must be in rural area eligible for RD loans.
  • Manufactured home must be new, from approved dealer, on a foundation engineered both site-specific and home-specific.

Loan Criteria:

  • Rates depend upon finance option
  • 30-year fixed rate loan
  • IRS recapture potential
  • Buy existing or build new home
  • Hazard insurance $1,500 or 1% of dwelling coverage deductible all peril; escrow for tax and insurance.

Underwriting Criteria:

  • Per RD guidelines

Down payment Sources:

  • Montana Board of Housing requires $1,500.00 of closing costs or down payment to come from borrowers personal funds
  • Reduced to $500 for borrowers completing approved Home buyer Ed courses.
  • Other sources must be approved by RD
  • Montana Board of Housing pays a portion of closing costs for the borrower.
 HUD184HTMLPro

Housing and Urban Development (HUD) 184 Native American Housing Program

Brief Description: HUD Section 184 Indian Housing Loan Guarantee Program is designed to offer homeownership, property rehabilitation, and new construction opportunities for eligible Native American individuals or families who want to own a home. Montana Board of Housing partners with HUD, who administers the program, to provide affordable mortgage rates for HUD 184 insured loans.

Montana Board of Housing Guidelines for HUD 184 loans

Borrower Eligibility Criteria:

  • Income limits
  • First-time homebuyer(s); waived for targeted area.
  • Home must be primary residence for the life of the loan.
  • Must be a member of a federally-recognized tribe.
  • No asset limitations.

Property Criteria:

  • Single family home, townhouse, de-titled manufactured home on permanent foundation or condo unit (MBOH will purchase loans on up to 25% of units in a project).
  • Purchase Price Limits
  • Limit of 15% for business use.
  • Land limited to 35% of value of property on new construction that has private water or sewer.
  • Maximum parcel size of 40 acres, with no subdivision of land possible.
  • Must meet applicable building code and have infrastructure.
  • Must have tribal approval if on lease or tribal trust lands; BIA if allotment; fee simple is allowed.

Loan Criteria:

  • 30-year fixed rate loan, with no origination or discount points charged at closing.
  • IRS recapture potential.
  • New construction or existing home.
  • Hazard insurance $1,500 or 1% of dwelling coverage deductible all peril; escrow for tax and insurance.
  • Tribe must have approved legal procedures for evictions, priority of lien, leasing, and foreclosure.

Underwriting Criteria:

  • Per HUD 184 guidelines
  • LTV cannot exceed 97.75 or 98.75 of appraised value.

Down payment Sources:

  • Tribal resources or approved HUD source.
  • Montana Board of Housing pays a portion of closing costs on behalf of borrower.

Mortgage Insurance Information:

  • Requires HUD 184 coverage.

Loan Information:

  • If done at the Set-aside rate, higher income limits are available for households of 9 or more people, and Montana Board of Housing pays lender origination fees for the borrow.
  • If done as a regular bond loan, Montana Board of Housing regulates points and fees that can be charged. Consult Board staff with any questions.
  • Reservations valid 60 days for existing homes or 180 days for new construction.
  • 0.25% fee charged for extensions, 0.50% for cancelation.

 

Reservation Process for HUD184:

PREFER

Input on Lender On Line web based reservation system
Fax Borrow Stat Sheet and Homebuyer Education Certificate
 

OR

Fax reservation to Montana Board of Housing including:

  • Reservation cover sheet and required documentation listed

Special Reservation Criteria

Must submit HUD 184 approval documentation to Montana Board of Housing before reservation can be approved.

This is a summary of the Montana Board of Housing program only. For a complete copy of the terms and conditions see Mortgage Purchase and Servicing Guide or Terms and Conditions for Whole Loans .

 

 

Frequently Asked Questions

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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.

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.

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.

Definitely. On-line live training is available upon request. Contact Julie Hope at 406.841.2853 or jhope@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 above 31% OR the back end ratio is above 41%, 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:
 

  • Income and Purchase Price 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.


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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