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 Housing regular bond and set-aside loan programs.

Montana 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 (Montana 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 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 deductible is the greater of $1,500 or 1% of dwelling coverage except for Wind/Hail is the greater of $2,500 or 1% of dwelling coverage; escrow for tax and insurance.

Underwriting Criteria:

  • Per RD guidelines

Down payment Sources:

  • Montana Housing requires $1,500.00 of closing costs or down payment to come from borrowers personal funds (CANNOT USE GIFT FUNDS)
  • Reduced to $500 for borrowers completing approved Home buyer Ed courses.
  • Other sources must be approved by RD



MONTANA HOUSING | 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