Where the Financing Comes From

A self-supporting agency, the Housing Division and the Montana Board of Housing sells bonds, administers tax credit programs, and uses federal funds to produce affordable housing in partnership with local governments, nonprofit housing producers, and for-profit developers. The financing is used to build rental apartments and homes, to rehabilitate rental and owner-occupied housing, to provide rent subsidies, and to assist home buyers.

Mortgage Revenue Bond Program

The Montana Board of Housing offers a low interest rate, thirty year, fixed-rate mortgage to assist low and moderate income first-time homebuyers in purchasing homes in the State of Montana under the federal Mortgage Revenue Bond (MRB) program.

The Board issues tax-exempt Mortgage Revenue Bonds to provide below market rate funds to either purchase existing housing or new construction. Primarily, this program is intended to be utilized by first time home buyers, however, in certain "targeted" areas, the borrowers do not need to be first time buyers. Other features include certain income requirements and house price restrictions which must be met. Loan fund availability and mortgage rates vary with each new bond issue.

The Agency also converts part of its bond authority into Mortgage Credit Certificates, which provide a tax credit in conjunction with market-rate mortgages for first-time home buyers.

See this Mortgage Revenue Bond Fact Sheet for more information


Housing Tax Credits

Authorized by Congress in 1987, federal Low-Income Housing Tax Credits (Housing Credits) now finance virtually all the new affordable rental housing being built in the United States. Housing Credit rental properties are privately owned and privately managed. In exchange for the financing provided through the tax credit, owners agree to keep rents affordable for a period of 15 to 30 years for families and individuals with incomes at or below 60% of the local median income.

The Montana Board of Housing monitors the properties during the compliance period to ensure that rents and residents’ incomes do not exceed federal limits and that the properties are well maintained.

The owners are eligible to take a tax credit equal to 9 percent of the “Qualified Cost” of building or rehabilitating the property (excluding land). The tax credit is available each year for 10 years, as long as the property continues to operate in compliance with program regulations.

Generally, the privilege of using the credit is sold to an investor or group of investors (syndicated) and the funds are used to provide equity in the new rental development.

Equity from the sale of tax credits reduces the amount of debt financing that the property owner incurs. This reduces the monthly debt service for the property, lowers the operating costs, and makes it economically feasible to operate the property at below-market rents. Residents are responsible for their own rent payments, unless rent subsidies are available from other programs.

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