Josephine Norton
NeighborWorks Montana, an organization that promotes housing education and financial assistance, has partnered with Missoula County to offer a $12 million down payment assistance program for residents. The program, created through House Bill 819, aims to provide pathways to affordable home ownership for middle-income households. While it is not clear if this program includes construction loans, NeighborWorks offers a range of loan programs, including home loans for individual homebuyers and financing for affordable housing developers. Additionally, they have been involved in purchasing and converting mobile home parks into resident-owned communities, ensuring affordable housing options. With a focus on a combination of education and financing, NeighborWorks strives to make homeownership more accessible and affordable for Montana residents.
| Characteristics | Values |
|---|---|
| Down payment assistance | Up to 30% of a home's value |
| Who it's for | Households earning between 60% and 140% of the area median income |
| Monthly payment cap | 30% of gross income |
| Appreciation restriction | 1% annually |
| Total funding | $12 million |
| Funding sources | State general fund and fundraising through NeighborWorks |
What You'll Learn
Down payment assistance
Missoula County has approved a $12 million down payment assistance program in partnership with NeighborWorks Montana. The program is a collaboration between the state, county, and nonprofit sectors. The funding for the program will come from the state and private investors, with half of the money coming from the state general fund and the other half from fundraising through NeighborWorks. The program aims to provide down payment assistance for households earning between 60% and 140% of the area median income. It can provide up to 30% of the total purchase price of a home and caps the monthly payment at 30% of gross income. This program is designed to create pathways toward affordable home ownership for middle-income households.
The down payment assistance program will be administered by NeighborWorks Montana, which has experience in promoting housing education and financial assistance. The program is set to launch in January 2025 and will be available to residents of Missoula County. This program is particularly beneficial as, despite a cooling off in housing price increases, prices in Missoula have yet to drop. As of December 1, 2024, the median price of all for-sale housing types in Missoula County was $565,000, and the median price for single-family homes stood at $612,000. The current prices make it difficult for many buyers to provide a large enough down payment to make the property affordable through monthly payments.
The down payment assistance program comes with some restrictions. Firstly, it caps home appreciation at 1% annually, limiting the ability of homeowners to reap large sums of equity as the market appreciates. Secondly, the program requires buyers to still work with first-mortgage lenders. Despite these restrictions, the program provides a valuable opportunity for buyers to enter the Missoula housing market and achieve the stability of home ownership.
The approval of the down payment assistance program is part of a broader effort to address the shortage of housing in Missoula. According to the latest action plan adopted by the county, there is a shortage of 2,400 homes in the local market, which is driving up prices. The program aims to help meet the region's housing needs and make homeownership more accessible to middle-class residents.
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Home loans for homebuyers
NeighborWorks Montana provides home loans for individual homebuyers and financing for affordable housing developers. The organization works to make homeownership affordable and offers a resident-owned community program to help homeowners purchase and manage their mobile home parks.
In addition, Missoula County has approved a $12 million down payment assistance program for NeighborWorks Montana, allowing the organization to accept funding from the state to launch the program. The program will provide down payment assistance for households earning between 60% and 140% of the area median income, offering up to 30% of the total purchase price for a home and capping the monthly payment at 30% of gross income.
For homebuyers, there are various loan options available to make the process of purchasing a home more accessible and affordable. Here are some examples:
- FHA Loans: Offered by the Federal Housing Administration, these loans assist first-time homebuyers, seniors who partially or fully own their homes, and those buying manufactured or mobile homes. FHA loans have a lower credit score requirement and allow for lower down payments, making them more accessible to a wider range of buyers.
- VA Loans: These loans are provided by the Department of Veterans Affairs and are available to veterans, surviving spouses, and service members. They can be used to purchase a home, refinance a mortgage, or finance home repairs. VA loans also offer large discounts on listing prices for homes in revitalization areas through the Good Neighbor Next Door Sales Program.
- Native American Direct Loan (NADL) Program: The NADL program assists American Indian and Alaska Native veterans, as well as veterans married to an American Indian or Alaska Native, in purchasing, building, or improving their homes.
- USDA Single-Family Housing Programs: For individuals living in rural areas, the U.S. Department of Agriculture offers loan programs with specific eligibility and application processes.
- Bank-Specific Programs: Banks like Wells Fargo offer various programs to assist first-time homebuyers, including fixed-rate mortgages, closing cost credits, and down payment assistance programs.
These are just a few examples of the many home loan options available for homebuyers. Each program has its own specific criteria and benefits, so it is essential to research and compare different options to find the one that best suits your financial situation and needs.
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Funding from the state
NeighborWorks Montana has received funding from the state to launch a $12 million down-payment assistance program. The state will release $6 million to NeighborWorks, which must be matched with an additional $6 million raised by the organization. The program will provide down-payment assistance for households earning between 60% and 140% of the area median income, with a cap on monthly payments at 30% of gross income.
In addition to this program, NeighborWorks Montana has also received state funding through grants. For example, the city of Missoula received a state grant of $850,000 to create a resident-owned manufactured home community in partnership with NeighborWorks Montana. This project, known as Old Hellgate Village, aimed to prevent the displacement of residents in mobile home communities due to rising housing costs and redevelopment pressures. NeighborWorks Montana contributed $700,000 of its own capital financing to secure the property, with the rest of the funding coming from seller financing.
Furthermore, Missoula County received a grant of $256,000 in partnership with the Missoula Food Bank and Community Center to expand food distribution sites. This grant was also funded through COVID relief dollars from the U.S. Department of Housing and Urban Development.
Another example of state funding received by NeighborWorks Montana is through the Montana Department of Commerce, which allocated over $25 million in federal funding for affordable housing projects. While it is not specified how much of this funding was directed specifically to NeighborWorks, the organization was mentioned as a recipient of these funds, which are intended to "rehabilitate, preserve or construct" affordable rental homes in communities across Montana.
Overall, it is clear that NeighborWorks Montana has benefited from various sources of state funding, allowing them to pursue initiatives that promote affordable housing and support local communities.
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Community reinvestment
The Community Reinvestment Act (CRA) was enacted in 1977 to encourage financial institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income (LMI) neighbourhoods. The CRA is supervised by three federal banking agencies or regulators, who are responsible for encouraging banks to comply with the CRA and providing information about the banks' CRA ratings and performance evaluations.
In the context of Missoula, Montana, NeighbourWorks Montana has been designated as the official community reinvestment representative by Missoula County. NeighbourWorks Montana provides home loans for individual homebuyers and financing for affordable housing developers, with the aim of making homeownership more affordable. NeighbourWorks Montana also helps homeowners purchase and manage their mobile home parks through their resident-owned community program.
One of the initiatives facilitated by NeighbourWorks Montana is the $12 million down-payment assistance program, which provides down-payment assistance for households earning between 60% and 140% of the area median income. The program can provide up to 30% of the total purchase price of a home, and it caps the monthly payment at 30% of gross income. This program is particularly beneficial for buyers looking to enter the Missoula housing market, where the median price of for-sale housing types is $565,000, and the median price of single-family homes is $612,000.
Another program offered by NeighbourWorks Montana is the Owner-Built Homes program, which helps neighbours obtain affordable mortgages through sweat equity and build their neighbourhood while getting to know each other. Additionally, Old Hellgate Village, a 34-lot manufactured home community outside Missoula, has become a resident-owned community, ensuring that the park remains affordable for its residents.
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Affordable housing
Missoula County has approved a $12 million down-payment assistance program to help residents pay for homes. The program is a collaboration between the state, county, and nonprofit organizations. NeighborWorks Montana will serve as the official community reinvestment representative, receiving $6 million from the state and raising an additional $6 million to provide down-payment assistance to eligible households. The program targets those earning between 60% and 140% of the area median income, providing up to 30% of the total purchase price for a home and capping monthly payments at 30% of gross income. This initiative aims to address the shortage of 2,400 homes in the local market, which has driven up prices, making it challenging for buyers to afford down payments.
NeighborWorks Montana has been working to create housing opportunities and ensure affordable housing across the state. They provide home loans for individual homebuyers and financing for affordable housing developers, helping to make homeownership more accessible. Additionally, they have been involved in converting mobile home parks, such as Old Hellgate Village, into resident-owned communities to prevent displacement and maintain affordability for residents with fixed or limited incomes.
The Owner-Built Homes program in Montana, offered by NeighborWorks America, assists individuals in obtaining affordable mortgages through sweat equity. This program also fosters a sense of community as neighbors collaborate to build their neighborhood.
While the down-payment assistance program in Missoula provides benefits to buyers, it also comes with certain restrictions. One notable limitation is the cap on home appreciation, which restricts owners from reselling their homes at significantly higher values as the market appreciates. This trade-off allows buyers to enjoy the stability of homeownership while potentially limiting their ability to cash in on substantial equity gains.
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Frequently asked questions
NeighborWorks Missoula does not offer construction loans. However, they do provide home loans for individual homebuyers and financing for affordable housing developers. They also have down payment assistance programs to help make homeownership more affordable.
The down payment assistance program provides funding for residents to cover up to 30% of a home's value, which only needs to be paid back when the homeowner sells the property. The program is aimed at middle-class residents trying to get into their first home and is eligible for people who make up to 140% of the area median income.
NeighborWorks Missoula also helps homeowners purchase and manage their mobile home parks through their resident-owned community program. They work to ensure that housing services are available to residents across Montana and offer education and counseling in 14 cities.
