Looking to help more Montanans buy a home, the Montana & Idaho Community Development Corporation will begin providing eligible borrowers a percent of their total mortgage loan to cover the down payment, closing costs and prepaid items, the organization announced last week.
Dave Glaser, president of MICDC, said the new HomeNow Down Payment Gift Program allows borrowers to receive between 3.5 and 5 percent of their total mortgage loan amount. They are not required to repay down-payment gifts.
He said the program is currently available in Missoula and will eventually be expanded statewide.
“The program is cash for eligible borrowers to put toward a down payment and closing costs,” said Glaser. “The HomeNow Program is available in about 30 other states, but this is the first time it will be available in Montana.”
Glaser said the biggest challenge facing aspiring homeowners isn’t necessarily making a monthly mortgage payment, since many already pay as much or more in rent. Rather, he said, it’s saving for the down payment and closing costs.
Glaser cited a recent survey suggesting that 62 percent of Americans have less than $1,000 in savings. A minimum down payment on a $200,000 home is $7,000 – an amount most Montanans can’t afford.
“As housing prices have risen across the state, we decided to introduce the program here – and are looking forward to awarding our very first Montana gift right here in Missoula,” Glaser said.
The program is designed to help borrowers overcome the challenge of providing a down-payment by offering a gift to fund up to 100 percent of the cash required to close, including down payment and closing costs.
No additional paperwork or information is required to qualify for a HomeNow Gift; the funds are provided at close with a participating lender with just one additional signature.
To be eligible, Glazer said, a borrower must prove income within established limits, have a minimum credit score of 640 and qualify for a 30 year, fixed-rate mortgage. He or she must also occupy the property as a primary residence.
The program is not limited to first-time buyers.
Glaser said potential home buyers should contact a participating mortgage lender to find out if they qualify for the program. First Security Bank of Missoula and Mann Mortgage of Missoula are participating, though other lenders are expected to join the program.