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Home Buyer Programs

Show All Answers

1. Is this where I come to buy a home if I have bad credit?

City staff does not perform credit history checks on applicants. Assistance is provided to eligible applicants that are able to receive a loan from a lender for the mortgage financing. The lender has certain criteria for underwriting their loans. If your credit is less than desirable the lender will let you know; you are entitled to receive a credit report and explanations on why you were denied credit. Seek guidance from your lender on how to bring your credit score up enough to qualify for a loan.

2. I applied for the First Time Home Buyer program and received a preliminary approval letter. Does this mean I qualify to buy a home?

City staff verifies that you haven't owned a home in the last three years and household income is within the guidelines for receiving assistance. When you receive the preliminary approval letter from the City, it means you are income eligible to participate in the program. It does not mean you qualify to buy a home, as your lender must make this determination.

3. I had a job that had me over the income limits but now I am on unemployment, do I qualify for your program?

City staff must ensure this federally-funded program does not provide opportunities for abuse. Therefore, staff will look at household income for the past year and current household income prior to determining eligibility. If your situation has changed from a previous year, staff will not automatically disqualify you. However, your situation will be fully analyzed prior to approval.

4. What if my income changes after I've applied for the First Time Home Buyer program?

If your income changes after receiving preliminary approval, you must submit the new information immediately. From the time that you apply for our program until the closing on a purchase, your income will be scrutinized by the lender, their underwriters, and possibly the Montana Board of Housing. If any of these parties discovers a change or something not previously disclosed, it can ruin the transaction; very disheartening. If you close later than 6 months after receiving the preliminary approval letter, City staff is required to re-verify your income before the closing. If you are getting a raise, a second job or anything that changes your income, you need to disclose it. If your income should change after you have purchased a home, you are not affected by this.

5. I work more than one job which puts me over the household income limit for the First Time Home Buyer program. What if I (or a member of my family) quits one of these jobs?

The First Time Home Buyer program is designed to assist households most in need and City staff must ensure the program is not abused in any way. Although having more than one job may put a household over the income limit, staff cannot approve assistance for a household where individuals may make a temporary income change to get qualified following assistance. Once disqualified for assistance, you can submit a new application for the program in 6 months.

6. Why do you need income information on people over the age of 18 when the house I want to purchase will be in just my name?

Once again, staff has to assure this federally-funded program is not abused. A person purchasing a home may have a spouse / partner that has bad credit and together couldn't qualify for a home. The household may have an adult child / roommate living in the home that can contribute to living expenses. Staff is required to review all "household" income for eligibility, including the income of all members over the age of 18.

7. Who should be getting you the information regarding my application to the First Time Home Buyer program?

Responsibility for submitting all required documents to the City falls on the applicant, including the signed application, tax returns, good faith estimate and buy-sell agreement. Many lenders and realtors will do this for the buyer, but the buyer should be the one that makes sure the City receives all the pertinent information regarding the transaction. This lets the buyer maintain control, lessens the possibility for error, and keeps the buyer informed.

8. I am a displaced homemaker and have owned a home in the last 3 years. Do I qualify for the First Time Home Buyer program?

Staff looks at each applicant's situation individually. A displaced homemaker can qualify but staff will need to assess the home that was owned jointly. Did you receive any funds from terminating your portion of ownership? If so what was the amount, do you still have these funds, how were the funds spent?

9. I own a mobile home. Do I qualify for the First Time Home Buyer program?

This depends on a number of situations: the age of the mobile home; if the land is owned by the applicant; and the condition of the home. Applicants owning a mobile home will be required to sell the home. If you sell the home prior to applying for the First Time Home Buyer program, did you receive enough proceeds to purchase a home without City assistance?

10. Can I buy a "Manufactured Home"?

This program can only assist with manufactured homes that are permanently affixed to an FHA approved foundation and on land owned by the purchaser. In other words, a manufactured home in a trailer park where you rent the lot space would not qualify. Manufactured homes can only be placed in areas that allow manufactured housing. Caution: Some areas may have manufactured homes in a residential area. These homes were built before zoning may have been in place and are considered "grandfathered in". Staff cannot assist with these so you must research such homes thoroughly before making an offer to purchase.

11. How do I buy a HUD Home?

HUD homes are homes that HUD has received through foreclosure. Your Real Estate Agent is authorized to show these homes and assist people with making offers.

12. Can I buy a home in Lockwood using City of Billings funds?

No. The City's program can only assist with purchases that are in the City limits. Lockwood is not in the City limits. There are also pockets of land around the City that are not considered in the City. Staff cannot assist with these and if in doubt ask your Realtor to research this for you.

13. I applied for the First Time Home Buyer program last year. Do I need to apply for the program again?

Staff can only keep an application active for 6 months. After that time you will need to fill out a new application with any tax returns, W-2's and current pay stubs staff may not have.

14. Do I have to use a Real Estate Agent to buy a home?

You do not need to use a Realtor to buy a home but buying a home can be a complicated and emotional experience. It is wise to use a Realtor to assist in buying a home. They have a strong knowledge of the process and can make the purchase proceed smoothly. If you don't use a Realtor staff would caution that you obtain some type of legal advice and not let the seller control the sale. Although they may be honest in working with you the bottom line is that they are going to do what's in their best interest. Staff also would recommend that while searching for a home, use a Realtor that is not the listing agent. The listing Realtor will be honest and work with you but their responsibility is to get what's best for their seller.

15. Do I have to attend the City's Homebuyer Workshop? Can I wait until I find a home so that I don't waste my time if I can't find a home?

Attending the workshop will probably be the most important thing you prior to buying a home. The workshop covers the whole process and will answer many questions you may have or never thought to ask. The workshop will be attended by other applicants with their own set of questions. Following attendance, you should feel comfortable with the journey to home ownership. Do not postpone attending this training! These workshops are only given once a month and you do not want this requirement to hold up or destroy your opportunity to purchase. Even if you cannot purchase a home at this time, you will have the knowledge to purchase a home in the future. It is better to get all the information beforehand rather than after to avoid needless mistakes.

16. How long do I have to find a home? Once I'm approved don't you hold the funds for me?

Funds are available from July 1st each year until they run out. this is a popular program; in most recent years, funding ran out by November.

Funds are not fully committed for a specific purchase until staff receives from an applicant that has received preliminary approval, a copy of the buy-sell agreement and a good faith estimate. At that time staff, issues a final approval letter which authorizes the lender to proceed. This letter signifies the City's intent to fund the project.

Staff recommends you talk to your lender or call the Community Development office (406-657-3045) regarding the status of funding before making an offer to purchase. Good communication can avoid major disappointment.

17. I heard that if we use the City program, we cannot take out a loan on the property. Is this true?

Yes. The City puts itself at greater risk if the homeowner is allowed to remove the equity from the home through a home equity loan. The City remains in what is known as a "second position" behind the mortgage. This means that should you default or sell the home, the mortgage gets paid first then the City receives it's funds with any remaining funds going to the homeowner.

Lenders have asked the City to take "third position" behind the home equity loan. This is prohibited and cannot be approved.

Many applicants have taken out home equity loans as they have gained equity and used a portion of the funds to repay the City, which would release the restrictions on the property. The City then reinvests the funds into our program allowing us the opportunity to assist another applicant.

18. The City program inspected my home, does this mean that it is safe and up to code? Do I need to have a home inspection?

Although the City's Inspection is fairly thorough, staff are not certified inspectors and cannot guarantee the condition of the home. When staff inspects a home, the following is considered: the size of the home is suitable to household size; the bedrooms meet code; the systems in the home are proper; the home meets the minimum criteria for livability.

The appraiser's inspection is to determine the value of the home and not to guarantee the condition.

It is a good idea for you to get a licensed inspector if you are not sure of the condition of the home.

19. City staff inspected my home and it was determined that repairs are needed. Who is responsible for these repairs?

Repairs the City requires generally are items that the seller should have repaired before sale and staff encourages you and your lender and realtor to get the seller to make needed repairs. The City funds cannot be used for repairs. The appraiser may also require repairs and these should definitely be completed by the seller. The appraiser is basically giving a value to the property on the condition that these repairs are made.This should not be an added expense for the home buyer.

20. Can you inspect the home before we make an offer to purchase it?

No. Your Realtor should have the knowledge and resources to determine if a home is going to meet City requirements. Once you submit the buy-sell agreement to the Community Development office, an inspection will be scheduled. A letter indicating the results of the City's inspection will be sent to you.

21. If I buy the home and discover a problem with the house, who is responsible for the repairs?

This has happened on occasion and that is why staff stresses the importance of you the home buyer being comfortable with your purchase by having qualified people assist you. Older homes are not always perfect and repairs are going to arise. If you aren't sure about the furnace, water heater, sewer, roof or any item in the home have these items checked by the proper people. Have the seller fill out and sign a disclosure statement on the condition of the home. If any problems occur after you have taken possession, resolving these issues is between you and the seller and may have to be addressed in civil court. Ask your Realtor what they will do to assist you if this should occur. Extreme caution should be practiced regarding this because you are liable for providing the burden of proof that the seller knew of an existing problem.