Big Sky Country

Home Mortgage Rates in Montana

Flathead River.

Montana: The Last Best Place to Buy Your Dream Home

If you are looking for scenic mountain ranges and crystal clear lakes, look into home ownership in Montana. Relaxed living, unparalleled natural surroundings, and lots of elbow room are just some of the amenities the Big Sky state has to offer. With median home prices in Montana currently hovering around $132,000 as compared to the national median home price of nearly $168,000, you are likely to find excellent value for your money as well.

While some areas of the state, such as the small northwest community of Whitefish and the larger burg of Bozeman enjoy a sizable population of residents in the upper income brackets who own vacation and second or third "trophy" homes, the greater part of Montana's population earns less than the national average and practices common sense when it comes to the purchase of real estate. Montana residents have, for the most part, escaped a significant home foreclosure rate while most of the country has been crippled by foreclosures. With far fewer Montana borrowers obtaining sub-prime and variable interest rate mortgages than residents of other U.S. regions, the Montana real estate industry has managed to remain on a somewhat even keel in a tempestuous national climate.

Best Cities in The Last Best Place

Real estate marketing experts have dubbed Montana "The Last Best Place," touting the unspoiled natural environment and plentiful open spaces. The state has experienced a healthy influx of new residents over the past decade or two, with people relocating from other parts of the country in search of a simpler life and outdoor recreation opportunities. Each of Montana’s well-spaced cities offers unique features for residents and visitors alike:

Billings: The largest city in Montana is located east of the continental divide--the Rocky Mountain range--and has a population just shy of 100,000.


Whitefish: The fastest growing city in Montana, this picturesque community of about 5,000 residents is located near Big Mountain ski resort, beautiful Whitefish lake, and within a couple hours' drive of Glacier National Park.

Kalispell: A nearby neighbor to Whitefish and a close second in population growth, this town of just over 14,000 is not only a vibrant community but a crossroads for the hoards of vacationers traveling eastward to Glacier and its majestic Rocky Mountain landscapes each year.

Helena: The Montana state capital, this picturesque city features plenty of historic architecture for its approximately 28,000 residents and many visitors to enjoy.

Montana State Capitol Building.

Bozeman: Situated in the heart of the Gallatin Valley, the town attracts residents and tourist alike with its spectacular scenery and outdoor recreational opportunities. The population stands at around 34,000 residents.

Butte: A former hard-rock mining town made good, the city is now a popular visitor destination and one of only two U.S. cities to have the designation of a National Historic Landmark. During the 1920s when mining was riding high, the population reached upwards of 60,000; today around 34,000 Montanans call Butte home.

Great Falls: Located on the banks of the Missouri river, the town gets its name from the enormous waterfalls cascading through the center of town. The population of this beautiful town is near 57,000.

Missoula: Home of the largest university in Montana, this city is located in the Bitterroot Valley in the western part of the state. The population of Missoula is nearing 60,000.

Aerial View of the University of Montana from Mount Sentinel.

The Montana Financial Landscape

Mortgage rates for financing which originates in Montana are keeping pace with the national averages. As in the rest of the country, lenders offer the lowest initial interest on Adjustable Rate Mortgages (ARMs), with the gold standard loan product, the 30-year fixed rate mortgage, carrying a somewhat higher but guaranteed interest rate.

Montana rates for refinancing your existing mortgage for the debt consolidation or to lower your interest rate and monthly payments compare favorably to national rates for similar loans. A home equity loan is also a financing option in Montana if you have lived in your residence long enough to have built a nest egg against which to borrow cash for home improvements and other needs. The Montana Housing Authority offers a direct short-term--5 year--loan program that includes financing for renovations and refinancing of qualified outstanding debt which carries interest rates of 3 % or the current U.S. Treasury 5-year note rate plus .15%, whichever is greater. For details, see

Montana Mortgage Types

Once you have found your the Montana property of your dreams, you'll be in the market for a mortgage. Lenders in the state can issue a purchase loan in the form of a deed of trust or a conventional mortgage.

A deed of trust is a version of a mortgage which provides for the transfer of a land title to a trustee--normally a title company--which holds the deed as loan security. Once the loan is paid, the trustee transfers the title to the borrower. Should the borrower default on payment during the life of the loan, the trustee can sell the property to repay the lender.

The loan menu in Montana is similar to the fare in other states, consisting of:

  • Conforming 30/3/1 Adjustable Rate Mortgage (ARM)*
  • Conforming 30/5/2 ARM
  • Conforming 30/7/1 ARM
  • Conforming 15 year Fixed Rate Mortgage (FRM)
  • Conforming 20 year FRM
  • FHA 30 year FRM
  • Conforming 30 year FRM

*The number sequence describing an ARM, such as 30/3/1 refers to a 30-year mortgage, with the first 3 years at a fixed interest rate, after which the interest will be adjusted every (1) year.

Home buyers may qualify for any of several types of home loans in Montana, including:

  • State and federal FHA loans, USDA loans, VA loans
  • First-time home buyers FHA loan with a reduced interest rate
  • Montana’s Extra Credit Teacher Home Purchase Program loan for educational professionals featuring forgivable interest and down payment assistance
  • Interest only PLUS loan with no down payment and interest-only payments for the first five years
  • Loans designed for disabled persons and their caregivers

Mortgage Considerations Specific to Montana

If you find a variable interest rate loan attractive, be aware that civil real estate code for the state of Montana regulates the eligible loan amount. People who take out mortgages over a specified dollar amount are guaranteed a fixed mortgage rate by law.

Your mortgage can begin accruing interest only one day before the lender records the loan, even if it went into effect earlier.

As of 2002, Montana's anti-predatory legislation stipulates that lenders cannot charge more than 6 % of the total financed amount in interest discount points and fees. Another provision prohibits mortgage companies from providing loans for amounts which are more than a borrower can reasonably pay.

Another state law sets the limits on the amount of interest a lender can charge, often called a "usury limit." The legal interest limit in Montana is 10 %. This rate is about average among the 50 states, with Wisconsin, Michigan, Illinois and Delaware setting the country's lowest legal interest rate of 5 %. The highest legal limit of 15% is shared by New Mexico and South Dakota.

Foreclosure on Montana Property

Even in a depressed real estate market and national recession, the rate of foreclosures on Montana properties is less than half the national average. While across the U.S. lenders are foreclosing on about 3.6 % of loans, only about 1.5 % of loans in Montana require foreclosure.

Should the borrower default on a mortgage or deed of trust in the state of Montana, the lender has the right to foreclose upon the property to cover its losses, provided the property is 40 acres or less. The trustee--a lawyer, bank, or title company in possession of the deed until the loan is satisfied--initiates a foreclosure after issuing requests for you to bring your defaulted payments on the loan current. Upon your failure to do so, your lender will ask the trustee to set the foreclosure in motion, with the following steps:

  • File a Notice of Default with your county clerk's office
  • Provide three months, as provided by state law, for you to bring your payments up to date (there may be added fees for late payments and foreclosure proceedings to date)
  • Publish a Notice of Trustee Sale in a newspaper for three weeks, minimum, and define a date for the auction of your property
  • Conduct a property auction
  • Issue a Trustee’s Deed Upon Sale to the winner of the auction
  • Deliver the proceeds from the sale to your lending institution

Montana is one of the mortgage "walk away" states, which means that once the trustee sale of your property is complete, you have no further obligation to pay any remaining balance on your loan. The state's non-recourse (walk away) law applies only if the foreclosure is accomplished via trustee sale; if the courts become involved, you are liable for lender recourse if the sale of your property does not satisfy your loan balance and applicable fees.