NeighborWorks Prepares to Deploy Homebuyer Assistance Funds to Participating Counties

After 46 counties at the end of last year elected to participate in a new homebuyer assistance program that was established in the 2023 Legislature with House Bill 819, local housing nonprofits are taking the next steps to set up Community Reinvestment Organizations (CRO) to deploy $50 million statewide, with plans to officially launch this summer.

The funding will be distributed among participating counties while NeighborWorks and HomeFront will be responsible for raising matching funds and executing the program. The program will provide homebuyers with 30% of the cost of a home as a loan or an investment; in turn, recipients agree to an equity cap of 1% per year. The cap allows the remainder of the equity to be recycled back into the program to provide long-term affordability for future homeowners. Eligible households must earn between 60% and 140% of the area median income (AMI).

Each county is earmarked a specific amount of the funding based on the gross domestic product. For example, Lake County will receive $890,000 in state dollars; Glacier County will receive $415,000; and Lincoln County will receive $560,000.

NeighborWorks Montana (NWMT) will provide program oversight for 14 counties including Lake, Lincoln and Sanders counties in northwest Montana. Other counties include Beaverhead, Fergus, Gallatin, Judith Basin, Lewis and Clark, Mineral, Missoula, Musselshell, Park, Powell and Valley counties.

Seven additional counties will work with NeighborWorks Great Falls, a partner that will also deliver services like homebuyer education for Glacier, Chouteau, Cascade, Blaine, Pondera, Teton and Toole counties.

Another organization called HomeFront established CROs in southeastern Montana and other counties in the state.

Flathead County opted out of the program last year, which would have allocated $4.5 million in homebuyer assistance funds locally. It is unclear where the rejected money will go.

Following several public meetings where residents, business owners and prospective homeowners urged Flathead County commissioners to accept the funding, the elected officials were unsupportive of the program’s concept.

Commissioner Pam Holmquist said she was skeptical of the equity cap while Commissioner Randy Brodehl did not support using taxpayer funds – despite the state funds already being allocated. Commissioner Brad Abell was also skeptical of the program but supported it because the funding had already been set aside.

NWMT Homeownership Director Hanna Tester said despite the commissioners’ decision not to accept the funds, the organization will continue to have a presence in Flathead County to provide other programs, such as down payment assistance, and work to serve local resident-owned communities.

“Flathead County is a little bit of an island in northwest Montana,” Tester said, referring to the neighboring counties that accepted the funds.

Although Flathead County was the most populous county to reject the funding, joining Granite County and several eastern Montana counties, Tester says the money will bring more homeownership opportunities for individuals in rural areas.

“The biggest interest when we’ve talked about housing in rural counties is how will this support our first responders, our firefighters, our teachers,” Tester said. “We want to have housing for these groups of people and a lot of county commissioners were asking how will you make sure housing goes to these types of people – so that’s something we’re considering.”

Despite the widespread attention the housing crisis has received in Flathead, Gallatin and Missoula counties in recent years, rural counties face similar issues like low inventory and high costs.

In Lake County, the median home price in January was $842,000 while Lincoln County’s median price was $320,000 and Sanders County was at $312,000.

Tester said the organization is currently working with secondary mortgage lenders, investors and potential funders to get the program underway to deploy the funding. The state is requiring the CROs to complete fundraising before prospective homeowners can apply.

Unlike other NeighborWorks programs, applicants will be required to apply with a mortgage lender initially before shopping for a home.

“This program is unique,” Tester said. “With our other programs, folks must have already identified a house but with this program, it could change the landscape of the type of house people are looking for … then they know how much they’re working with.

“We don’t anticipate this program to solve the housing issues in the state, but this will be one more tool to add to the bucket,” Tester said.

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