The Montana Revolving Loan Account will loan up to $5,000 at 2 percent interest to low- and very low-income households who qualify to buy houses but need that last piece of money. It is meant to serve households that qualify for welfare - Temporary Assistance for Needy Families - but don't have to be receiving welfare.
"It's very hard for low-income people to get down payment money saved," said Erin Thompson, outreach coordinator at homeWORD in Missoula, an administrator of the program. "We hear that often in our work. They're able to pay a mortgage payment, but they can't raise the down payment."
The 1999 state Legislature created the fund, which was supported by the building industry, real estate agents and affordable housing advocates, said Ren Essene, director of homeWORD. However, the fund received no money. Experience in other states that created such housing trust funds showed that without money, the fund "fairly quickly" becomes a dead issue, she said.
A coalition of the same people worked together before the 2001 legislative session to find money for the fund. The solution was a package of money that included Section 8 reserves from the2
Montana Board of Housing and some TANF welfare money. Missoula legislators Ron Erickson and Dick Haines led the successful effort during the session.
"We had this broad base of support that played across the aisles because everybody understands that housing is a crisis," Essene said.
In some cities, like Missoula and Bozeman, housing costs are out of reach of average incomes. The average price of a Montana home reached $140,000 in the 2000 census, a price that would meet the definition of unaffordable for 53 percent of households. Affordable housing takes no more than 30 percent of the household's monthly income.
The fund lost the TANF money to the state budget crisis, but it still has $750,000 to loan. The money can be used for down payments, closing costs, or both. The program is statewide, administered by homeWORD in Missoula and by Neighborhood Housing Services in Great Falls. In Missoula, the loan does not have to be paid back until the house is sold, refinanced or paid off.
Money that's repaid goes back into the revolving fund and is available for the next household to borrow.
Income qualifications for TANF are 200 percent of the federal definition of poverty or below. For two people, that's $23,880 a year, for three it's $30,036 and for four $36,204.
Home ownership is the best equity-building strategy a household has, Essene said. It's especially important for people who do not have retirement plans or savings.
"The most important factor in owning your own home is economic," she said.
Questions about the Montana Revolving Loan Account? Call Ellie Sigrist at homeWORD, 543-3550.
Reporter Ginny Merriam can be reached at 523-5251 or at gmerriam@missoulian.com.
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