Owning a Home in Bozeman is Extremely Expensive Now

​How much does it cost to own a home in Bozeman?

Entry level condos start around $400,000 and those are mostly two bedroom units. 

If you want a three bedroom condo, it’s going to cost closer to $500,000. 

So how much is a monthly payment on a home in Bozeman?

During the pandemic, Bozeman (and Montana overall) saw a huge influx of people. Home prices in Bozeman doubled in around 3-4 years 2018/2019-2022. 

A mortgage payment, taxes, and HOA will cost about $3,000/month for a $415,000 home with a down payment of 10% ($41,500). And that number does not include Private Mortgage Insurance (PMI).

You can use mortgage calculators online to understand how much your home payment could be at currrent interest rates. Don’t forget to estimate the taxes, insurance, and HOA dues. Dues for HOAs in Bozeman average about $200-300/month. 

If you put less then 20% down on a home, the bank will add the PMI to your payment. PMI for a starter home in Bozeman could cost around $125-175 per month.  

Owning a home since late 2020 became a lot more expensive than renting in Bozeman. Average rent is around $2,000-2,200 for a 2 bedroom unit and close to $3,000/month for a 3 bedroom unit. 

What does it take to buy a home in Bozeman?

With extremely high home prices and higher interest rates (about 7.8% in late 2023), most people will need a six figure household income to afford even a starter house. If you have children, you’ll need a higher income to afford all your expenses. 

If you don’t make a six figure income, you’ll need to have a large amount of cash available to either reduce your loan amount or buy down the interest rate. 

Unfortunately, much of the middle class in Bozeman can no longer afford to buy homes, because the median income is about $50,000 lower than what’s required to affordably buy a starter home. 

Building Wealth with VA Home Ownership

 A service member I chatted with recently said that she has bought three properties with VA loans. When first hearing about these loans, they sounded so special that I was shocked to learn that they can be used multiple times.

Own a new property every two years!

National Guard members who have served for six years or were on active duty for 90 days also qualify for VA loans. A young person who joined in their 20s could become a homeowner more easily before age 30.

After buying my first home (with a conventional loan) in 2021, I plan to buy a second home in 2024 or 2025 after qualifying for a VA loan. Then we'll live in the new home and rent out the first (small) home that we purchased. By that point, the rents in the hot rental market where will live will likely reach the point where the renter is paying our entire mortgage.

And if we want to, we could rinse and repeat the same process to buy a third home.

After owning three properties for 10-15 years, we could cash out of the first two homes. Then live off of the profits of those sales until retirement when our 401Ks and Roth IRAs would accessible.

Use Zillow or a Property Management Agency to Find Reliable Tenants

A buddy (non-service member) who just bought his second home in Bozeman, MT was able to use Zillow's Rental Application Form to find qualified renters in less than a month, on multiple occasions.

He rented out his first home, showed the bank the lease, and was able to co-sign with his in-laws to get a single family dream home in the same city! He was expecting a third child and they were outgrowing their original home, a modest 3 bedroom townhome in a newer and desirable neighborhood. He now rents this Townhome for $2,700 per month, which is far more than the total cost mortgage they got in 2014 (7 years ago). Their mortgage, including HOA fees on that rental is only $1,400-1,500 per month. 

Not only is his tenant paying their mortgage completely, they are also paying for part of their current mortgage on this nicer home so his family has more affordable living. 

This service Zillow offers is free for the homeowner and only costs the renter applying a flat $29, which they can also use to apply to other Zillow rentals within 30 days. This is a big win-win for both landlord and tenant. The landlord has better piece of mind getting the history of the tenant for free, and the applicant does not have to pay high fees to apply to multiple properties. 

Some property management agencies swindle big bucks out of applicants in hot rental markets by charging $50, $75, or more to apply, when their costs for the application are almost nothing.

VA Loan Occupancy Requirement Before Renting

Buyers must live in the home for 12 months before renting out the property.

Moving into the VA Loan Home

Generally buyers have 60 days to occupy the property, but up to one year if there is a special circumstance, like a service member who is returning from deployment, or time is needed to perform agreed upon repairs to the property.

"The VA allows for a spouse to fulfill the occupancy requirement for an active duty military member who is deployed or who cannot otherwise live at the property within a reasonable time."

Estimated Mortgage Payment for $250,000 and $230,000 Mortgage

Google has a great built-in tool to help you calculate mortgage payments and maximum loans based on the payment amount.

Simply search for 'mortgage caluclator' to view the tool. These calculators do not include mortgage insurance, property taxes, and other fees (like Home Owner's Association fees for Condos and Townhouses).

A $230,000 mortgage at a 3.92% rate for 30 years would be payments of $1,087.

A $250,000 mortgage at a 3.92% rate for 30 years would be payments of $1,182.