As we move into 2025, the housing market continues to evolve, presenting new opportunities and challenges for buyers. While interest rates remain a key factor in affordability, buyers who are prepared and well-informed can navigate the market with confidence. Compared to the peak competition of recent years, buyers today often have more negotiating power, fewer bidding wars, and the ability to include contingencies that were once rare. If you’re considering buying a home, preparation is key—especially when it comes to financing.


Meet with a Lender Early
For those purchasing a home with financing, one of the most crucial steps is meeting with a lender early in the process. Understanding your financial standing will help set realistic expectations, ensuring you’re looking at homes within your budget.

Know Your Buying Power
A lender will help determine how much home you can afford, explaining monthly payments at different price points, as well as potential mortgage structures. Some buyers opt to buy down their interest rate by paying extra at closing, lowering their monthly payment. Your lender can help you assess whether this strategy makes financial sense for you.

Understanding Down Payments
Down payment requirements vary depending on loan programs and property types. Many buyers are surprised to learn that investment properties and second homes often require larger down payments than primary residences. Similarly, requirements can differ between single-family homes, condos, and multi-unit properties. If you’re putting down less than 20%, mortgage insurance may be required, which adds to your monthly payment. Your lender can walk you through these details to avoid any surprises.

Preparing for Gift Funds and Alternative Income Sources
Many first-time buyers turn to family for down payment assistance. If you plan to use gifted funds, talk to your lender about the documentation needed. Additionally, if your income comes from multiple sources—such as business ownership, commissions, or investments—lenders will need to verify it properly. Business owners and high-income earners should start this process early, as self-employed tax returns and non-traditional income streams often require additional underwriting time.

Get Pre-Approved Before Shopping
Being pre-approved puts you in a strong position when making an offer, especially in competitive markets like Bozeman. Many homes still hit the market over the weekend, and if you haven’t completed your pre-approval in advance, you might miss out on the perfect home.

Check Your Credit Early
It’s not uncommon for credit reports to have errors that negatively impact scores. Identifying and correcting mistakes early can help secure better loan terms and interest rates. Since credit corrections can take time, it’s best to review your credit report at the beginning of your home search.

2025 Market Insights
The start of 2025 has already shown promising activity in the local housing market. In January, 40 homes sold in the greater Bozeman area, with another 72 currently under contract.

Key Market Shifts in 2025
• More Balanced Market Conditions: While interest rates remain higher than the historic lows seen during the pandemic, home prices have stabilized in many areas. This shift means fewer extreme bidding wars and a more measured approach to purchasing.
• Increased Inventory: The number of homes available for sale has gradually increased, giving buyers more choices and allowing for more thoughtful decision-making rather than rushed offers.
• Sellers Offering Incentives: To attract buyers, some sellers are now offering incentives such as rate buydowns, closing cost assistance, or including home warranties. Buyers should work with their agents to explore potential negotiation advantages.
• Affordability Considerations: Many buyers are adjusting their expectations based on affordability, considering smaller homes, townhouses, or homes in emerging neighborhoods to stay within budget.

The data reflects home sales in the greater Bozeman area, including Four Corners, Gallatin Gateway, Bridger Canyon, and within Bozeman city limits.

These numbers come from the Big Sky Country MLS and do not include private party sales, condominiums, or townhouses.

With the right preparation, 2025 can be an excellent time to purchase a home. Whether you’re a first-time buyer or an experienced investor, understanding the financial side of home buying is crucial to making informed decisions.