How to Buy a House in Vermont: A Homebuyer’s Guide
Updated: March 31, 2023
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The average value of a home in Vermont is $374K, increasing by approximately 17% from the previous year. Homebuyers in the state — first-timers or otherwise — should note that Vermont homes are more expensive than the national average of $358K. Additionally, growth in Vermont median home prices is faster than the national average, which was roughly 14% over the past year.
Understanding the homebuying process is the key to achieving homeownership. In this guide, MoneyGeek details how to buy a house in Vermont without falling into crippling debt. We broke down how to choose an ideal location, get pre-approved for a mortgage, conduct a home inspection and more.
Choose an Ideal Location
Because location is a significant factor that affects the cost of homes, choosing where you want to live is critical if you want to save on expenses. For instance, the median home price in Burlington is $488K, whereas a house in Montpelier has an average value of $404K.
Additionally, it’s important to evaluate other factors to determine the best place to buy a house in Vermont. These include neighborhood culture, cost of living and access to amenities.
Calculate Mortgage Rates
Mortgage rates often change based on the type of home loan you choose. Individual factors like your credit score, debt-to-income ratio and annual income can also significantly affect your rate. It’s best to shop around and compare lenders to find the best mortgage rates for your profile.
Prepare Down Payment Requirements
Before you can buy a house in Vermont, you need to provide a down payment equal to a certain percentage of the purchase price. How much you put down on a home can greatly affect the cost of your loan. Some mortgage programs require at least 20% down to avoid private mortgage insurance (PMI), while others allow as little as a 3.5% down payment. A couple of programs don’t even require a down payment at all!
Get Pre-Approved for a Mortgage
Getting pre-approved for a mortgage is a crucial step in buying a house in Vermont. It can help you shop for homes within your budget and make stronger offers. Additionally, a mortgage pre-approval often informs sellers that you are a serious buyer.
Keep in mind that pre-approval is not interchangeable with prequalification. A pre-approval means your lender is willing to loan you a specified amount at a given rate, whereas prequalification only means you are qualified for a loan.
Conduct a Home Inspection
Before buying your dream home in Vermont, it’s essential to have a third-party professional inspect the property. A home inspection informs you about the house’s current condition and if there are issues below the surface that you may have missed. Knowing these particular details can guide you on whether to proceed with the home purchase.
Close Your Mortgage Loan
Once the home inspection and appraisal are done, you can review the loan terms and proceed to close your mortgage loan. You may be required to pay closing costs during this process. If you need help with covering the fees, Vermont has the ASSIST closing cost assistance program that you may qualify for.
Vermont Homebuying Details
When planning to buy a home in Vermont, it's important to explore both conventional and government-backed mortgage options to determine which is better for your borrower profile. Additionally, you can qualify for Vermont homebuyer assistance programs if you are having trouble with your down payment or closing costs.
The VHFA provides down payment loans of up to $15,000 based on income for first-time homebuyers in Vermont. It’s worth noting, however, that these loans are only available when paired with a VHFA Move, Move MCC or Advantage Mortgage Program.
Through the VHFA, you can get a federal tax credit of up to $2,000 each year for your annual mortgage interest payments. That said, the agency’s MCCs are only available with Move MCC or a non-VHFA mortgage from a VHFA participating lender.
Frequently Asked Questions About Buying a Home in Vermont
MoneyGeek answered some commonly asked questions to help you learn more about how to buy a home in Vermont.
Before buying a house in Vermont, it’s critical to address certain concerns, such as the best location for your needs and budget, the type of mortgage you’re eligible for and how much down payment you can afford.
While it’s part of the American Dream, homeownership is not for everyone. Purchasing a home in Vermont can be a good idea if you’ve resolved your existing debts or put your finances in order.
Vermont has an average home value of $374K, higher than the national average of $358K. Pursuing homeownership in Vermont can be a wise decision if you have the financial capacity to afford the monthly mortgage payments and the state’s cost of living.
Typically, the amount of money you need to purchase a house in Vermont depends on the type of mortgage you qualify for.
The median property tax rate in Vermont is 1.83%.
MoneyGeek found that Rutland City and Barre City are two of the most affordable locations in Vermont for homeownership.
sources
- Census.gov. "Quick Facts: Essex County, Vermont." Accessed October 24, 2022.
- Census.gov. "Quick Facts: Rutland County, Vermont." Accessed October 24, 2022.
- International Association of Certified Home Inspectors. "Home Inspection Standards of Practice." Accessed October 23, 2022.
- USDA. "Single Family Housing Direct Home Loans." Accessed October 24, 2022.
- Vermont Department of Taxes. "Comparison of Vermont’s Property Taxes to Property Taxes in Peer States." Accessed October 24, 2022.
- VHFA. "VHFA mortgage programs." Accessed October 24, 2022.
- Zillow. "Burlington Home Values." Accessed October 24, 2022.
- Zillow. "Montpelier Home Values." Accessed October 24, 2022.
- Zillow. "Vermont Home Values." Accessed October 24, 2022.
- Zillow. "United States Home Values." Accessed October 24, 2022.