Vermont is known as the Green Mountain State, a testament to its beautiful scenery and postcard backdrops. Who wouldn't want to live in a state known for being peaceful and one of the healthiest states to live in? Finding a home and getting a mortgage in Vermont is easy, too. There are plenty of resources available to help new home seekers. First-time homebuyers in Vermont can find help with the homebuying and lending process from the housing development authority. The state offers eligible homebuyers financial assistance and low-interest, fixed-rate mortgage loans for purchasing their first home. Follow this interactive guide to getting a mortgage in Vermont as we explore what options could best fit your needs.
Shop Mortgage Rates in Vermont
Mortgage rates can vary slightly from lender to lender, but also state to state. Of course, the borrower's credit score is the primary factor in what rates you will be offered, but location, local competition, Vermont laws, cost of doing business for the lender and foreclosure rates also count. (Vermont has a very low foreclosure rate compared to the national average, according to RealtyTrac.) In addition, local and national market conditions affect rates. Currently, Vermont's mortgage rates are slightly lower than the national average. Click here to find a more thorough explanation of what generally drives rates.
Homebuying Help in Vermont
Along with traditional homebuying assistance offered nationally, such as loans through the Federal Housing Authority (FHA) and Veterans Administration (VA), Vermont has a few of its own home buyer programs: MOVE, Advantage and the MOVE MCC through the Vermont Housing Finance Agency.
For qualified buyers, these programs could provide low-interest, fixed-rate mortgage loans, up to $5,000 in down payment and closing cost assistance, lower mortgage insurance payments and tax credits for eligible areas. Tax credits include saving up to $825 on property transfer tax, and/or an annual tax credit could save homebuyers thousands over the life of the loan. Select lenders are able to offer homebuyers these programs.
Other home buying help from the U.S. Department of Housing and Urban Development (HUD) includes free home buying educational classes. And in certain eligible areas in Vermont, you may qualify for a guaranteed low-interest mortgage loan or a zero down payment loan through U. S. Department of Agriculture.
Click here for a comprehensive look at the home buying process for first-time homebuyers.
First-Time Buyer Financial Assistance in Vermont
Look here to see what you might qualify for and how to get financial assistance when purchasing your first home in Vermont.
Locate a Housing Counselor in Vermont
Understanding Home Affordability in Vermont
Location, local economy interest and unemployment rates greatly affect home affordability. The median home price in Vermont is currently $209,300. Certain trendier or popular areas tend to be pricier than inner city.
When rates are low, homebuyers can afford a more expensive home because the mortgage payment is lower. If the local economy is healthy, the local real estate market is healthy, and it looks like home affordability is on the rise in Vermont. The median household income for a family of four according to HUD is $70,200. Vermont's June unemployment rate of 3.2 percent also is lower than the national average.
Homebuyers still need to assess their individual situation, though, by asking: is your employment stable, what is your debt-to-income, and how does the financial future look in the short and long term?
Monthly Payments Are Affected by Mortgage Rates and Home Prices in Vermont
|Metro Area||Estimated Monthly Mortgage Payment*||Q1 2016 (Change from Previous Year)||2015 Median Home Price||2014||2013|
|Burlington-South Burlington||$1,393||$296,500 (+7.30%)||$289,600||$283,300||$280,300|
Source: National Association of Realtors Q1 2016 Metropolitan Median Area Prices and Affordability report.
*Estimated Monthly Mortgage Payment is based on median home prices for the metro area in Q1 2016 and a 30-year fixed mortgage with today's rates.
Determine How Much You Can Borrow in Vermont
Federal Housing Administration (FHA) and conventional loans both have a cap on how much can be borrowed. FHA insures the loan in the event the borrower defaults so it needs to minimize its losses by limiting the amount each individual can borrow. And although conventional loans are not guaranteed or insured by the federal government, they follow the guidelines of government-sponsored enterprises such as Fannie Mae or Freddie Mac. FHA limits for a single-family residence in Vermont vary from $271,050 to $342,700 depending on the county and $417,000 for conventional. Check the table below for the limits in Vermont.
Buying a Home in Vermont: Experts Weigh In
Leslie Black-Plumeauis the research and communications coordinator at the Vermont Housing Finance Agency.
Darlene Kellyis a housing counselor with Windham & Windsor Housing Trust in Burlington, Vermont.
Given the market crash in 2008, how is the housing market in Vermont right now?
The homes sales market in Vermont is steady, in terms of sales volumes and prices. The median price during the first six months of 2016 was about the same as last year. [But] in Chittenden County, the median home price has consistently increased over the past five years.
Some locations are thriving and housing is a little outpriced from what the local income is. In other communities you can find housing no problem. Property taxes are pretty high in Vermont, and that puts a lot of strain on first-time homebuyers. A good place to get a handle on the Vermont housing market is by taking a look at our website and seeing what programs we have to offer.
What do first-time homebuyers in your state need to know about buying a home?
Many potential homebuyers go as far as to eliminate themselves from the purchasing market under the assumption that without a huge savings account or a six-figure household income they cannot afford a home. Fortunately, state and federal programs can help Vermont borrowers clear both of these hurdles.
They need to know what their credit is, and management it well. We see a lot of folks who don't have credit or can't manage it well and they have no idea how the choices they've made on spending habits have impacted their credit score. People have a misconception that medical bills might not affect their credit. What I feel, personally, is that they tend to believe on the street from somebody who doesn't have much knowledge about credit.
I know it seems obvious, but pay bills on time. Don't think you can skip a month and you'll just make two payments the next month. It affects credit scores. Student loans also need to be paid down because the debt level could affect their ability to get a loan. We work with a lot of people who are recent graduates, young couples, and their debt is so high they can't get a mortgage based on their income.
Is there enough affordable inventory to meet first-time homebuyer demand in Vermont?
It's tough when property taxes are $3,500 to $4,000 per year and a working class family isn't making much more than $50,000 in the communities we serve. So they need additional subsidies or try to qualify for 100 percent financing. We're looking at the $170,000 range, that's about the median price of a house in the southern part of Vermont and in the northern part of the state prices are a bit lower. But again, wages don't support a bigger house.
What resources are available to help first-time homebuyers?
The USDA Rural Development loan guarantee program can finance up to 100 percent of the costs of buying a home. The Federal Housing Administration (FHA) can help local lenders fund up to 96.5 percent of the sales price of a 2-unit house. Vermont Housing Finance Agency (VHFA) can also finance each of these types of loans ... (and) provide first-time homebuyers up to $5,000 in closing cost and down payment assistance in the form of a zero percent, no monthly payment second mortgage that is payable only upon sale or refinance of the property.
The State of Vermont also offers an annual benefit that applies to a majority of households called the Homestead Declaration and Property Tax Adjustment Claim. This state tax benefit allows households under an income threshold to reduce a portion of the state's property tax related to education. VHFA also offers Mortgage Credit Certificates that allow borrowers to reduce their annual federal tax liability.
Closing Costs in Vermont
Closing costs vary by state and sometimes county due to different policies and rates. The loan amount, type of property, and whether you escrow insurance and taxes also matter when it comes to final closing costs. But for controlled third party costs, some rates and fees are standard. The national average for origination fees is $1,041 and $807 for third-party, for total average closing fees of $1,848, according to a Bankrate survey that reflects just minimal third-party cost such as credit report and appraisal fees. In comparison, Vermont comes in at about 4.5 percent higher than national average with $1,074 in origination fees and $862 in third-party. The state with the highest average cost was Hawaii ($2163) while the least was Ohio ($1613).
Click here to get a full explanation of closing costs and what you should expect.
Average Closing Costs in Vermont
Source: Bankrate's 2015 survey of closing costs.
Refinancing a Mortgage in Vermont
Close to historically low interest rates nationwide make the idea of refinancing appealing for many homeowners. With rates that are several points lower than just 10 years ago, some homeowners can switch from a 30-year mortgage to a 15-year while maintaining nearly the same payments. Financial benefits must outweigh the initial cost to refinance, however. Some homeowners could benefit greatly and see equity gains, but others may have been hit by the housing crisis and are just now regaining the original value of their home.
For a more detailed look at mortgage refinancing, click here to check out our tools, tips and resources.
Other Vermont Mortgage Resources
Find state and community resources along with facts, attractions and reasons why you should move to Vermont.
The Vermont Housing Finance Agency offers homebuying assistance, resources, educational opportunities, lender information and more.
The U. S. Department of Housing and Urban Development can offer financial and educational resources to homebuyers for state, regional and local home buying programs.
Habitat for Humanity has several offices in Vermont that can assist qualified home seekers. They offer housing assistance for those in need, who have the ability to pay a mortgage and the willingness to help build their home.
The U. S. Department of Agriculture (USDA) offers low- and moderate-income households low interest mortgage loans and assistance in obtaining a home in eligible rural areas of Vermont.
offers educational resources for obtaining FHA financing in Vermont.
The City of Burlington offers city residents home buyer assistance programs and home improvement help through the Community & Economic Development Office.
The Windham & Windsor Housing Trust has the Homeownership Center, which helps residents obtain homeownership opportunities with grants and other resources as well as helps local qualified homeowners remain in their homes.