In terms of both population and area Vermont ranks among the smallest states in the country. Yet that doesn't mean that first time home buyers in Vermont are different than anywhere else. They still struggle at times coming up with the finances needed to purchase their first home. Unfortunately, Vermonters buying their first home don't have a long list of programs to choose from like many other states. There is some assistance available, but it is rather limited.
Vermont first time home buyers should consult their mortgage lenders and real estate agents when seeking out financial assistance. Because the availability of such programs changes on a continual basis, it may be that there is more available at the time you're reading this article than there was when first written. If you're just thinking about buying a home and have not yet contacted a real estate agent, you can also check for first time home buyer programs by contacting the Vermont Housing Finance Agency
Vermont Housing Finance Agency (VHFA)
Almost every state has a public or quasi-public entity responsible for administering resources dedicated to housing. Vermont is no exception. The name of their agency is the Vermont Housing Finance Agency. The agency has provided assistance to some 27,000 individuals and families since its inception in 1974. The assistance they provide can come in the form of low-cost mortgages, closing cost assistance, down payment assistance, and home buyer education courses. The VHFA website currently lists three separate first time home buyer programs available right now.
Government Guaranteed Home Loan Program
The agency's Government Guaranteed Home Loan Program is one that makes federally backed loans available with competitive interest rates. They are the easiest to qualify for because of their minimal restrictions. Loans can come in the form of VA, RD (Rural Development), or FHA products.
Interest rates will be the same regardless of which type of loan an individual is awarded. However, the fees charged by various lenders will differ from one loan product to another. Where fees are applied, they are generally significantly lower than what you'd pay with a conventional mortgage secured on your own.
In order to be eligible for one of these programs buyers must meet certain income requirements and complete a home buyer's education course. There are restrictions on the geographic location of homes and their values in relation to the average property values in the general area.
Conventional Home Loan Program
Vermont's Conventional Home Loan Program provides a low interest, 30-year fixed-rate mortgage with a low buyer contribution. These types of loans are slightly more difficult to get than the previous type and involve more stringent requirements.
Loans are available for up to 97% of the purchase price with a 3% down payment. Borrowers are also legally allowed to procure a second mortgage from eligible non-profit organizations in order to cover closing costs and down payment. Like the previous program, eligible first time home buyers participating in the Conventional Home Loan Program must complete a home buyer’s education course.
Direct Home Loan Program
This third program is specifically for the purchase of single or double-wide mobile homes. Because of the nature of mobile homes, there are certain eligibility requirements based on where the home is located, what it's currently assessed value is, and how long a mortgage the borrower is looking for.
In any case, first time home buyers under this program must contribute a minimum of 3% from their own saved funds. They also must have enough cash in reserve to equal 2% of the home's value once closing is complete. Other restrictions may apply including income eligibility. A home buyer education course must also be completed prior to closing.
Other Programs in Vermont
From time to time counties and local municipalities offer their own assistance to first time home buyers as a means of filling vacant houses or encouraging further development. At this time there appears to be only one program of this nature in the state of Vermont - the Burlington Community Land Trust Program. This program was found listed on the website of the Department of Housing and Urban Development (HUD) which regularly updates of this list. Feel free to check with the HUD website in the future to see if other programs are available.