Vermont First-Time Home Buying Assistance Programs & Grants for 2024
By Susan Guillory
(Last Updated – 03/2024)
The Green Mountain State is a nature lover’s paradise with forests, lakes, and mountains and in the past year it has been popular with homebuyers as well. The number of homes sold increased 14.2% between February 2023 and 2024. Prices were up 6.5% as well, according to Redfin, hitting a median price of $361,300.
The good news is, if you’re a first time home buyer in Vermont, there are state and federal programs to help you purchase your home. This home buying guide can help walk you through the process.
Who Is Considered a First-Time Homebuyer in Vermont?
You qualify if you’ve never owned a home, of course, but you are also considered a first-time homeowner in Vermont if you haven’t owned a house in the last three years. In addition, the U.S. Department of Housing and Urban Development (HUD) considers you a first-time home buyer if you’re a single parent who has only owned a home with a partner while married, or a displaced homemaker who has only owned a home with a spouse. Be sure to check with any home buying assistance program you’re considering as you embark on your search for a home and a home mortgage loan, because requirements can differ. Not sure where to put down roots? Have a look at a list of the best affordable places in Vermont.
5 Vermont Programs for First-Time Homebuyers
There are several state programs for the first time home buyer in Vermont. Many are designed for people with low incomes or those who don’t have good credit scores. The Vermont Housing Finance Agency (VHFA) offers a number of them.
1. VHFA: MOVE and MOVE MCC
The MOVE program offers first-time homebuyers 30-year, fixed-rate mortgage loans with low down payments. To qualify, you must meet purchase price and income limits and have a minimum credit score of 640-680. At least one member of the purchase household must take a homebuyer education course. The MCC program provides for an income tax credit of up to $2,000.
2. VHFA: ADVANTAGE
The Advantage program is a low-interest 30-year loan for candidates who do not qualify for MOVE and MOVE MCC. There is no first-time homebuyer requirement unless buyers are using a VHFA down payment assistance program.
3. VHFA: ASSIST Down Payment and Closing Cost Assistance
VHFA’s ASSIST program offers a 0% interest loan with no monthly payments due on sale to help with down payment and closing costs, with a maximum loan amount of either $10,000 or $15,000 (based on income). To qualify, borrowers and non-borrowing spouses must be first-time homebuyers with combined assets of less than $30,000.
4. VHFA: Mortgage Credit Certificate (MCC)
VHFA’s Mortgage Credit Certificate (MCC) provides a Federal tax credit up to $2,000 for every year you live in your home and pay interest on the mortgage. This is available with the MOVE MCC program as well as non-VHFA mortgages.
5. Champlain Housing Trust (CHT)
If you’re interested in a home in Northwest Vermont, check out the Champlain Housing Trust (CHT) Shared Equity Program. It helps low- and moderate-income homebuyers purchase enables people to buy a home without a down payment and with a reduced mortgage. In order to qualify, you must fall into a certain income range; cannot own another home or have significant assets outside of retirement savings. You’ll have to pay the closing costs, and when you sell the home you sell it back through the trust to another qualified buyer.
Recommended: First-Time Homebuyer Guide
How to Apply to Vermont Programs for First-Time Homebuyers
You can choose from many types of mortgage loans. You can also apply to the programs we’ve discussed for the first-time home buyer in Vermont. Just be sure to check the requirements before applying. Many ask you to connect with a partnering lender to apply for the program.
Federal Programs for First-Time Homebuyers
Several federal government programs are designed for people who have low credit scores or limited cash for a down payment. Although most of these programs are available to repeat homeowners, they can be especially helpful to people who are buying a first home or who haven’t owned a home in several years.
These mortgages are generally for single-family homes, two- to four-unit properties that will be owner occupied, approved condos, townhomes, planned unit developments, and some manufactured homes.
Federal Housing Administration (FHA) Loans
The FHA, which is part of the U.S. Department of Housing and Urban Development (HUD), insures mortgages for borrowers with lower credit scores. Homebuyers choose from a list of approved lenders that participate in the FHA loan program. Loans have competitive interest rates and require a down payment of 3.5% of the purchase price for borrowers, who typically need FICO® credit scores of 580 or higher. Those with scores as low as 500 must put at least 10% down.
In addition to examining your credit score, lenders will look at your debt-to-income ratio (DTI, your monthly debt payments compared with your monthly gross income). FHA loans allow a DTI ratio of up to 50% in some cases, vs. a typical 45% maximum for a conventional loan.
Gift money for the down payment is allowed from certain donors and will be documented in a gift letter for the mortgage.
FHA loans always require mortgage insurance: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which allows the removal of mortgage insurance after 11 years. For a $300,000 mortgage balance, upfront MIP would be around $5,250 and monthly MIP, at a rate of 0.55%, would be around $137. You can learn more about these loans, including FHA loans for refinance and rehab of properties, by reading up on FHA requirements, loan limits, and rates.
Freddie Mac Home Possible Mortgages
Very low- and low-income borrowers may make a 3% down payment on a Home Possible® mortgage. These loans allow various sources for down payments, including co-borrowers, family gifts, employer assistance, secondary financing, and sweat equity.
The Home Possible mortgage is for buyers who have a credit score of at least 660.
Once you pay 20% of your loan, the Home Possible mortgage insurance will be canceled, which will lower your mortgage payments.
Fannie Mae HomeReady Mortgages
Fannie Mae HomeReady® Mortgages allow down payments as low as 3% for low-income borrowers. Applicants generally need a credit score of at least 620; pricing may be better for credit scores of 680 and above. Like the Freddie Mac program, HomeReady loans allow flexibility for down payment financing, such as gifts and grants.
For income limits, a comparison to an FHA loan, and other information, go to this Fannie Mae site .
Fannie Mae Standard 97 LTV Loan
The conventional 97 LTV loan is for first-time homebuyers of any income level who have a credit score of at least 620 and meet debt-to-income criteria. The 97% loan-to-value mortgage requires 3% down. Borrowers can get down payment and closing cost assistance from third-party sources.
Department of Veterans Affairs (VA) Loans
Active-duty members of the military, veterans, and eligible family members may apply for loans backed by the Department of Veterans Affairs. VA loans, which can be used to buy, build, or improve homes, have lower interest rates than most other mortgages and don’t require a down payment. Most borrowers pay a one-time funding fee that can be rolled into the mortgage.
Another benefit of VA loans is that they do not require private mortgage insurance (PMI) for borrowers who make a down payment of less than 20%. And they have more flexible credit score requirements. In some cases, even those who have previously been in foreclosure or bankruptcy can qualify.
Borrowers applying for a VA loan will need a Certificate of Eligibility from the VA so make sure to review a guide to qualifying for a VA loan as a first step in the process.
Native American Veteran Direct Loans (NADLs)
Eligible Native American veterans and their spouses may use these no-down-payment loans to buy, improve, or build a home on federal trust land. Unlike VA loans listed above, the Department of Veterans Affairs is the mortgage lender on NADLs. The VA requires no mortgage insurance, but it does charge a funding fee.
US Department of Agriculture (USDA) Loans
No down payment is required on these loans to moderate-income borrowers that are guaranteed by the USDA in specified rural areas. Borrowers pay an upfront guarantee fee and an annual fee that serves as mortgage insurance.
The USDA also directly issues loans to low- and very low-income people. For loan basics and income and property eligibility, head to this USDA site .
HUD Good Neighbor Next Door Program
This program helps police officers, firefighters, emergency medical technicians, and teachers qualify for mortgages in the areas they serve. Borrowers can receive 50% off a home in what HUD calls a “revitalization area.” They must live in the home for at least three years. You can reach the Burlington Field Office of HUD at 802-951-6290.
First-Time Homebuyer Stats for 2024
• Median home sale price in Vermont: $361,300
• 3% down payment: $10,839
• 20% down payment: $72,260
• Percentage of buyers nationwide who are first-time buyers: 32%
• Median age of first-time homebuyers: 35
• Average credit score (vs. average U.S. score of 714): 737
Financing Tips for First-Time Homebuyers
As you learn about mortgage basics and how to choose mortgage term loans, you may want to also learn how to lower your mortgage payment. Here are some tips that can help.
• Traditional IRA withdrawals. The IRS allows qualifying first-time homebuyers a one-time, penalty-free withdrawal of up to $10,000 from their IRA if the money is used to buy, build, or rebuild a home. The IRS considers anyone who has not owned a primary residence in the past three years a first-time homebuyer. You will still owe income tax on the IRA withdrawal. If you’re married and your spouse has an IRA, they may also make a penalty-free withdrawal of $10,000 to purchase a home. The downside, of course, is that large withdrawals may jeopardize your retirement savings.
• Roth IRA withdrawals. Because Roth IRA contributions are made with after-tax money, the IRS allows tax- and penalty-free withdrawals of contributions for any reason as long as you’ve held the account for five years. You may also withdraw up to $10,000 in earnings from your Roth IRA without paying taxes or penalties if you are a qualifying first-time homebuyer and you have had the account for five years. With accounts held for less than five years, homebuyers will pay income tax on earnings withdrawn.
• 401(k) loans. If your employer allows borrowing from the 401(k) plan that it sponsors, you may consider taking a loan against the 401(k) account to help finance your home purchase. With most plans, you can borrow up to 50% of your 401(k) balance, up to $50,000, without incurring taxes or penalties. You pay interest on the loan, which is paid into your 401(k) account. You usually have to pay back the loan within five years, but if you’re using the money to buy a house, you may have up to 15 years to repay.
• State and local down payment assistance programs. Usually offered at the regional or county level, these programs provide flexible second mortgages for first-time buyers looking into how to afford a down payment.
• The mortgage credit certificate program. First-time homeowners and those who buy in targeted areas can claim a portion of their mortgage interest as a tax credit, up to $2,000. Any additional interest paid can still be used as an itemized deduction. To qualify for the credit, you must be a first-time homebuyer, live in the home, and meet income and purchase price requirements, which vary by state. If you refinance, the credit disappears, and if you sell the house before nine years, you may have to pay some of the tax credit back. There are fees associated with applying for and receiving the mortgage credit certificate that vary by state. Often the savings from the lifetime of the credit can outweigh these fees.
• Your employer. Your employer may offer access to lower-cost lenders and real estate agents in your area, as well as home buying education courses.
• Your lender. Always ask your lender about any first-time homebuyer grant or down payment assistance programs available from government, nonprofit, and community organizations in your area.
Use this home affordability calculator to understand how much you can afford to pay for a home in Vermont.
The Takeaway
The housing market in Vermont can be challenging, but as a first time home buyer, there are many state and federal programs available that can help you achieve your goal.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.FAQ
Should I take first-time homebuyer classes?
Yes! Good information is key to a successful home-buying experience for anyone, but especially for newcomers, who can easily be overwhelmed by the jargon, technicalities, and magnitude of applying for a mortgage and purchasing a home. First-time homebuyer classes can help. Indeed they are required for some government-sponsored loan programs.
Do first-time homebuyers with bad credit qualify for homeownership assistance?
Often they do. Many government and nonprofit homeowner assistance programs are available to people with low credit scores. And often, interest rates and other loan pricing are competitive with those of loans available to borrowers with higher credit scores. That said, almost any lending program has credit qualifications. That’s why it’s important to take all possible steps to improve your credit standing before you go house hunting.
Is there a first-time homebuyer tax credit in Vermont?
There is a mortgage credit certificate program for first-time homeowners and those who buy in targeted areas in Vermont. With it, you can claim a portion of your mortgage interest as a tax credit, up to $2,000.
Is there a first-time veteran homebuyer assistance program in Vermont?
Yes. The U.S. Department of Veterans Affairs offers home loans to service members, veterans, and eligible surviving spouses.
What credit score do I need for first-time homebuyer assistance in Vermont?
Credit score requirements vary, depending on the homebuyer assistance program. For example, for the VHFA MOVE and ADVANTAGE programs, you need a credit score of at least 640.
What is the average age of first-time homebuyers in Vermont?
The median age of first-time homebuyers in the U.S. is 35.
Photo credit: iStock/haveseen
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
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