First-Time Homebuyer Programs in Vermont

The down payment on a new home is often the biggest hurdle for first-time homebuyers. In Vermont, where the average home value is $395,523, you would need a down payment of $79,105 to avoid private mortgage insurance.

Fortunately, first-time homebuyer programs in Vermont can help you achieve homeownership. There are also mortgages that allow first-time buyers to put less down on a home, though these usually have income requirements and require mortgage insurance. MoneyGeek explores several state-specific and government-backed first-time homebuyer programs for people from different financial backgrounds.

Vermont offers grants and loans to assist first-time homebuyers in covering both down payment and closing costs. We have compiled the first-time homebuyer programs offered by the Vermont Housing Finance Agency (VHFA) to help you find the best option for your particular needs and situation.

The MOVE Program by VHFA offers affordable fixed-rate mortgages with low-interest options for eligible first-time homebuyers, applying income and purchase price limits by county. It can be paired with eligible 30-year mortgages such as Fannie Mae, Freddie Mac, FHA, USDA Rural Development and VA loans.

This program also includes down payment assistance and the option for a Mortgage Credit Certificate (MOVE MCC), which grants an annual federal tax credit up to $2,000 on mortgage interest. MOVE MCC follows the same structure as MOVE but includes the tax certificate benefit.

The ADVANTAGE Program is designed to help Vermont homebuyers who exceed the income or purchase price limits of the MOVE programs. It offers a fixed-rate, 30-year mortgage and does not require first-time homebuyer status unless paired with VHFA down payment assistance. The program allows for high-income and purchase price limits and can be combined with eligible 30-year mortgages, including Fannie Mae, Freddie Mac, FHA, USDA Rural Development and VA loans.

VHA's ASSIST Program provides a $10,000 deferred loan to help first-time homebuyers cover down payments and closing costs. This assistance carries 0% interest with no monthly payments and becomes repayable only when the home is sold, refinanced or the mortgage is paid off.

Exclusively available with VHFA’s MOVE, MOVE MCC or ADVANTAGE programs, ASSIST cannot be paired with VA loans and is accessible to first-time homebuyers who have not owned a home before and have less than $30,000 in liquid assets.

The First Generation Homebuyer Assistance program offers a $15,000 grant for eligible first-generation homebuyers to help with down payments and closing costs. This grant can be combined with the ASSIST program but is limited by fund availability and provided on a first-come, first-served basis. Qualifying individuals must meet specific family history requirements, such as having been in foster care or having parents/guardians who never owned a home or lost one to foreclosure.

The Mortgage Credit Certificate (MCC) provides a federal tax credit to eligible homebuyers, allowing them to claim up to 50% of the annual mortgage interest paid, capped at $2,000 per year. This certificate remains valid as long as the homeowner lives in the property and holds the original mortgage. The MCC is automatically provided to borrowers using MOVE MCC, but it can also be added to a non-VHFA loan from a participating lender.

In Vermont, there are zero-down-payment loan programs that allow you to purchase a home without putting any money down. USDA and VA loans are two government-backed options that come with no down payment.

USDA loans are designed to assist low to moderate-income homebuyers in rural and suburban areas. They are issued by the U.S. Department of Agriculture through its Rural Development Guaranteed Housing Loan program.

USDA loans offer several benefits, including low interest rates and zero down payments. They are intended to make homeownership more accessible for those who might not qualify for conventional financing. The program also provides flexible credit guidelines to help more families achieve homeownership.

To qualify for USDA loans, your property must be 2,000 square feet or smaller and located in a USDA-eligible rural area with a population under 35,000. Income limits vary by location and household size, which must be met to be eligible. For instance, a four-person household in Orange County, Vermont, has an income limit of $76,000, while in Windsor County, Vermont, the limit is $80,400.

VA loans, issued by the U.S. Department of Veterans Affairs, re designed to help veterans, active-duty service members and eligible surviving spouses become homeowners.

VA loans offer several advantages, including the absence of a down payment requirement. They also do not require private mortgage insurance (PMI), which can save borrowers a significant amount of money over the life of the loan. Additionally, VA loans come with lower interest rates compared to private loans. As of November 2024, the APR for a 15-year fixed-rate VA loan in Vermont is 6.08%, while a 30-year fixed-rate VA loan is 6.22%.

To be eligible for a VA loan, you must meet specific requirements related to your length of service or service commitment, duty status and character of service. You must also meet certain income limits depending on where you live and provide a valid certificate of eligibility (COE).

First-time homebuyers in Vermont can take advantage of low-down-payment loan programs that allow them to finance their home with a down payment of 3.5% or less. These programs include conventional, FHA and FHA 203(k) loans.

FHA loans and conventional loans are the two most common types of mortgages. FHA loans require a minimum down payment of 3.5%, making them accessible for buyers with limited savings. Conventional loans can require as low as a 3% down payment for first-time homebuyers but generally have stricter credit score and debt-to-income ratio requirements than FHA loans.

Interest rates are another important factor to consider. As of November 2024, the current APR for a 15-year fixed-rate conforming loan is 6.03%, while the APR for a 15-year fixed-rate FHA loan is 7.98%. APRs on FHA loans can be higher because there tend to be more fees and extra costs associated with borrowing money on government-backed loans.

Use our FHA vs. conventional loan calculator to help you compare FHA and conventional mortgage programs and find the best option for you.

We answered some frequently asked questions about first-time homebuyer programs in Vermont to help you determine the best option for you and get closer to achieving homeownership.

Explore additional MoneyGeek resources for first-time homebuyers in Vermont to help you with the homebuying process.