FHA Loan Requirements, Limits and Approval Tips
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2022 FHA Loan Limits in Vermont

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If you’ve been dreaming of buying a home in scenic Vermont, you may be able to qualify for a more affordable loan backed by the Federal Housing Administration (FHA). Unlike conventional loans, an FHA loan can help borrowers who need smaller down payments and less stringent credit score requirements.

The FHA loan limit for a single-family home in Vermont is now $420,680 in most of the state, but rises to $434,700 in the area around Burlington, its most populous city.

Vermont FHA loan limits by county

County nameOne unitTwo unitsThree unitsFour unitsMedian sales price
ADDISON$420,680$538,650$651,050$809,150$251,000
BENNINGTON$420,680$538,650$651,050$809,150$253,000
CALEDONIA$420,680$538,650$651,050$809,150$165,000
CHITTENDEN$434,700$556,500$672,650$835,950$378,000
ESSEX$420,680$538,650$651,050$809,150$102,000
FRANKLIN$434,700$556,500$672,650$835,950$378,000
GRAND ISLE$434,700$556,500$672,650$835,950$378,000
LAMOILLE$420,680$538,650$651,050$809,150$265,000
ORANGE$420,680$538,650$651,050$809,150$275,000
ORLEANS$420,680$538,650$651,050$809,150$150,000
RUTLAND$420,680$538,650$651,050$809,150$185,000
WASHINGTON$420,680$538,650$651,050$809,150$236,000
WINDHAM$420,680$538,650$651,050$809,150$240,000
WINDSOR$420,680$538,650$651,050$809,150$275,000

How are FHA loan limits determined?

Every year the U.S. Department of Housing and Urban Development (HUD) sets limits on the cost of a house the FHA is willing to insure in every county in the United States. These limits are based on those of conventional mortgages — known as conforming loan limits — which are established by the Federal Housing Finance Agency (FHFA). Conforming loan limits are based on median home values of houses in every U.S. county, so as housing prices go up, so do the limits for both conforming and FHA loans. In 2022, the conforming loan limit is $647,200, having risen 18% from 2021.

The size of an FHA-backed loan can only go as high as the loan limit for the county where you live. For most counties, the FHA “floor” is limited to 65% of the conforming loan limit. In contrast, the FHA “ceiling” is a higher loan limit that is calculated at 150% of the limit, and is commonly found in many high-cost metropolitan areas across the U.S. The floor and ceiling for single-family housing in 2022 are $420,680 and $970,800, respectively; however, most FHA loan limits fall somewhere in between the FHA floor and ceiling.

How to qualify for an FHA loan in Vermont

Taking out a federally-insured FHA loan is typically easier and less expensive than a conventional mortgage loan. However, borrowers will still need to satisfy certain FHA loan requirements. If you’re a first-time homebuyer in Vermont, the Vermont Housing Finance Agency (VHFA) may be able to assist with your down payment, offer educational resources and guide you through the process.

To get approved for an FHA-insured loan through a participating lender, you’ll need the following:

  • A minimum 3.5% down payment. Borrowers with a credit score of at least 580 may be able to secure an FHA loan with a down payment of just 3.5%. A lower credit score will require a higher down payment.
  • A minimum 500 credit score. The lowest accepted credit score for an FHA-insured loan is 500, and a credit score that falls between 500 and 579 will require a down payment of 10% or more. You can check your credit score online.
  • A debt-to-income ratio (DTI) of 43% or less. A DTI ratio compares your monthly debt spending to your income. With an FHA loan, your DTI ratio will generally need to be 43% or lower, although some lenders may still qualify you with a higher DTI.
  • An FHA home appraisal. Regardless of the size of your down payment, an FHA loan will need to pass the strict guidelines of an FHA home appraisal.
  • Mortgage insurance. FHA loans require two types of mortgage insurance. The upfront mortgage insurance premium (UFMIP) is equal to 1.75% of the total loan amount, which can be rolled into your mortgage. The annual mortgage insurance premium (MIP) costs from 0.45% to 1.05% of the total loan amount and is broken into 12 monthly installments that are added to your monthly mortgage bill.
  • Live in the home you buy. An FHA loan can’t be used to buy a secondary home or rental/investment property. Single-family properties purchased with an FHA loan must be used as the borrower’s primary residence for at least a year after purchasing.

Buying a multifamily property with an FHA loan

FHA-insured loans aren’t just for single-family properties — they can also be used to purchase multifamily properties with up to four separate living units. One advantage to an FHA loan: As long as you live in one of those units for at least 12 months, you could qualify for a down payment of just 3.5% and still collect rental income.

FHA lenders in Vermont

Here are five top-rated FHA lenders in Vermont that you may want to consider. Click on their names to see reviews and learn more.

Lender nameLT rating Minimum FHA credit score 
Rocket Mortgage9.5 / 10580
Guild Mortgage9 / 10540
Better Mortgage9.5 / 10620
PennyMac9 / 10640
BMO Harris Bank 8.5 / 9580

 

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