Vermont Mortgage Rates

Living in Vermont

Vermont may be one of the smallest states in the nation, but it still brings in some 13 million visitors each year who come for perks like the Green Mountains, fall foliage, winter sports, picturesque villages and, or course, maple syrup.

Despite its appeal, Vermont’s population grew by fewer than 1,000 residents between 2010 and 2018. The state still has one of the lowest unemployment rates in the U.S., but job growth has been weak lately while housing prices continue to rise.

That’s not good news for homebuyers, but Vermont is part of a recent trend nationwide: shrinking inventory has caused home prices to shoot upward, benefitting sellers in many markets. According to the Vermont Association of Realtors, the median listing price for a home in the state during the first four months of 2019 was $274,545, up 8.3% from the same time last year. Meanwhile, the state’s count for new listings was down 15.8%.

In northwestern Vermont, which includes Burlington, the state’s largest city, both shrinking inventory and pent-up buyer demand — especially for updated homes — are responsible for the recent uptick in prices. In March, the median sales price for a single-family home in Burlington was $301,000, up 9.3% from the same time last year. Meanwhile, new listings were down 15.4% for single-family homes and 15.5% for townhomes and condos.

The rules and costs of buying a home in Vermont

As with other states, Vermont has rules and statutes that regulate buying a home. Here’s what you need to know:

Property disclosure

In Vermont, licensed real estate agents are required to fully and promptly disclose to a prospective buyer any essential information they know of that might ultimately affect the value or functionality of a home. This includes disclosing defects, deed limits that could make the home less marketable and hazards that pose a risk to human health. Vermont law also specifies that real estate agents must withdraw from their relationship with the seller if they refuse to disclose any essential information while trying to sell their home.

Judicial foreclosure state

Vermont is a judicial foreclosure state, which means lenders need to go to court to pursue foreclosing on a home, rather than attempting to work with borrowers outside of a courtroom. In judicial foreclosure states, borrowers typically receive a summons and a copy of the foreclosure report after a lender files a foreclosure lawsuit. The homeowner then has a certain amount of days — often 30 — to either pay the amount owed or let the foreclosure move forward.

Equitable distribution state

Vermont is an equitable distribution state when it comes to deciding how a couple’s assets — this includes property — will be divided during a divorce or annulment. In a state like Vermont, assets are typically divided in an equitable, court-approved fashion, based on factors such as the length of the marriage and the ages, occupations and incomes of the divorcing spouses. By contrast, assets in community property states are split 50/50.

Attorney state

In Vermont, buyers typically use an attorney to close on the sale of a home, but a property owner is still legally able to transfer the deed of a property without an attorney.

Taxes

Buyers in Vermont are required to pay a real estate transfer tax — in addition to any other closing costs they might owe — at the time they close on their home. Buyers are now taxed at a rate of 0.5% of the first $100,000 of a home’s value and 1.45% of the remaining value.

Vermont buyers may be able to save up to $825 on their property transfer taxes if they qualify for either the Advantage or MOVE mortgages (see details below) offered through the Vermont Housing Finance Agency (VHFA). They may also be able to exempt the first $110,000 of their home’s value if their mortgage is a USDA Rural Direct Home Loan or a VHFA mortgage.

According to Tax-Rates.org, property taxes in Vermont are now some of the highest in the U.S. The exact amount varies according to county, but the current rate on average is 1.59% of a home’s assessed value, which works out to $3,444 per year for the median home value. Chittenden County has the highest rate, 1.61%, which averages out to $4,096 annually, while Essex County has the lowest, 1.39%, an average of $1,727.

In Vermont, homeowners, depending on income, may be able to qualify for an annual property tax adjustment. Meanwhile, disabled veterans may qualify for an annual minimum property tax exemption of $10,000 or up to $40,000 if a local city or town has voted to raise the exemption.

Conforming loan limits

Conforming loans are mortgages that meet the federal guidelines and limits that have been set for Fannie Mae and Freddie Mac, two government-sponsored enterprises that work to make the mortgage market more liquid and stable. Unlike non-conforming loans, or jumbo loans, which come with higher borrowing limits, conforming loans offer less risk. They also tend to offer the best interest rates and loan terms to borrowers with good credit.

Every county in Vermont now has the standard conforming loan limit that applies to most of the U.S.: $484,350 for a single-family home. Limits are higher for multifamily homes.

Programs for homebuyers in Vermont

The Vermont Housing Finance Agency (VHFA) offers programs that can help qualified buyers receive more affordable mortgages. They can also help lower down payment and closing costs and provide a federal tax credit for a portion of the interest paid on a mortgage. Income and purchase price limits for these programs can be generous, so don’t assume you won’t qualify. Go to this VHFA homebuying page to see if one of the programs might work for you.

VHFA Advantage

This program offers buyers more affordable mortgages with a low down payment requirement. An Advantage loan may also be paired with an ASSIST loan (see below) to help pay down payment and closing costs. You don’t have to be a first-time homebuyer to qualify. Buyers may also be able to save up to $825 in property transfer taxes.

Who qualifies:

  • Home must be a primary residence
  • Income limits of $100,000 for one or two-person households and $125,000 for households of three or more apply
  • Purchase price must be less than $350,000

 

VHFA ASSIST

This program gives first-time buyers who qualify for a VHFA mortgage an opportunity to receive up to $5,000 in down payment or closing cost assistance in the form of a 0%, deferred-payment loan. You pay off the loan when you sell your home and move, refinance or pay your mortgage in full.

Who qualifies:

  • Buyer must have never owned a home and have a VHFA mortgage
  • Buyer must have less than $30,000 in liquid, non-retirement assets

 

VHFA Mortgage Credit Certificate

This mortgage credit certificate program can help homeowners save up to $2,000 annually on their federal taxes. It works by converting up to 30% of the mortgage interest you pay annually into a tax credit that can be used over the life of your mortgage.

Who qualifies:

  • Borrower must be a first-time homebuyer in Addison, Bennington, Chittenden, Grand Isle or Windsor counties
  • Home must be a primary residence
  • Income limits range between $79,500 and $110,000 depending on household size and county of residence
  • Purchase price limits vary by county and property type (one-unit or two-unit); for single-family homes, the range is $270,000 to $300,000

 

VHFA MOVE MCC

This program lets consumers qualify for a low-interest mortgage along with a mortgage credit certificate to allow them to save up to $2,000 annually on federal taxes. MOVE MCC can also be paired with an ASSIST loan to help shave down payment and closing costs. Another benefit: Borrowers who use this mortgage program may be able to save up to $825 on Vermont property transfer taxes.

Who qualifies:

  • Borrower must be a first-time homebuyer in Addison, Bennington, Chittenden, Grand Isle or Windsor counties
  • Home must be a primary residence
  • Income limits vary by county and household size but range between $79,500 and $110,000
  • Purchase price limits vary for one-unit and two-unit properties and by county; they range from $270,000 to $300,000 for a single-family home

 

VHFA MOVE

This mortgage program works like the Advantage program to offer more generous income and purchase limits, but it comes with the lowest interest rate that VHFA offers. You can pair a MOVE loan with an ASSIST loan to help pay down payment and closing costs, and those who qualify may save up to $825 in property transfer taxes.

Who qualifies:

  • Borrower must be a first-time homebuyer in Addison, Bennington, Chittenden, Grand Isle or Windsor counties
  • Home must be a primary residence
  • Borrower must complete a homebuyer education course
  • Income limits range from $75,900 to $90,000 for one-to-two-person households and $90,000 to $110,000 for households of three or more
  • Purchase price limits vary for one-unit and two-unit properties and by county; for a single-family home, the limit ranges from $270,000 to $300,000

 

Rate shopping tips

No matter your financial picture, it’s possible to save money on the cost of owning a home by securing the lowest interest rate — and loan terms — you can find. Before deciding on a mortgage, consider these shopping tips:

Compare rates with at least three lenders

By shopping around and comparing mortgages, you may be able to trim thousands of dollars off the total cost of your loan. Mortgage rates can change daily, so compare rates offered by at least three lenders on the same day to make the best apples-to-apples comparison.

Give the same details

Not only should you get multiple mortgage quotes on the same day, but you should give each lender the exact same information. This is important since each lender will put together loan terms that are specific to you and based on factors such as your reported income, employment situation, credit score and down payment amount.

Know when to lock your rate

Locking in your mortgage rate with a lender can help you avoid having to pay a higher rate if interest rates rise. Consider locking in your rate as soon as you are preapproved for a home loan, but ask your lender for advice and whether it’s possible to “float down” your rate if interest rates should drop.

Ask about lender fees

To fully understand how much a new mortgage might cost you, ask about the interest rate you’ll get as well as lender fees, which can add up quickly. Lenders charge these fees to approve and process a mortgage, and they typically include fees for reviewing the application, hiring an attorney and a publicly registering a mortgage transaction. The loan estimate your lender provides should include any prepayment penalties and the amount in points you may owe at closing in exchange for a lower interest rate.

The information in this article is accurate as of the date of publishing.