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  • Writer's pictureNathan Zarcaro

5 Tips for Vermont First-Time Home Buyers [2023]

Updated: Oct 25, 2023


I bought my first home less than one year ago, in June 2022. And I won't lie - it was stressful at times. Thankfully, I worked with a great loan officer that went above and beyond to help me understand each part of the process.


And along the way, I discovered a number of tips that made the home buying process easier to complete. Today, I'm back to share my top five tips for Vermont's first-time home buyers in 2023.




Buying a home in Vermont


In the previous twelve months ending in April 2023, home prices in Vermont increased in value by nearly 8%. This follows the national United States trend. The average home price in Vermont is $337,758, according to Zillow.


With the rapid increase of real estate prices statewide, a home in Vermont will cost you more than it would have a few years ago. With this in mind, please reference the below table with estimated down payment costs.

Average home price

$337,758

3.5% down payment (FHA loan min)

$11,822

10% down payment

$33,775

20% down payment

​$67,550

With home prices this high, it is critical that prospective home buyers across Vermont do their due diligence and whatever else they can to be able to afford their first homes.




5 tips for Vermont's first-time home buyers


I recommend that first-time home buyers in Vermont - and around the country - use these tips to lower their stress and maybe even save some money on their home purchase!


Among my best recommendations:


  1. Set a home budget

  2. Consider mortgage pre-approval

  3. Pick the right mortgage lender

  4. Consider Vermont's first-time home buyer programs

  5. Pick the right lender



1. Set a home buying budget


Before you start looking at homes, it is really important that you understand how much home you can really afford. This way, you can begin to look at homes within your budget.


Establishing your home buying budget is not a hard exercise to complete, either. In fact, I recommend that you start by taking a look at your debt-to-income ratio. Then, once you understand what your DTI is and how much room you have left to take on debt (most mortgage lenders want a DTI no higher than 43%), you can use our mortgage calculator to help you understand how much home you can afford.


Let me walk you through an example.


Imagine for a minute that you earn $7,000 monthly pre-tax, and make $1,200 in monthly debt payments, split between your student debt and car loan. Before buying a home, you'll have a DTI ratio of 17.1%.


With the 43% maximum DTI rule in mind, you essentially can take on more debt worth the remaining 25.9% of your monthly income. In this example, that would be $1,813 per month.


Next, pull up our mortgage calculator. Current interest rates are about 7% on many home loans, leaving you with the option of changing your down payment and loan term in an attempt to make these numbers work.



Budget for closing costs


One mistake that I see far too many first-time buyers make is forgetting to budget for closing costs and a down payment. New England has some of the highest closing costs anywhere in the country, largely due to the property tax rates in the region.


Across The Green Mountain State, buyers can typically expect to pay somewhere around 3% of the purchase price of their new home, but your exact figure may vary somewhat, depending on where you buy your home and how much you pay.


Similar to the state's first-time home buyer programs, there are also some down payment assistance programs available to qualifying buyers in Vermont.


The most common of these is offered by VHFA, a program known by both VHFA DPA or ASSIST program.



2. Consider mortgage pre-approval


I also recommend that Vermont buyers complete a mortgage pre-approval process as they begin the home buying process.


There are a couple of reasons why pre-approval may be a good idea for you.


In a competitive real estate market like the previous few years, a pre-approval can give you a competitive leg-up on other interested buyers, since it signals to sellers that you are best prepared to move towards a closing quickly.

Additionally, completing a mortgage pre-approval will better help you to understand your budget early on in the process, without having to deal with the debt-to-income ratio calculation on your own.



3. Pick the right mortgage program


Home buyers in the Vermont have a number of different loan programs to choose from, including:


  1. Conventional: Fixed rate and adjustable-rate varieties (known as ARMs)

  2. Conventional 97: A loan type carrying the qualities of Conventional mortgages but with only a 3% down payment requirement.

  3. Federal Housing Administration (FHA): Federally backed loans with lower credit score and down payment requirements (starting at 3.5%)

  4. U.S. Department of Agriculture (USDA): Loans for low to moderate income buyers buying homes in federally designated rural areas (much of Vermont qualifies)

  5. Veterans Affairs (VA): Qualifying Veterans and surviving spouses may opt for these loans complete with no down payment requirements.


Vermont actually also has a number of state government, local government, and nonprofit funded home loan and assistance programs, which I will cover next.



4. Consider VT's first-time home buyer programs


Prospective home buyers in Vermont have access to state specific programs offered by the Vermont Housing Financial Agency (VHFA) and other organizations.


To take advantage of VHFA programs, you'll need to work with one of the VHFA's participating lenders.


These programs fall into a few main categories:


  • Loan programs

  • Down payment programs

  • Other programs



Vermont first-time home buyer loans


At this time, the most notable loan program for first-time home buyers in The Green Mountain State is VHFA MOVE.


The VHFA MOVE program offers 30-year mortgages carrying fixed and low interest rates. The program calls for up to a 5% down payment, though you may qualify for a no down payment mortgage. Additionally, VHFA MOVE comes with the option for down payment and closing cost assistance.


Eligibility for the program is reserved for those that:


  1. Have a credit score of at least 640

  2. Buyers in Addison, Bennington, Chittenden, Grand Isle, or Windsor County must not have owned a home in the previous thirty-six months

  3. Meet the various VHFA income limits (no more than $92,800-$110,000) and home purchase price limits (between $300,000 and $350,000), which vary by county and the size of your household

  4. A debt-to-income ratio no higher than 45-50%


The MOVE program also offers up to $825 in savings on the Vermont property transfer tax.



Vermont closing and down payment assistance


The VHFA also offers a closing and down payment assistance program for first-time buyers in Vermont, through VHFA Assist.


VHFA Assist offers up to $15,000 in the form of a loan at 0% interest. Though the loan does not carry monthly payments, you will need to repay the $15,000 in the event that you sell your home, pay off your mortgage, or refinance your mortgage.


To qualify for VHFA Assist, you'll need to:


  • Complete a home buyer education course

  • Have less than $30,000 in liquid assets

  • Qualify for a VHFA mortgage program



Other programs


The Vermont Housing Finance Agency also offers a mortgage credit certificate (MCC) program. The VFHA MCC is a 30-year fixed rate mortgage complete with a mortgage credit certificate, which allows home buyers to claim a tax credit for mortgage interest paid.


The program structure and eligibility requirements are largely the same as with the MOVE program, but in addition to the potential $825 in property transfer tax savings, program participants will also be eligible for up to a $2,000 federal tax credit thanks to the mortgage credit certificate.



5. Pick the right mortgage lender


You also need to find a loan officer in particular that you trust. Sometimes, it helps to work with a smaller local lender as opposed to larger national companies such as loanDepot, TD Bank, or Chase. This is because lenders in your area are more likely to be well versed in the eligibility requirements and have experience participating in Vermont's first-time home buyer programs.


Generally, though, you'll want the lender you choose to meet the following qualities:


  • A good customer service experience

  • Competitive interest rates



Get our Vermont mortgage calculator


We've found that first-time buyers in particular get really nervous about buying a new home. In fact, in some research we conducted with some of our readers, we found that being able to afford their closing costs and mortgage payments is top of mind for prospective buyers.


We listened to you and took action. Our mortgage calculator can help you model out what your projected payments may look like, based on a number of variables including:


  • The home's purchase price

  • How large of a down payment you pay

  • The term and interest rate on your home loan

  • How expensive your property taxes and homeowners insurance premiums are


Our calculator will help Vermont buyers to understand how much home you can afford, what your monthly mortgage payments will look like, and how changing variables like your down payment and loan term will impact your payments.



Vermont mortgage calculator


Final tips for Vermont's first-time buyers


As you can tell, there are many things that prospective home buyers need to keep in mind. I have a couple of final bonus tips to help make the process as simple as possible for you.


First, I encourage you to not feel compelled to work with any certain lender off of a referral or any other reason.


Additionally, you may consider setting manageable goals for yourself throughout the homebuying process. You're not likely to buy a home, get a mortgage, close, and move in within the next thirty days, for example. But what may be more manageable is giving yourself goals something like the following:


  1. Search for homes in the next 3 months

  2. Buy a home in the next 4-6 months

  3. Close within 8 months

  4. Be settled into new home one year from now


Most importantly, do not rush and settle for a home that you are not in love with. It is okay to take the time and assure that you find something that you are excited about.



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About Nathan Zarcaro

Nathan Zarcaro is the founder of The Student Debt Destroyer and is passionate about personal finance related causes.  A 2018 graduate of Providence College's Liberal Arts Honors Program, Nathan studied Finance, and has worked for industry leaders in both finance and healthcare.  In his free time, Nathan enjoys playing golf and traveling with his wife Brigid.

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