Vermont & New Hampshire First-Time Homebuyer & Affordable Housing Programs Guide

So you’re ready to buy a home! Beyond the challenge of finding the perfect place in which to spend the next stage of your life, you also have to navigate the complicated process of financing such a big purchase. Potential homeowners, especially first-time buyers, often face other challenges: getting enough money together for a down payment, finding the right lender, and getting approved for an affordable loan with a good interest rate. This can be especially difficult for those with limited resources, little or no credit history, or a low Fair Isaac Corporation Score (FICO). However, because it is a well-known fact that the most robust communities are those where the residents own their own homes, numerous local, state, and federal programs have been created in order to help potential homebuyers achieve their dreams of becoming homeowners.

Navigating the abundance of programs can be tricky, and assistance opportunities and eligibility requirements can vary greatly by state — and even by county. In addition to state-sponsored agencies like the Vermont Housing Finance Agency (VHFA) and New Hampshire Housing Finance Authority (NHHFA), local homebuyers could be eligible for national assistance programs through Housing and Urban Development (HUD) and the United States Department of Agriculture (USDA). Below you’ll find details about the many homebuyer assistance programs in Vermont and New Hampshire, their eligibility requirements, and their benefits. Most of the programs listed below are only available through participating lenders, including Union Bank. With assistance from one or more of these programs, you could be owning a new home before you know it.

Help for First-Time Homebuyers in Vermont and New Hampshire

First-time homebuyers in Vermont and New Hampshire can look forward to special incentives and programs to help them attain the purchase of their first home, as well as assistance navigating the often challenging financing process.

In Vermont, the Vermont Housing Finance Agency (VHFA), works directly with lenders to offer special down payment assistance programs to cover the upfront costs associated with purchasing a home. Through their ASSIST program, first time homebuyers can get an interest-free loan for up to $5,000, with no monthly payments. The ASSIST loan is a second mortgage (the primary mortgage being the loan taken out to purchase the home), but unlike your first mortgage, you do not have to pay it back until you sell your home, refinance, or pay off your mortgage in full, and you will not pay interest for the life of the loan.

First-time homebuyers should ask their local mortgage lender for more information about down payment assistance in Vermont. In addition, first-time homebuyers can take advantage of the many other homebuying assistance programs offered by VHFA, including mortgage and education courses (see below).

New Hampshire residents buying their first property (or buying a property in “targeted areas”) can take advantage of New Hampshire Housing’s Home Start Homebuyer Tax Credit Program, which offers up to $2,000 in an annual tax credit (10-50% of the interest you pay on your mortgage) for the life of the loan. In order to qualify, buyers need to obtain a Mortgage Credit Certificate from New Hampshire Housing, with help from a participating local lender. There are income limits (starting at $83,000 for a household of two) and online training is required. For more details, speak to your local mortgage lender or visit the Home Start Homebuyer Tax Credit Program site. Like VHFA for Vermont residents, New Hampshire Housing also offers many other programs that first-time homebuyers in New Hampshire are often eligible (see below).

VHFA Programs and Requirements for Vermont Residents

Buyers looking for homebuying assistance programs in Vermont may not need to look any further than the Vermont Housing Finance Agency, which offers five separate programs to help potential buyers secure financing for their homes. VHFA also provides educational programs to guide potential buyers through the process. In addition to ASSIST for first-time homebuyers, VHFA offers MOVE, Mortgage Credit Certificates, MOVE MCC, and Advantage which offer benefits such as low interest payments, low down payments, tax credits, and property transfer tax savings.

MOVE and Advantage are similar programs, with the main difference being participants of Advantage tend to buy homes with higher sticker prices that are ineligible for a loan through MOVE. Both programs offer low down payments, low monthly insurance costs, and savings (up to $825) on property transfer tax. While some counties require that participants in MOVE are first-time homebuyers, for both programs it is usually not necessary. Additionally, both programs require participants to complete pre-purchase homebuyer education courses.

What sets them apart: While both programs have household income limits (can vary by county/location), only MOVE limits the purchase price of the home. Though not all homes are eligible for purchase using loans through MOVE, participants who do qualify can take advantage of VHFA’s lowest interest rates.

Mortgage Credit Certificates are not loans, but do allow those who qualify to get a tax credit worth up to 20% of the mortgage interest paid each year. MOVE MCC combines MOVE with a Mortgage Credit Certificate, though it is possible to receive a credit certificate using a non-VHFA loan issued by your lender. There are income limits and purchase price limits, with some counties requiring no property ownership in the past 36 months.

For all VHFA programs, talk to your local participating mortgage lender to learn more and see if you qualify.

NHHFA Programs and Requirements for New Hampshire Residents

New Hampshire Housing Finance Authority offers homebuyer education classes, as well as affordable loans and down payment assistance programs available through participating mortgage lenders. Many of these programs can be combined to give homebuyers the most affordable options for purchasing their home.

The two main loan programs offered by NHHFA are Home Preferred and Home Preferred No MI (Mortgage Insurance). The income limit for both programs across the state is $116,300. Both products are 30-year fixed rate mortgages available through participating local lenders, and can finance up to 97% of the cost of the home (meaning your down payment could be as low as 3%). Both programs do require participants to take homebuyer education classes as well as have a good credit history.

New Hampshire Housing also offers the Home Flex Plus program, which provides a cash grant of up to 3% of the total loan amount to help buyers with down payment and closing costs. The great thing about Home Flex Plus is that buyers do not have to repay the funds, and the grant can be combined with many other state and federal homebuying loan programs. Income limits are the same as other NHHFA programs ($116,300). Home Flex Plus is available through participating mortgage lenders.

USDA Rural Development Loans

Because of the low population density of much of Vermont and New Hampshire, many areas fall under the USDA’s “rural” designation, and buyers purchasing or renovating homes in these regions may be eligible for assistance programs through the USDA. The most popular program, the Single Family Housing Guaranteed Loan Program, is designed to help low and moderate-income buyers qualify for a home loan when they might have difficulty doing so through a traditional mortgage application. The USDA secures or “backs” traditional 30-year home loans taken out from participating mortgage lenders, allowing applicants to be approved for a bigger loan than they might otherwise have been able to get. These loans typically provide 90-100% financing, which means buyers may avoid having to pay a down payment altogether, or only pay up to 10% of the cost of the home as a down payment, compared to the typical 20% down payment many mortgages require.

USDA loans are not limited to home purchase. Funds loaned through the USDA Guaranteed Loan Program can also be used to cover closing costs, repairs or renovations to an existing home, as well the cost of appliances and energy-saving home updates like solar-panel installation or insulation, and other home expenses.

In order to be approved for the Single Family Housing Guaranteed Loan Program, applicants must meet income-eligibility requirements, which vary by county (maximum income for a household of two living in Vermont typically ranges from $72,000-$96,000). Additionally, homes must be used as the primary residence and must be located in an eligible area. As these loans are simply standard bank loans backed by the USDA, applicants can apply directly through their local mortgage lender.

FHA (HUD) Loans

Similar to the USDA’s Rural Development program, HUD, or the US Department of Housing and Urban Development, offers homebuying assistance through its Federal Housing Authority (FHA) program. However, unlike the USDA’s program, homes do not need to be located in rural regions.

Participating lenders like Union Bank are able to provide FHA-backed loans to customers who may not otherwise qualify for a mortgage, as well as loans with lower down payments and lower closing costs. For first-time buyers with a credit score of at least 580, down payments can be as low as 3.5% through HUD (for credit scores of 500-579, you can be eligible with a 10% down payment).

To be eligible, prospective buyers also must have a steady history of employment and the home must be appraised by an FHA-approved appraiser and meet certain standards. Additionally, the monthly mortgage payment (including any taxes and insurance) usually can’t be more than 31% of buyers’ gross income (though your local lender may be able to get you approved for as high as 40%). Total debt payments each month can’t be more than 43% of your income. For more details or eligibility requirements, talk to your local lender or visit HUD’s FHA Loan page.

VA Loan Options

VA loans, available through your local lender, are backed by the US Department of Veteran’s Affairs and provide affordable options for veterans looking to finance home purchases without a lot of money up front. VA loans require no down payment and limit what buyers pay in closing costs. Credit requirements are generally less strict than conventional mortgages, there are no income limits, interest rates are competitive, and mortgage insurance is not required. However, potential recipients should be aware that there is a funding fee for this loan, which can be as high as 2.4% the first time the loan is used (the more you pay for a down payment, the lower your fee will be). VA loans are only available to service members, veterans, and eligible surviving spouses and require a Certificate of Eligibility. For more information about VA loans, visit your local mortgage lender.

The Advantage of Working with a Local Lender

There are many affordable home loans and incentives available to homebuyers in Vermont and New Hampshire, and Union Bank can help you find the options that are right for you. As a true community bank, our employees possess local insight and expertise that you won’t get from a national lender. As Vermont’s most popular bank for mortgage loans and USDA Lender of the Year for over five years running, we understand the nuances of local real estate markets and can help you find the right loan program to meet your needs. To take advantage of our experience and knowledge of all available homebuyer assistance programs, contact the Mortgage Lending Team at Union Bank.