Your Guide to Buying a Home in Vermont

The Home Buying Process in the State of Vermont

  • Vermont is a state where real estate transactions must be closed by an attorney.
  • In the state, buyers pay recording fees, title-insurance premiums, and transfer taxes. 
  • The buyer and seller will meet at the same table at the same time to complete the transaction
  • There are specific environmental features that are unique to Vermont, including the presence of outdated oil tanks on some properties. 

Phase 1: Negotiations in Vermont

The first part of your Vermont home purchase process is to find a home, make an offer, and have that offer accepted by the seller. Once this happens, it will launch a series of steps that finalize the purchase. The first phase is to agree on the specific details of the purchase. 

  1. First an offer will be accepted and a contract will be signed by both parties. 
  2. At the same time, you will pay a deposit known as “earnest money.” This is paid to the attorney or broker, and must not be paid to the seller. This is simply a small amount that demonstrates your honest intention to purchase the property. 
  3. You will now receive disclosures from the seller. Disclosures are simply statements of known problems with the property, and they can include a variety of issues, such as known damage or required maintenance. It may also include past repairs to the property. 
  4. As the buyer, you now have the opportunity to complete inspections. These must be completed by a certain date, which will be described in the contract. This date is called the inspection contingency date. A variety of inspections may be completed, but most people will want a full-home inspection, termite inspection, and an inspection for lead paint. 
  5. In addition to the inspections, buyers may need a complete certification of buried oil tanks. In Vermont and other northeastern states, oil tanks, which stored home-heating fuel, were buried underground to save space. These tanks are now environmental hazards, so having them decommissioned may be required. Decommissioning buried oil tanks can be expensive, so you may have to work with sellers to complete this phase.  
  6.  If the property uses a well, the water will need to be inspected and verified. 
  7. Once all inspections are complete, the buyer can request repairs or adjustments to the contract. The seller and buyer will negotiate until an agreement is reached. However, if no agreement is possible, the contract may be voided without penalty. 

Phase 2: The Mortgage Loan

The second phase is often the part that takes the longest. For this reason, it’s recommended that you start early and prepare all documents as soon as possible. 

  1. The first step in this phase is to make an application for the loan. In most cases, you will already have gone through pre-qualification, so you’ll need to make an official application with a specific house listed on the documents. This can be done on your own or with the help of a professional. 
  2. You will get a “good faith estimate,” which roughly estimates the overall costs of finalizing the purchase. 
  3. Now the lender will need a variety of documents, including: 
  • Bank statements for the past several months
  • Tax returns for at least three years
  • Information on current loans and debts
  • Pay stubs and employment contract information
  • Financial disclosures, such as information on child support, divorce decrees, legal judgements, alimony, and more. Basically anything that impacts your financial situation should be included. 
  • Explanation of recent credit inquiries
  • Information on large deposits. (If lenders see a large cash deposit into your bank account, a deposit that is outside of your normal income, they will want an explanation, especially if that money is being used as a downpayment on your Vermont purchase. If the money is a gift, you will need a “gift letter,” which outlines the nature of the gift and states that it is not a loan and will not need to be repaid.)
  • Repeat information on any of the above. Lenders want as much information as possible, so they may ask for updated bank statements or repeat information on your income. Don’t be surprised or offended if you need additional documents to support information you have already provided. 

4. The lender will now issue a pre-approval letter, which essentially states their willingness to support your purchase.

5. An appraisal will now be completed. Although some loans won’t require it, most lenders will request an appraisal on the property. If the appraisal comes back with a low number, changes to the purchase price or loan (or both) may be needed or financing could be denied.

6. Once the appraisal is complete, the lender will issue a loan commitment letter. With this letter, you can remove the financing contingency from your purchase contract. If financing has not been completed by a certain date, you may request an extension to the financing contingency date.

7. Homeowner’s insurance will now be ordered and proof of insurance will be given to the lending office.

Remember, this step can be long and drawn out. To speed the process, start preparing documents as soon as possible, preferably before you start searching for homes. Also, avoid taking on new debt during the Vermont home buying process. 

Phase 3: The Final Closing

This is the final phase, the part where you finally get to take possession of your home. But before you can start moving in, you need to take a few final steps, including a final meeting where the home is officially transferred. 

  1. Before the final closing, a title search will be completed. This will make sure there are no liens or other complications with ownership. You can have this step completed far in advance of the closing. 
  2. Title insurance and final paperwork will be prepared by the attorney. 
  3. A final closing date is scheduled.
  4. A cash figure for closing the loan is delivered to the buyer. This is the amount you will need to finalize the purchase, and may include the downpayment, agent fees, origination fees, and more. 
  5. Right before the closing, the buyer and their agent will complete a final walkthrough to make sure the property is still in good condition. 
  6. The buyer, seller, agents, and attorney will meet together on the scheduled closing date to finalize documents.
  7. You will now pay the final amount to the attorney or title company. This is usually done through a cashier’s check. 
  8. A representative from the title company will record the transaction. 
  9. You will now receive the keys to your Vermont home!

Before closing, it’s best to prepare as many of the steps as possible. This includes moving cash so you can create a cashier’s check, as well as completing a title search in advance. 

Conforming Loan Limits for Vermont Real Estate

Conforming loan limits are set by the Federal Housing Finance Association. This group looks at home prices in each county and sets limits based on average home prices. Most of the country is under the base limits, but certain areas will have higher limits, allowing for the purchase of moderate homes in expensive locations. 

In Vermont, the entire state is under the base limits. From beautiful Grand Isle County in the far northwest to Essex County in the northeast and down to Bennington and Windham counties, which make the southern border with Massachusetts, the base limit is $548,250 for a single-family home.

Multiunit homes are also available with a conforming loan. The limit for a two-unit property in Vermont is $702,000, the limit for a three-unit is $ 848,500. If you want to use a conforming loan to purchase a Vermont four-bedroom property, the limit is $1,054,500.

These are only the limits for conforming loans in Vermont. If you need loans above these amounts, contact our staff to learn about Vermont jumbo loans.


Vermont Downpayment Assistance Programs

Vermont is one of the best places to own a home, but a downpayment requirement, which can equal tens of thousands, is a common barrier to purchasing a property.

If you have struggled to save for a downpayment, there may be help. Downpayment assistance (DPA) programs are available from a variety of organizations, including the state government, local cities, and nonprofit groups.

Statewide Vermont DPA Programs

Here are two examples of DPA programs available to buyers all across Vermont…

ASSIST Second Mortgage for First-time Buyers
The Vermont Housing Finance Agency (VHFA) offers the ASSIST program, which delivers second mortgages to first-time homebuyers. The support is structured as a 30-year fixed-rate mortgage that can go as high as $15,000 for eligible buyers.

Manufactured Housing Down Payment Loan Program
The Champlain Housing Trust has a program that helps people purchase manufactured housing. The program offers a loan that can be used for a downpayment to either purchase a new property or replace their existing manufactured home with an Energy Star-rated home.

Local and Regional DPA Programs in Vermont

Some programs are only available to buyers in certain areas. Here are two programs available in a specific city or region…

Burlington Downpayment Assistance
The city of Burlington offers support that can be as high as $10,000. While priority is given to first-time buyers, people who currently own a home may be eligible as well. This program is targeted to specific Burlington neighborhoods.

NeighborWorks of Western Vermont
If you live in western Vermont, you may be eligible for assistance from NeighborWorks, a national nonprofit that works out of regional offices. With this program, you may be able to secure as much as $40,000 in assistance.

Typical Requirements for Vermont Downpayment Assistance

Each program will have its own details, but you can expect a few common requirements. Most start with an income restriction, as the support is intended for low-income earners, a group that often struggles to save for a downpayment. 

Programs usually have credit-score requirements, debt limits, and may require that you contribute at least a small amount of your own savings. There will also be restrictions on purchase price (you can’t buy a luxury estate) and many will be available exclusively to first-time buyers.

Again, every program is different. If you have questions about current Vermont DPA programs, eligibility requirements, and the amount of assistance you might receive, contact our team today!