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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.
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 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.
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.
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:
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:
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:
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:
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:
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