First-Time Homebuyer Programs in Vermont

Down Payment Assistance Programs

• VHFA ASSIST Down Payment and Closing Cost Assistance. VHFA's flagship down payment and closing cost assistance product: up to $15,000 structured as a 0% interest deferred second mortgage with no monthly payments, repayable when the home is sold, refinanced, or no longer the borrower's primary residence. ASSIST pairs with a VHFA first mortgage (FHA, VA, USDA-RD, or conventional) at a below-market 30-year fixed rate, and is available to first-time buyers within VHFA's income and purchase price limits. ASSIST is one of the more generous statewide DPA programs in northern New England and is designed to stack with the City of Burlington Down Payment Assistance Program for Burlington buyers.
• VHFA MOVE Program. VHFA's program for buyers who do not qualify as first-time buyers (defined federally as not having owned a primary residence in the past three years). MOVE delivers the same below-market 30-year fixed-rate first mortgage as VHFA's first-time buyer products and can be paired with ASSIST down payment assistance, opening the VHFA platform to repeat buyers and divorced buyers who were previously on a deed within the three-year window. Income and purchase price limits apply.
• VHFA ADVANTAGE Program. A VHFA conventional first mortgage product that offers meaningfully reduced private mortgage insurance (PMI) compared to standard conventional loans with less than 20% down. ADVANTAGE is structured to lower the monthly payment for credit-qualified buyers who can use a conventional loan but cannot make a 20% down payment, and it can be paired with ASSIST down payment assistance. Especially attractive for buyers with strong credit scores who would otherwise pay full-cost PMI on a standard conventional loan.
• Vermont Mortgage Credit Certificate (MCC). A federal income tax credit administered by VHFA that converts a portion of the mortgage interest a Vermont first-time buyer pays each year into a dollar-for-dollar federal tax credit (typically up to $2,000 per year), available every year the borrower keeps the loan and the home as a primary residence. The MCC is in addition to the standard mortgage interest deduction on the remaining interest, and it can be paired with a VHFA first mortgage and ASSIST DPA. Issued at closing and must be requested in advance through a VHFA-approved lender - it cannot be added retroactively.
• USDA Rural Development (USDA-RD) Loans in Vermont. USDA Rural Development guaranteed and direct loans offer 100% financing (no down payment required) for primary residences in USDA-eligible areas, and most of Vermont qualifies outside the Burlington/Chittenden County metro core - including most of the Northeast Kingdom, the Green Mountain spine, the Connecticut River valley, and most of southern and central Vermont outside the Burlington commuter shed. USDA Guaranteed loans require household income at or below 115% of area median income and a credit score generally of 640 or higher. VHFA's first mortgage can be underwritten as USDA-RD, which lets the buyer keep VHFA's below-market pricing plus ASSIST DPA while taking advantage of USDA's zero-down structure - ASSIST can then be applied to closing costs and prepaid items instead of a down payment.

Income and Purchase Price Limits

VHFA income and purchase price limits vary by county and household size, with higher limits in Chittenden County and in targeted areas. Income limits generally range from roughly $95,000 in lower-cost Vermont counties to $120,000+ in Chittenden County for 1-2 person households, with higher limits for 3+ person households and in targeted areas. Purchase price limits typically fall in the $350,000-$500,000 range across most of the state, with higher limits in Chittenden County reflecting Burlington-area pricing. USDA Guaranteed loans use a separate income limit (115% of area median income) that often allows higher household income than VHFA's standalone limits in the same county. The Vermont MCC uses its own first-time buyer and income/purchase price tests that closely track VHFA's. Always confirm current VHFA and USDA income and purchase price limits with a VHFA-approved lender or at vhfa.org before assuming eligibility.

City Programs Worth Knowing

Burlington runs a city-level down payment assistance program that is unusually generous for a small city, reflecting Burlington's high housing costs relative to the rest of Vermont. It's income restricted and requires HUD-approved homebuyer education before application.

• City of Burlington Down Payment Assistance Program. Up to $20,000 in down payment and closing cost assistance for income-qualified first-time buyers purchasing a primary residence inside City of Burlington limits. Structured as a deferred or forgivable second mortgage with multi-year continuous owner-occupancy requirements, HUD-approved homebuyer education required, and designed to stack with VHFA ASSIST. The $20,000 ceiling is on the high end for a small-city DPA program and reflects Burlington's unusually high prices for its population size - confirm current funding and program details with the City of Burlington Community and Economic Development Office (CEDO) before applying, as funding cycles can exhaust mid-year.

The City of Burlington program runs on funding cycles that can exhaust mid-year, and homebuyer education must be completed before application - not after offer acceptance. The city agency review step extends closing timelines by several weeks beyond a standard VHFA-only closing; plan that into the front of your timeline and confirm current funding availability with CEDO before counting on it in your offer.

FHA Loan Requirements in Vermont

FHA loans are widely used by Vermont first-time buyers and are compatible with VHFA ASSIST, VHFA MOVE, and the City of Burlington Down Payment Assistance Program. VHFA ADVANTAGE is a conventional product (not FHA) and the Vermont MCC can be issued against any qualifying first mortgage, including FHA. Across all of Vermont, FHA loan limits use the standard single-family ceiling.

How to Apply

1. Check your credit score - 580 is the FHA minimum for 3.5% down, and VHFA and USDA Guaranteed both typically require 620-640 or higher.
2. Review current VHFA income and purchase price limits for your county at vhfa.org - and check whether you qualify as a first-time buyer (no primary residence ownership in the past three years) or whether you need the VHFA MOVE program instead.
3. Decide between an FHA-backed VHFA first mortgage (lower credit score floor, higher mortgage insurance) and VHFA ADVANTAGE conventional (stronger credit required, reduced PMI) - your VHFA-approved lender can run both scenarios side by side.
4. Request the Vermont Mortgage Credit Certificate (MCC) at application - it delivers an annual federal tax credit for the life of the loan, must be issued at closing, and cannot be added retroactively.
5. Check the USDA Rural Development eligibility map by property address if you're considering a property outside Chittenden County - most of Vermont qualifies, and USDA's zero-down structure plus VHFA ASSIST redirected to closing costs is often the most efficient stack available.
6. If you're buying inside City of Burlington limits, contact the City of Burlington Community and Economic Development Office (CEDO) to confirm Down Payment Assistance Program eligibility and current funding - the $20,000 Burlington stack is one of the more generous local programs in northern New England.
7. Complete a HUD-approved homebuyer education course - required by VHFA and by the City of Burlington program.
8. Select a VHFA-approved lender experienced with USDA underwriting if you're targeting a USDA-eligible property - not all VHFA lenders are equally fluent in USDA-RD.
9. Apply through your approved lender, who will coordinate the VHFA application, the ASSIST DPA request, the MCC issuance, the USDA Guaranteed loan submission (if applicable), and the City of Burlington DPA approval simultaneously.

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