Buying a home with a VHFA loan

Why choose VHFA?

  • Low interest rates
  • Savings up to $625 thanks to a partial exemption from Vermont's Property Transfer Tax
  • Plus ... VHFA first-time homebuyers may be eligible for a federal tax credit up to $8,000!

See a participating lender

VHFA does not make loans directly to consumers. Instead, we offer low-rate mortgage programs for eligible borrowers through participating lenders located throughout the state.

Learn the ins and outs below, and then take that first step: Contact a VHFA participating lender

Applying for a VHFA mortgage loan

VHFA does not make loans directly to potential buyers. You must apply for a VHFA loan through a participating lender. Your lender will determine the loan amount and applicable VHFA program you qualify for and process your application.

Eligibility requirements

These requirements apply to all applicants and mortgage loan programs:

  • Income of all borrowers/non-borrowers must be within current income limits
  • Purchase price of the property must be within the current purchase price limits
  • Property type must be VHFA eligible and have no more than 15 acres
  • All borrowers must occupy the property as their principal residence within 60 days after closing
  • At the time the VHFA loan is closed, no borrower or eligible non-borrower, can own other property except for:
    • Vacant land
    • Property unsuitable for year-round occupancy
    • Commercial real estate (does not include residential rental units)
    • Single wide mobile home in a park that is not permanently affixed to land
  • If purchasing in one of the following counties: Addison, Bennington, Chittenden*, Grand Isle or Windsor all borrowers and eligible non-borrowers must be a first-time buyer or not have owned a home in the past three years. This requirement does not apply to any other counties.

*Requirement does not apply to Census Tract 4 in the City of Burlington

Mortgage loan programs

MOVE program

  • Eligibility — All applicants must meet the eligibility requirements outlined above.
  • Homebuyer education — At least one applicant must complete homebuyer education at the required level.
  • Qualifying — Your lender will make this determination depending on the qualifying criteria in place. Contact a participating lender to determine your eligibility and be qualified.
  • Property types —
    • New and existing single-family detached homes. No mobile homes.
    • Existing two-family homes. Must have been a residence for past 5 years.
    • Properties subject to shared appreciation with a non-profit organization.
    • Units in existing condominium projects that meet the required eligibility criteria.

Direct program

  • Eligibility — All applicants must meet the eligibility requirements outlined above.
  • Homebuyer education — All applicants must complete pre-purchase education with a NeighborWorks® Homeownership Center of Vermont.
  • Qualifying — Contact a participating lender to determine your eligibility and be qualified.
  • Property types —
    • Properties subject to a specific ground lease with a Community Land Trust
    • Units in a new condominium project that are not eligible for the MOVE program
    • Single and double wide mobile homes that meet the following requirements. Unit must be:
      • A 1976 or newer
      • On owned land or in an eligible park
      • Properly skirted and the wheels, axles and hitch must be removed
      • Permanently affixed to a poured concrete slab, poured concrete columns that extend beyond the frost line or concrete blocks set on poured concrete footers that extend below the frost line.

See a list of condos and mobile home parks eligible for this program

Federal recapture tax information

Due to the source of VHFA's funding, some borrowers may be subject to a Federal Recapture Tax.

Whether you're subject to the tax and the amount, is not determined until you file taxes for the year the property purchased with VHFA financing is sold.

However, VHFA will reimburse you for any recapture tax you owed and paid if you received your mortgage loan with VHFA on or after Feb. 1, 2006. This is a reimbursement of any recapture tax you pay. VHFA will not pay the recapture tax initially.

The Federal Recapture Tax does not require you to provide information about your income each year, and your loan's interest rate and payment are not adjusted annually.

The Federal Recapture Tax is only applicable if you sell or dispose of your property within the first nine years of your VHFA loan and is based on information only in the year you dispose of the property.

Are you subject to the tax?

For you to be subject to the Federal Recapture Tax, you must meet all three of the following requirements:

  1. Dispose of your property within nine (9) years from the date of the loan. If you do not sell within the first nine years, you are no longer subject to the Federal Recapture Tax.
  2. Your income at the time you sell must exceed specific income limits. The income limits are not the same limits used to determine if you are eligible for the loan. The income limits used for Recapture Tax are much higher. At the time you close on your VHFA home loan, you will receive a chart showing the income limits that will apply to you.
  3. You must make a net profit on the sale of the property.

If you sell or dispose of the property within the first nine (9) years, you must complete and file IRS Form #8828 with your tax returns in the year you sell the property.

Robin Lyndaker home, Swanton