- How do I apply for a VHFA home loan?
VHFA does not make home loans directly to homebuyers. You
must apply for a VHFA loan through a participating
lender.
Rates and requirements for VHFA loans are identical
no matter which participating lender you
choose.
A participating
lender will:
- Review your information to determine your eligibility
for VHFA;
- Determine the loan amount you qualify for;
- Work with you to
complete an application and other required forms; and
- Process
your loan application
If you have questions during the application process, contact your
lender.
- How can VHFA help
me finance a home?
VHFA is not a conventional financial institution that makes home
loans directly to consumers. Instead, we work with participating
lenders to make sure our low-rate loans are available to all
eligible homebuyers.
We offer low rates, flexible downpayment options, and a special
Cash Assistance Rate Option to help
you with closing costs and/or downpayments.
Furthermore, all VHFA borrowers are exempt for up to $500 of the
Vermont Property Transfer Tax.
- What are your current
interest rates?
VHFA's 30-year 0 point interest rate for stick-built homes is
6.25% (APR 6.25% points only). Current rates
are available on VHFA.org. Rates are subject to change without
notice.
- What home loan
programs does VHFA offer?
VHFA offers programs to purchase properties and a limited
refinance program. We do not offer programs for construction loans,
home improvements loans or general refinance.
Our current programs are:
- Are VHFA loans
subject to income and purchase price limits?
Yes. All applicants must meet VHFA's income
limits and purchase price limits.
Income limits are based on family size and the area you are buying
in. Purchase price limits are based on location and whether the
property is existing, new or a two-unit.
- Do I have to be
a first-time buyer/homeowner?
You must be a first-time buyer or not have owned a home in the
past three years if you are buying a property in one of the following
counties:
- Addision
- Bennington
- Chittenden
- Grand Isle
- Windsor
There is an exception in the Burlington Targeted Area, which is
Census Tract 4. To determine if a property is in the Burlington
Targeted Area, go to www.census.gov
and click on American FactFinder; enter the street address as
requested.
You do not have to be a first-time buyer if you are purchasing
in any other county in Vermont.
- Do I have to live
in the property?
Yes. You must begin to live in the property within 60 days after
you close the VHFA loan and the property must be your primary
residence for as long as you have the VHFA loan.
- Do I have to be
a Vermont resident?
No, but the property you're buying must be located in Vermont
and you must occupy the property as your principal residence.
You must meet the first-time buyer requirement, as applicable,
and you cannot own another principal residence in Vermont or another
state.
- Do I have to attend
homeownership classes or counseling?
VHFA only requires that applicants be a client of a NeighborWorks®
HomeOwnership Centers of Vermont to be eligible for our HOUSE
Program, or when purchasing manufactured housing, and sometimes
limited programs that VHFA offers. To be a client, you must attend
an orientation session, homeownership classes and one-on-one counseling.
While not required for all VHFA loans, we strongly recommend all
first-time homebuyers to attend homeownership education classes.
In addition to the pre-purchase education the NeighborWorks®
HomeOwnership Centers of Vermont offer, in some cases, they can
provide financial assistance for home purchase. Homeownership
Centers are located throughout Vermont. For more information visit
the Homeownership Centers on the web.
- Do I need a downpayment?
You must have sufficient cash assets to complete the transaction
— downpayment and the cost of closing the loan. Depending
on your credit history, you might be required to have a downpayment,
and in some cases, part of the downpayment might have to come
from your own savings. To assist buyers who need additional funds
for downpayment and/or closing costs, VHFA offers a Cash
Assistance Rate Option program. Additional eligibility requirements
apply for this optipon.
Note: Mortgage insurance is required on all loans that have less
then a 20% downpayment. Your participating
lender will give you details on the mortgage insurance.
- Are there special
closing costs?
No. The closing costs for a VHFA loan are similar to a conventional
loan. One reduced cost is the Vermont Property Transfer Tax. VHFA
borrowers are exempt from the Vermont Property Transfer Tax on
the first $100,000 of the purchase price, resulting in up to $500
savings.
- Can I get VHFA
financing without my spouse?
Yes. You may apply for a loan yourself. However, due to the source
of VHFA's funding, your spouse must meet all of the program eligibility
requirements (See question #14), and your combined
income must be within VHFA's income
limits. Your spouse will be required to sign specific VHFA
documents and provide copies of tax returns to verify eligibility.
- Can I get VHFA
financing with another person?
Yes. The other co-owner must meet the program eligibility requirements
(See question #14), be financially qualified
(See question #15) and have acceptable credit
(See questions #16). Only individuals approved
by VHFA are allowed to take title to the property.
- Am I eligible
for a VHFA home loan?
You must meet the following program eligibility requirements:
- Income: Your gross annual
income must not exceed the income limit by family size in
the area you plan to purchase a home. (See
income limits.) You must also have sufficient regular
income to support the mortgage payment, other housing-related
expenses and personal debts. A participating
lender will review your earnings history to determine
if your income is within the income limits and is sufficient
to support your loan amount request.
- Purchase price: The
property you are buying must be within the current purchase
price limits.
- First-time homebuyer:
In most areas you are not required to be a first-time homebuyer.
Only in Addison County, Bennington County, Chittenden County
(except for Census Tract 4 in the City of Burlington), Grand
Isle County and Windsor County, you must not have owned a
principal residence within the past three years. You do not
have to be a first-time home buyer if you are purchasing in
any other county in Vermont.
- Other real estate: At
the time you close the VHFA loan, you cannot also own other
real estate except for:
- A vacation property unsuitable for year-round occupancy;
- Vacant land; or
- Commercial real estate (that does not include residential
rental units;
- Single-wide mobile home in a park that is not permanently
affixed
- Occupancy: You must
occupy the purchased property as your principal residence
within 60 days after you close your loan and for as long as
you have the VHFA mortgage.
- New home loan: We provide
home loans to purchase a property that you do not already
have an interest in. VHFA does not refinance existing home
loans, except under the Limited
Refinance Program.
- Do I financially
qualify for a VHFA home loan?
To determine if you financially qualify, discuss your qualifications
with a participating lender. Items considered
in qualifying are:
- Income/Employment: Your
employment and income history will be reviewed for stability.
You must have a source of stable income that is sufficient
to cover the expenses related to the mortgage and all other
debts.
- Monthly mortgage payment: As
a general guideline for affordability, a percentage of your
income is considered to cover your monthly mortgage payment
plus a monthly escrow.
- Escrow: VHFA requires
that your monthly mortgage payment include an escrow of these
items. Plus:
- Principal and interest
- Property taxes;
- Homeowner's insurance; and
- Mortgage insurance and flood insurance, when applicable
- What are VHFA's
requirements for credit?
- Credit history: You
must have a sufficient and acceptable credit history that
shows an ability and willingness to meet payments when due.
Your credit history will determine your down payment. Your
credit history may be reflected in the credit score provided
on your credit report, which will impact your downpayment
requirement (See question #10). If you have
had past credit difficulties, you should discuss this with
a participating lender. Your lender
can determine if your credit is acceptable.
- Your credit report: Credit
agencies collect and organize information about you and your
credit history. For information on your credit report, contact
one of the following credit agencies:
- More help: For assistance
with credit issues, contact Consumer
Credit Counseling Service of NH/VT
- How does VHFA
consider my credit score?
In most cases, you'll have a credit score that's based on your
credit history. Your credit score helps determine the amount of
downpayment you will be required to have and the percentage of
your income that can be considered to support your debts. Your
lender will determine the credit score to be used and your eligibility
based on the applicable score.
- What type of property can I buy
with a VHFA loan?
VHFA provides financing for various property types. For
a property to be eligible for a VHFA loan, it must
be within the purchase
price limits, meet the property requirements and
be an eligible
property type.
- General property requirements
- All
properties must be safe, reasonably livable, and
meet all state and local building and zoning codes.
- All properties
must have a potable water supply, be structurally
sound and all mechanical systems must be
in good working condition.
- Newly-constructed properties must be fully completed
- Existing two-family
houses
- Both units must have been a residence for the previous
five years.
- Existing
and newly-constructed single-family houses
- The amount of land sold with the property cannot exceed
15 acres and must be one contiguous parcel
- VHFA
does not offer construction financing
- Existing and newly-constructed
condominium units
- Manufactured Housing
- Existing and new single- and
double-wide mobile homes
- VHFA will consider mobile homes on owned land (not to
exceed 15 acres) or in eligible parks. A listing of VHFA
approved condo projects/mobile
home parks is available online.
- The wheels, hitch and axles must be removed.
- The unit must be attached to a permanent foundation
that must consist of:
- Poured concrete slab;
- Poured concrete support columns installed below
the frost line; or
- Concrete block piers that are set upon poured concrete
footers installed below the frost line.
- Piers and columns must be of sufficient size and adequate
bearing to support the unit.
- Insulated skirting must be installed around the perimeter
to protect the undercarriage from air infiltration.
- Mobile homes in parks must be in a VHFA-eligible park
and are restricted to a 20-year term.
- Pre-1976 units must be currently financed with VHFA,
are restricted to a 20-year term and require a full
property inspection by a qualified property inspector.
- Does VHFA inspect the property?
No. The participating lender you apply
with will have the property appraised by a professional real
estate appraiser.
The appraiser
will determine, for the use of the lender, the current
value of the property for lending purposes. The appraisal
is not
a property inspection. For existing properties, we
recommend you
hire a qualified home inspector to perform a property inspection.
- Am I subject
to special requirements —such as Federal Recapture Tax — when I sell
or refinance?
Due to the source of VHFA's funding, some borrowers may be subject
to what is known as Federal Recapture Tax. Whether an individual
borrower is subject to the Federal Recapture Tax is determined
at the time the property is sold and if certain other factors
apply. The Federal Recapture Tax is regulated by the Internal
Revenue Service.
However, VHFA will reimburse
homeowners who closed their VHFA mortgage loan on
or after Feb. 1, 2006,
for any validated Federal Recapture Tax liability actually paid
if the specific guidelines are met. You still may be liable for
the Federal Recapture Tax, but you may be reimbursed the amount
of the Recapture Tax you paid from VHFA. Read
more about requirements for reimbursement.
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 based on your income. 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.
It is important
to know that you are subject to Federal Recapture Tax only if you meet
very specific requirements at the time you sell or otherwise
dispose of your property. It is not possible to determine if you will be
subject to
the tax at the time of application. The maximum Federal Recapture Tax that
could potentially be owed is no more than 6.25% of the original loan amount.
At application and closing, your lender will provide you with additional
information on the Federal Recapture Tax.
For you to be subject to the Federal
Recapture Tax, you must meet all three of the following requirements:
- 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.
- Your income at the time you sell must exceed specific income limits.
The income limits that determine this are not the same as the limits used to
determine
if you are eligible for the home loan. The income limits used for the 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.
- You must make a net profit on the sale of the property.
If you sell or
otherwise dispose of the property within the first nine years, you must complete
and file IRS Form #8828 with your tax returns.
The Federal Recapture Tax is
paid directly to the IRS. VHFA does not calculate nor accept payment for
the Federal Recapture
Tax.
You are not subject to the Federal Recapture Tax if you refinance within
the
first nine years. You must sell the property as explained above for this tax
to apply.
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