Now that the housing market is finally calming down after the pandemic, buyers are facing a new challenge: Soaring mortgage rates.
In Vermont, the average 30-year fixed mortgage rate is 5.61% — up from 2021's historic lows. This raises the average monthly mortgage payment to $1,705 (assuming a 20% down payment at the median home value).
But buying a home in Vermont is still possible, even for first-time home buyers. Many markets are seeing frequent price drops and fewer offers, giving motivated buyers the upper hand in negotiating for the best price.
In this guide, you’ll learn how to buy a house in Vermont with confidence no matter what the market brings. Learn why you can trust our advice.
Whether you're actively house hunting or just starting to browse homes on Zillow, it's never too early to find a great local realtor to guide you on your search. An experienced agent can help you navigate a tricky housing market, explore your financial options, and negotiate the best deal possible.
Best of all, hiring a real estate agent comes at no extra cost to you — since the seller typically pays both their listing agent and your buyer's agent.
Ready to find a great local realtor, but not sure where to start? The best (and easiest!) option is to try a free agent matching service like Clever Real Estate. Answer a few simple questions about your home buying goals, and Clever will match you with hand-picked agents from Keller Williams, RE/MAX, and other top brokerages in your area. Find a top local agent and make your home buying dreams a reality today!
Step 1: Save for a down payment
Your down payment is the first part of your home's purchase price that you pay at closing. Your mortgage lender will pay the remaining balance.
Typically, mortgage lenders in Vermont want you to contribute 20% of the purchase price as a down payment. That would be $74,158 for a $370,790 home — the typical home value in Vermont.
However, you have options to lower your down payment amount.
Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).
Minimum down payment (%)
Down payment ($)
Based on typical home values from Zillow (August 2022)
But making a down payment of less than 20% comes with some risks.
First, because you're borrowing more money, you'll have a higher monthly payment and pay more in interest over the life of your loan.
Based on home values from Zillow (August 2022) and a 5.61% interest rate for a 30-year loan.
Second, you may have to purchase mortgage insurance.
Conventional loans require private mortgage insurance (PMI) until your loan balance reaches 80% of the purchase price. FHA loans, on the other hand, require a mortgage insurance premium (MIP) for the life of your loans.
Mortgage insurance costs around 1% of your mortgage balance annually. However, rates vary based on your down payment and credit score. Typically, your mortgage insurance payment is added to your mortgage payment each month.
VA loans don't charge mortgage insurance. Instead, you'll pay a VA loan funding fee at closing, which can range from 1.4% to 3.6% of the purchase price.
Vermont down payment assistance programs
There are numerous down payment assistance (DPA) programs throughout the state of Vermont that can help first-time and low-income buyers afford a home. Eligible buyers could receive a grant or loan to help cover closing costs or a down payment.
Here are a few DPA resources you might qualify for:
The Vermont Housing Finance Agency (VHFA) offers their ASSIST program to first-time homebuyers who were approved for a VHFA first mortgage. Depending on the first mortgage amount, participants may receive $5,000 or $10,000 as a 0% interest, 30-year second mortgage. Payment is due when the buyer pays off their first mortgage or refinances or sells their home.
U.S. Department of Housing and Urban Development
HUD’s list of alternative programs in Vermont can be found here.
Step 2: Find a great real estate agent in Vermont
Your real estate agent will be your main ally during the home buying process. Besides finding and showing you properties, your agent will help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers like title companies and inspectors to help you buy your home in Vermont.
Don't rush into choosing an agent. Instead, take the time to research and interview multiple real estate agents who have experience in the neighborhoods you're interested in. You should pay attention to a realtor's:
- Years of experience
- Number of transactions in the last year (the more the better!)
- Experience in your price range
- Overall review score
- Individual reviews and complaints
Step 3: Get preapproved for a mortgage
A mortgage preapproval letter is an offer to lend you up to a certain amount of money to purchase a home. It shows sellers that you are a serious buyer who is financially qualified to make an offer on a home.
Most sellers in Vermont will require preapproval before showing you their home.
You don't have to decide on one lender right now. In fact, you should compare interest rates and preapproval amounts from several lenders to make sure you're getting the absolute best terms when you buy your Vermont home.
Step 4: Choose the right location
Currently, the typical home value in Vermont is $370,790, but don't worry if that doesn't perfectly match your budget. Home prices vary dramatically from city to city and even from neighborhood to neighborhood!
Also, look at past home value trends. This will give you an idea of how much your home's value could go up over the next few years.
To give you an idea of how appreciation could impact what your house is worth in the future, consider these examples from three neighborhoods in Barre:
Home value appreciation in Barre
Step 5: Start house hunting in Vermont
Searching for homes in Vermont is the fun part of the home buying process! You'll get to look at a variety of homes and discover what you really want in a home.
Make a list of everything you want in a home and prioritize them. At the top of the list should be the items that are most important to you. This will help you separate your "must-haves" from your "nice-to-haves."
Your agent can help you understand if your wants are realistic for your budget and favorite neighborhoods or if you need to rethink what you're looking for.
Look at current housing inventory
The timing of your house hunt in Vermont can have a big impact on your number of options. For example, in Vermont, June has historically seen the most homes for sale. Searching in this season could give you more options and a greater likelihood of finding your dream home.
On the other hand, December gives you the fewest choices in Vermont. Historically, there are 62.6% fewer homes for sale than during Vermont's peak season.
Housing inventory in Vermont by season
New listings per month
Based on data from Realtor.com (October 2022)
Step 6: Make an offer
Once you find a Vermont house you love, it's time to make an offer. Your real estate agent will help you write a compelling offer that gives you the best shot of convincing the homeowner to sell to you.
Currently, in Vermont, homes stay on the market for 128 days before going under contract. However, every market goes through seasonal changes. During busier months, homes get snatched up more quickly than others.
Historically, Vermont homes sell fastest in August, where the average property is only on the market for 86 days. If your home search falls around this time, you should be prepared to move quickly and potentially make offers on several homes before yours is accepted.
On the other hand, if you buy in February, you have a bit more time to search. Homes typically stay on the market 42 days longer than Vermont's annual average.
Average time homes spend on market in Vermont
Based on data from Realtor.com (October 2022)
» LEARN MORE: What should an offer include?
Step 7: Inspections and appraisals
Inspections and appraisals are an opportunity for you to better evaluate the home's condition and value before officially purchasing it. You may have an opportunity after this step to renegotiate the terms of your contract with the seller if something unexpected pops up.
Home inspections in Vermont
Having your Vermont home inspected by a licensed inspector gives you peace of mind about the condition of the property before you commit thousands of dollars to purchase it.
Your inspector should check out the following parts of the property:
- Electrical system
- HVAC system
If the home has a septic system, you should also pay for a septic inspection to make sure it doesn't have any problems that wouldn't be covered in a typical home inspection.
Vermont is known as a “buyer beware” state, which means that sellers may not necessarily disclose issues with a home. Vermont homebuyers are highly advised to conduct more specialized tests and inspections, in addition to a general home inspection. Taking these extra precautions can save you from expensive repairs and other problems in the long run.
Here are a few of the most highly-recommended tests you should do before closing on a home:
- Radon testing: Elevated radon levels can be hazardous to your health, and this substance can seep into any home undetected. It's recommended to conduct a radon test annually to ensure a property is safe for its residents. You can request a free radon test kit from the Vermont Department of Health here.
- Pest inspection: Termite and pest inspections aren't required in all Vermont counties, but homebuyers are encouraged to get one done no matter where they're located. Infestations can spread quickly and cause serious property damage, so it's best to have a professional check out a home before closing.
Appraisals determine the value of the property. If you're using a mortgage to buy your new home, your lender will order an appraisal to make sure the home is worth the money that it's loaning you.
Step 8: Close on your new home!
On closing day in Vermont, you'll meet at your title company to complete paperwork and settle your closing costs.
Plan to spend about an hour reviewing all of the legal documents required to finalize your loan and begin the title transfer. Take your time to make sure all the information is accurate before signing anything. If there are any errors, it could disrupt the transfer process.
A few important forms you'll need to complete will include:
- Your final loan application
- The deed
- The mortgage promissory note
- The disclosure statements
After the paperwork is finished, you'll need to pay your closing costs. Simply pay the full amount to the title company, and they will distribute payments to each recipient on your behalf.
As a buyer, your closing costs can be broken down into four main categories:
- Lender fees: Fees paid to your mortgage lender for originating and underwriting your loan. Other costs connected to your loan may be included as well, such as appraisal fees and survey fees.
- Title and escrow charges: Fees the title company charges for conducting the title search and facilitating the closing.
- Prepaid costs: Ongoing costs of owning a home, like property taxes and homeowners insurance. Mortgage lenders often require borrowers to pay for these expenses up front at closing.
- Other closing costs: Miscellaneous expenses that vary from buyer to buyer. Some common costs include natural disaster certification fees, real estate attorney fees, and pest inspection fees.
Buyers in Vermont typically pay 3–5% of the purchase price in closing costs. For a $370,800 home — the typical home value in Vermont — that's between $11,124 and $18,540!
Frequently asked questions
Vermont does not require you to hire a real estate attorney to buy a home. However, depending on your circumstances, you might consider hiring one anyways. If you do, treat the process similarly to hiring an agent. Interview multiple attorneys and proceed with the one that best meets your needs.
- Save for down payment
- Get pre-approved for a mortgage
- Choose your preferred Vermont neighborhoods
- Partner with the right real estate agent in Vermont
- Go house hunting
- Make a strong offer
- Inspections and appraisals
- Do a final walkthrough and close
Yes! The Vermont Housing Finance Authority (VHFA) offers several programs for first-time buyers to choose from.
The ASSIST Down Payment and Closing Cost Assistance program is available across the state. The financial assistance is given as a 0% interest loan that requires no payments until the first mortgage is paid off or the home is sold or refinanced. To qualify, applicants must be approved for the VHFA Move program, the Move MCC program, or the Advantage program. Liquid and non-retirement assets cannot exceed $30,000,
The MOVE program is only available to first-time buyers in Addison, Bennington, Chittenden, Grand Isle, and Windsor counties. It offers the VHFA’s lowest rates and can be combined with a VHFA down payment assistance program. To qualify, the borrower must meet the minimum credit score required by their first mortgage.
Federal Reserve. "Housing Market Tightness During COVID-19: Increased Demand or Reduced Supply?." Accessed October 11, 2022. Updated July 08, 2021.
Consumer Protection Financial Bureau. "The Fed is raising interest rates. What does that mean for borrowers and savers?." Accessed October 11, 2022. Updated March 17, 2022.