First-time home buyers in Vermont are getting some help with the expenses that come with buying a house. Legislation signed by Gov. Peter Shumlin last week includes up to $5,000 for closing costs and down payments.
That program will be administered by the Vermont Housing Finance Agency, but VHFA doesn't directly lend money to homebuyers. Instead, they work with participating lenders like credit unions and community banks. "They'll go into one of those institutions, be qualified for one of the VHFA programs and it would be there that they'll get the down-payment assistance", said VHFA executive director Sarah Carpenter. The down payment assistance money will be paid back as a zero interest loan when the home is sold or refinanced.
Low and moderate income Vermonters who make up to $100,000 qualify for the VHFA programs. "We understand that many working families are in that range searching for a home," Carpenter said.
"What we're seeing these days is just an increase in closing cost fees, down payment requirements and for a lot of home buyers, especially young families, saving that cash is very difficult. They've got student loans to pay, they're paying high rents, so it's a real sort of cash flow problem, getting the cash up front to buy that first home is very problematic," Carpenter said, adding that VHFA sees many eligible homebuyers still renting apartments.
A recent study showed a family has to make $21 per hour to rent a decent 2-bedroom apartment in Vermont, often paying as much as a mortgage payment, and those high costs prevent people from saving the money they need for a down payment. Down payment requirements are also high, because of tightened credit requirements. Those factors keep people in the rental market, despite low interest rates that might spur interest in home buying. Carpenter said there are certain parts of the state that are still low on housing stock under $200,000, especially in the Champlain Valley.
For people who might not know where to begin when it comes to buying a home, Carpenter recommends the home buying program offered by the alliance of Neighborworks organizations which provides home ownership counseling. "They'll sit down with you, look at your credit, look at how much you can afford, look at any barriers you might have, and walk you through the process of home buying," she said.
The homebuyer tax credit will be available to about 110 buyers each year for three years, and the program will begin in the fall.