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A Review of Mortgage Products

By Tiffany Raiford

When purchasing a home in Vermont, it helps to understand the different mortgage products available to you. While many people are under the misconception that all mortgages are the same, they are not. Every mortgage offered by every lender differs in some way. Provided for you here is a comprehensive list of the most common mortgage products offered to Vermont home buyers so that you know which one is best for your financial situation.

Fixed Rate Mortgage

A fixed rate mortgage is one in which your interest rate does not change over time. If you sign your mortgage paperwork with an interest rate of 3.35 percent, you will pay that rate over the life of your loan. These loans are available to consumers who want to know that their mortgage payment will not fluctuate over the course of 10, 15, 20 or 30 years, which is the standard time frame for home loans in the state. Most lenders require at least 20 to 30 percent down.

Adjustable Rate Mortgage

Adjustable rates are something a number of buyers are interested in. This is typically because most buyers are interested in a low interest rate at the start of the loan, often thinking they won’t live in a home more than just a few years anyway. For example, if your adjustable rate mortgage has a 4/1 adjustment, you will pay a fixed interest rate for the first four years of your loan. After that, the interest rate can change every year. The down payment requirements are similar to those of a fixed rate mortgage.

Vermont Housing Finance Agency

VHFA loans are available only to first time homebuyers in Vermont. These loans make it possible for first time homebuyers to get into their first home with a low down payment, low monthly payment and several financial restrictions. To qualify for this type of mortgage product, you must be a first time homebuyer who meets certain income restrictions as well as price limits when it comes to choosing your first home to purchase.

203K Rehab Loans

203K rehab loans require just a bit more work than other loans in Vermont. With a loan like this, you can apply for a mortgage that will help you purchase a home that requires construction, such as an unfinished property or one that needs a significant amount of work. The down payment requirements for this type of loan are typically anywhere between 20 and 30 percent. However, if you apply for a government funded HUD 203K rehab loan, you will only need 3.5 percent down on the cost of the improvements and the home itself.

FHA Loans

The Federal Housing Administration offers FHA loans to individuals in Vermont who want to purchase a home. These loans are generally offered alongside down payment grants so that buyers with low incomes can afford to purchase a home. This program has strict income restrictions, making it possible for only those who show financial need to be able to obtain a loan. This program is good for those who cannot purchase a home because they have limited income, budget and down payment requirements.

There are a number of loan options available when it comes to purchasing a home in Vermont. Once you know what your financial situation looks like, you can make a decision regarding the type of loan you will apply for. Several loans make it possible for you to purchase a home even without the traditional down payment, which means more people are eligible to make a purchase.

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