Vermont FHA Loans – Requirements and Loan Limits for 2024
Vermont home buyers who need a small down payment or have poor credit scores may be able to purchase a home with an FHA home loan. There are many FHA lenders in Vermont who offer FHA loans, but not all of them participate in all of the various FHA loan programs options available.
For more than 20 years we have helped Vermont borrowers to finance their homes and to provide answers to their questions about FHA eligibility requirements. We will take you through the Vermont FHA loan eligibility requirements, detail what is needed to qualify, then help with your application.
If you already know that an FHA loan is right for you, then click to connect with a Vermont FHA lender whether you live in Burlington, Brattleboro, Essex, or anywhere else in the state.
FHA Loan Benefits in Vermont
These are the benefits of an FHA loan versus a conventional loan:
- Lower credit scores permitted
- Lower down payment requirement
- FHA interest rates are lower than conventional rates
- Gift funds are allowed
- Seller closing cost contributions are allowed up to 6% of the purchase price
- FHA loans are assumable
- Co-signers are allowed
- Higher debt to income ratios are permitted up to 56.9%
- Available in rural areas which is important when searching for homes in Vermont
According to the HUD FHA Handbook, FHA loans help home buyers by providing lenders with insurance against potential losses to allow homebuyers to qualify with a smaller down payments and lower credit scores.
Eric Jeanette – “FHA loans are perfect for first time home buyers who may have a small down payment or low credit scores.”
Types of FHA Loans in Vermont
There are various types of government backed FHA mortgages available in the state of Vermont for both purchases and also refinances. Each of these are for a specific situation that a home buyer or current homeowner may encounter. Although these programs are available, not every lender offers them and the ones who do may have their own unique requirements.
- Standard Purchase
- Standard Refinance
- FHA 203k Rehab (when buying or refinancing)
- FHA Streamline Refinance
- FHA One Time Close Construction Loan
- FHA Cash Out Refinance
- FHA Energy Efficient Mortgage
We will review some of these programs below and will provide additional eligibility information.
FHA Down Payment Requirements
The down payment requirements for an FHA loan is the same in every state. The minimum requirement for an FHA loan is 3.5% of the purchase price. However, if your credit score is below 580, then the down payment requirement will be 10%.
If you do not have the down payment needed, you can also use gift funds from a relative.
FHA Down Payment Assistance Programs in Vermont
There are various down payment assistance programs in every state. Below is a list of just a few down payment assistance programs that may be available to you in Vermont. Home buyers will need to contact, and arrange for these programs independently. Lenders will accept the funds from these programs for your down payment but they will not arrange for the down payment assistance.
We also have the ability to offer lender provided down payment assistance. There will be minimum credit score requirements and the other will be included in the entire loan package offered by the lender. Contact us here if you are interested in this option.
FHA Loan Requirements in Vermont for 2024
These are the basic FHA loan requirements for this year. All of these must be met to be approved for an FHA loan. If you are not positive on whether you meet these standards or have questions, an FHA lender can help.
- Down payment of 3.5% or 10% if your credit score is below 580
- 2-year employment history with some exceptions allowed
- Fully document your income for the past two years
- Minimum FICO score requirement of 500 – down payment will vary
- Mortgage Insurance Premium (MIP) is required for every FHA loan
- Maximum debt to income ratio of 43% with exceptions up to 56%
- The home must be your primary residence
- No bankruptcies or foreclosures in the past two years
Application Process and Required Documentation
The loan officer will provide you with a secure link to complete your loan application. It is important to complete the application fully as if it is incomplete, it will delay the process.
Next, your loan officer will pull your credit and the liabilities will be imported into the loan application.
Once you have fully completed the mortgage application, the loan officer or processor will ask you to upload the following documents through a secure portal:
- Last 30 days pay stubs
- Last two months bank statements
- Last two years tax returns
- Last two years W2s
- Copy of the sales contract for purchases
- Copy of your current mortgage statement for refinances
When you are farther into the application process, at some point you will be asked to provide a copy of your homeowner’s insurance policy reflecting the required coverage for the home.
After your loan application is completed and signed, you will receive the official disclosures including the loan estimate which would include the closing costs.
Top Vermont FHA lenders
These lenders are just a few options for you to consider. Please note that each lender is different and it is possible that none of these options are best for you depending upon your scenario.
- Northfield Savings Bank – Contact
- Berkshire Bank – Contact
- Brattleboro Savings and Loan – Contact
- The Bank of Bennington – Contact
- Mad River Valley Vermont Lenders – Contact
Let us help you to find the best FHA lender in your area by completing this FHA loan scenario form with some basic loan scenario information. No credit report will be pulled and we can connect you with the best option.
FHA Approved Loan Limits for Each County in Vermont
Every county in the United States has specific maximum loan limits that are set for single family homes, as well as 2-4 unit properties. The limits are set based upon the average home sales value in that county.
The FHA loan limits vary for each county and are set to meet the average median home cost in each area. This FHA Loan limit listing below will be kept updated so you may bookmark the page for future reference.
FHA 203k Loans in Vermont
FHA 203k loans are a great program which will allow you to borrow the money needed to purchase the home plus additional funds needed to rehabilitate or remodel the home. This program is also available in your state and we work with lenders that help with your FHA 203k loan.
If you would like to fully understand how this program works, we suggest reading our article on FHA 203k loans.
FHA Streamline Refinance in Vermont
The FHA streamline refinance program is available to existing homeowners who would like to refinance for a lower rate while eliminating some of the refinance costs such as an appraisal. You may also get a discount on the mortgage insurance premium which is another advantage.
For more information, please read our article on the FHA streamline refinance.
FHA Pre-Approval Process for Purchases or Refinances
If you are looking for an FHA loan, there is an optimal process you should follow to get pre-approved.
- The first step is to make sure you have the minimum down payment needed to qualify
- check your credit and try to cleanup anything that is pulling down your scores
- Get a copy of your tax returns for the past two years
- Get copies of your pay stubs for the past month
- Get copies of your last two months’ bank statements
- Speak to an FHA lender about your loan scenario
Speak to a lender early in the process because they can identify opportunities to help with your FHA approval. This should be done months before you start looking for a home. Read more about how to get pre-approved for an FHA loan.
What to Look for in an FHA Lender
We take a few things into consideration when looking at which lenders we work with. Some of these also may be, or should be very important to you as you continue shopping for an FHA loan.
A good FHA lender will:
- Allow for credit scores as low as 500
- Provide FHA 203k loans
- Offer competitive rates and fees
- Have a great processing and underwriting team
- Work closely with you throughout the loan process
- Communicate well and will provide you with updates along the way
Frequently Asked FHA Questions
Can I get an FHA loan with a bankruptcy?
In general, you will need to wait two years before applying for an FHA loan after a bankruptcy. However, there are some exceptions which may allow you to apply sooner. Read our article on the bankruptcy waiting period.
Are all FHA lenders the same?
Not all mortgage lenders who offer FHA loans are the same. They all do not offer all of the FHA programs and their rates and fees may also vary. Most importantly, the individuals who help to process and underwrite your loan will have a huge impact on your FHA loan experience.
Can I use gift funds for an FHA loan?
FHA loans do allow for gift funds to cover your down payment as well as your closing costs. The gift funds must come from a relative or a close friend as approved by the lender. You will need to provide the lender with a gift letter that is signed by the donor.
Do I need an appraisal for an FHA loan?
The FHA does require an appraisal and inspection before your loan can be approved. The FHA inspection has clear guidelines on what needs to be repaired before your loan can close. They want to make sure home buyers are moving into a home that is safe and operational.
Can I get an FHA loan for an investment property?
FHA loans are for primary residences only and if your goal is to purchase an investment property, you cannot use FHA insured financing for that purchase. However, if you are currently living in a home that is financed with an FHA loan, you can move to a new home and keep the current home as an investment.
Are there any income limits in Vermont for an FHA loan?
FHA guidelines do not have income limits which means you can be a high income earner and still get approved for an FHA loan.
Do I need mortgage insurance for an FHA loan?
Every FHA loan requires mortgage insurance. You will have an upfront mortgage insurance premium and also a monthly premium that is included in your total mortgage payment. Read more about the FHA mortgage insurance requirements.
How long does it take to get approved?
You can secure an initial approval from the automated underwriting system just minutes after completing your loan application. The final approval would come after all of the underwriter’s conditions have been cleared. Some examples of conditions are an appraisal, a verification of employment, or copies of asset statements that may be missing.
What are the interest rates for FHA loans in Vermont?
Interest rates for FHA loans are slightly lower than conventional loans at the moment. To get the best possible rate, it is important to have excellent credit scores.
Vermont Home Buying Statistics
If you are thinking about buying a home in Vermont, these home buying statistics may be interesting and relevant to you.
Population = 647,064
Number of Housing Units = 339,034
Percent of Housing Units that are Owner Occupied = 72.1%
Average Home Value = $265,600
Average Mortgage Payment = $1,965
Average commute time to work = 23.3 minutes
Top Vermont Cities by Population
Burlington – 44,595
Essex – 22,408
South Burlington – 20,624
Colchester – 17,604
Rutland – 15,695
Bennington – 15,312
Brattleboro – 12,106
For consumers – The Vermont Department of Financial Regulation helps to make to promote a stable banking industry in the state of Vermont while helping consumers to have safe and responsible access to financial services – Address: 89 Main Street • Montpelier, VT 05620-3101