There are special programs available in Vermont and elsewhere which will boost up the purchasing power of low and moderate income buyers, and allow a qualified buyer to purchase a home without a down payment.

The help to buyers generally comes in two forms:

1. A grant to cover the down payment and to reduce the final cost of the home to buyer;
2. A below-market interest rate on the loan.

Each program has maximum income limits for qualifying, and a maximum home price. The buyer must have good credit, and the buyer must be able to put up at least $1,000 of their own cash. For certain programs, such as the Vermont Housing Finance Agency (VHFA), which offers a lower-than-conventional interest rate, the maximum income is fairly high; so it is better to inquire before assuming that you will not qualify. Governor James Douglas bought his first house through VHFA, and he strongly endorses this program. VHFA loans are originated through regular lenders, so ask a local banker or mortgage broker whether they participate.

Affordable housing programs can be combined to leverage housing affordability. The Brattleboro Area Community Land Trust (BACLT) and the Rockingham Area Community Land Trust (RACLT) offer a grant, which can amount to over $20,000, through the Homeland Program. There is also a smaller grant (cash assistance) to help with closing costs. Homeland is usually combined with a special, stepped rate VHFA loan, which is a 30 year fixed that begins at an artificially lowered interest rate in order to boast qualifying ratios. When funds are available, a VHFA Silent Second can add another $10,000 – $15,000. The reason it is silent, is that there are no monthly payments for this second loan; and no interest: It will be paid back from your equity down the road when you sell. In order to create a permanent pool of affordable housing, a home purchased through Homeland can only be sold to another buyer using that program, and the amount of appreciation which may be taken is limited. For information call BACLT at (802) 254-4604 ext. 102, or RACLT at (802) 885 1856.

The U.S.D.A. offers Rural Development(RD) loans and loan guarantees. The direct loans have a below-market interest rate, which in some cases can be extremely low. This boasts up the loan value, allowing the participant to afford more of a house at a lower monthly cost. RD loans can be combined with the Land Trust’s Homeland Program. The Guarantee Program is used to convert bank or mortgage company financing (often a VHFA loan) into a no down payment loan. For information, call the local RD office at: (802) 257-7878.