Best Mortgage Lenders for First Time Home Buyers in Vermont

CrossCountry Mortgage is the premier option for first-time homebuyers in Vermont looking for the leading mortgage lender.

With the Green Mountain State’s picturesque landscapes and community-centric towns, snagging a place to call your own is a dream for many. But the buying process could dampen the excitement of buying your first home in Vermont. That’s where this handy guide comes in — find the best mortgage lenders for first-time homebuyers in Vermont and learn how to find your slice of New England paradise confidently. 

Quick Look: Best Mortgage Lenders in Vermont for First-Time Home Buyers

• Best for Down Payment Assistance: CrossCountry Mortgage
• Best for Streamlined Online Application: Rocket Mortgage
• Best for Loan Comparison: Credible Mortgage
• Best for End-to-End Digital Process: LoanDepot
• Best for Military Borrowers: Veterans United

Top Vermont Mortgage Lenders for First-Time Home Buyers

Choosing the right lender can make all the difference when navigating the complex mortgage landscape as a first-time home buyer in Vermont. Here are five of the best mortgage lenders in the state, each offering unique benefits for new buyers.

1. Best for Down Payment Assistance: CrossCountry Mortgage

CrossCountry Mortgage excels in supporting first-time homebuyers through its various assistance programs. Its Smart Start program provides up to $5,250 in down payment assistance, making homeownership more accessible. 

• Loan types offered: Conventional, FHA, VA, USDA Jimbo, and more
• Credit score requirement: Minimum of 620 for most loans; lower for FHA loans 
• Average days to close a loan: Typically 21 days; FastTrack Credit Approval program can close in 10 days
• State served: Nationwide

2. Best for Streamlined Online Application: Rocket Mortgage

Rocket Mortgage is a leader in the mortgage industry, providing various loan options. It has made a name for itself with its digital-first approach and innovative technology that simplifies the home buying and loan management process.

• Loan types offered: Conventional, Jumbo, FHA, VA, Fixed, Adjustable, and more
• Credit score requirement: Minimum 580 for FHA and VA loans; varies for other types
• Average days to close a loan: 32 days
• State served: All 50 states

3. Best for Loan Comparison: Credible Mortgage

Credible Mortgage’s user-friendly platform offers borrowers a seamless experience to compare personalized loan offers from multiple lenders without affecting their credit scores. Credible does not make loans directly as a mortgage broker but connects lenders to borrowers.

• Loan types offered: Conventional, FHA, VA, and jumbo loans
• Credit score requirement: Starts at 620 for conventional loans; other loan types vary
• Average days to close a loan: 30 to 45 days, depending on the lender
• State served: All U.S. states except Missouri, New York and Hawaii (inactive)

4. Best for End-to-End Digital Process: LoanDepot

Founded in 2010, LoanDepot has quickly become the nation's second-largest non-bank lender. It’s recognized for its customer-centric approach and proprietary Mello software platform, which powers every loan transaction provides a fast and straightforward digital mortgage experience.

• Loan types offered: Conventional, Jumbo, FHA, VA, Fixed, Adjustable, and more
• Credit score requirement: Minimum of 620 for most loans; 500 for FHA loans; 700 for jumbo loans
• Average days to close a loan: 30 to 60 days
• State served: All 50 states

5. Best for Military Borrowers: Veterans United

Veterans United is the largest VA lender in the U.S., offering exceptional services to veterans and active-duty service members. They specialize in VA loans and provide additional mortgage products to help veterans and military families become homeowners.

• Loan types offered: VA, FHA, USDA, Conventional and Jumbo Loans
• Credit score requirement: Typically 620
• Average days to close a loan: 40 to 50 days
• State served: All 50 states

The Housing Market in Vermont: An Overview

In May 2024, home prices in Vermont jumped 9.4% year-over-year, reaching a median price of $421,400. The market also experienced a rise in the number of homes for sale, with 2,799 properties available, marking an increase compared to the previous year and reflecting the market's competitive nature, around 42.5% of homes sold above list price as of June 2024, indicating that bidding wars are prevalent.

Total households: 277,090

Median list price: $471,000

3 most expensive cities in Vermont to buy a house:

• Burlington
• Weybridge
• Ferrisburgh

3 most affordable cities in Vermont to buy a house:

• Bennington
• Newport
• Rutland

How to Prepare for a Mortgage

It pays to be well-prepared when you're ready to apply for a mortgage and start shopping for your first home.

Check Your Credit Score

Request a free credit report from major credit bureaus through AnnualCreditReport.com. Review your credit report for any errors and dispute them if necessary. A higher credit score can land you a lower interest rate on your mortgage.

Save for a Down Payment

Determine how much you need to save, factoring in the type of mortgage you're considering. Then, create a savings plan, cut unnecessary expenses, and consider setting up automatic transfers to a savings account specifically for your down payment.

Research the Market

Study the housing inventory, average listing prices, and sale prices to determine the current state of the housing market. Check whether it's a buyer’s or seller's market. Also, check out the quality, amenities, and potential for growth of the neighborhood.

Gather Your Paperwork

Assemble your tax returns, pay stubs, W-2s, bank statements, credit reports, gift letters (if applicable), photo ID, renting history, and other relevant documents. Keeping them handy will streamline and fast-track the mortgage application process.

Get a Purchase Quote

Estimate your payments using online mortgage calculators, and then get quotes from multiple lenders to compare rates. Remember to consider terms like interest rates, lender fees and discount points.

Start Shopping

Before shopping for a home, decide on a budget and get preapproved for a mortgage. Choose a location, and check if you qualify for particular loans or programs. You can work with a real estate agent to help you find a home that ticks all the boxes. Plan to spend below your preapproval amount to ensure you can comfortably afford your new home.

What Are Your Mortgage Options?

First-time homebuyers have several mortgage options to consider, each with unique features and requirements:

Conventional Loans

Conventional loans are the most common type of mortgage and are not backed by any government agency. They are ideal for buyers who have a stable income, good credit, and can afford a down payment. Typically, borrowers must have a minimum credit score of 620, a down payment ranging from 3% to 20%, and a debt-to-income ratio below 43%.

USDA Loans

The United States Department of Agriculture backs USDA loans, and they do not require down payments. USDA loans are designed to help buyers in rural and some suburban areas. They should have a moderate income, not exceeding 115% of the median income for the area, and can show a stable employment history.

FHA Loans

FHA loans are insured by the Federal Housing Administration and are popular with first-time buyers due to their lower down payment and credit score requirements. They are the go-to option for buyers who may be unable to qualify for conventional loans due to subpar credit or a higher debt-to-income ratio. Borrowers must have a credit score of at least 580 for the 3.5% down payment or 500 with a 10% down payment to qualify.

VA Loans

Guaranteed by the Department of Veterans Affairs, VA loans ease the process of homeownership for veterans, active-duty service members, and some surviving spouses. They do not need a down payment or private mortgage insurance (PMI). Comparatively, FHA loans offer competitive rates and are easier to qualify for. However, borrowers must meet service requirements and obtain a Certificate of Eligibility (COE).

What Are Mortgage Terms?

Mortgage terms are the conditions and details attached to a mortgage loan, including the time to repay the loan and the type of interest rate applied. Understanding these terms will guide your decision on the perfect mortgage for your financial goals and situation.

30-Year Fixed Loans 

A 30-year fixed loan is a mortgage with a constant interest rate and monthly payments that remain the same for the entire 30-year term. This stability makes budgeting more straightforward, as your housing costs won’t change over time. However, the trade-off is that you’ll typically pay more interest over the loan term than in shorter terms.

15-Year Fixed Loans

You also have a constant interest rate, but the loan term is only 15 years. Your monthly payments will be higher than a 30-year loan, but you’ll pay less interest overall. This option makes sense if you want to build equity quickly and save on long-term interest costs.

5/1 Adjustable-Rate Mortgages (ARMs)

A 5/1 ARM offers a fixed interest rate for the first five years. After that, the rate adjusts annually based on market conditions. It can be beneficial if you plan to sell or refinance before the rate adjusts, as the initial rate is usually lower than fixed-rate mortgages. However, rates may increase, which could lead to higher future payments.

What Are the First-Time Homebuyer Programs in Vermont?

First-time homebuyers in Vermont can benefit from government programs designed to make the path to homeownership more accessible and affordable:

• VHFA MOVE Program: Offered by the Vermont Housing Finance Agency, this program provides low interest rates and may require a low down payment between 0 and 5 percent.
• VHFA Advantage Program: An alternative for those unable to qualify for the MOVE program, it features higher income and purchase price limits. 
• First Generation Homebuyer Program: Designed to help Vermonters who lack the benefits of generational wealth of homeownership, this program offers a $15,000 grant for down payment and closing cost assistance to eligible first-time homebuyers who meet credit, income, asset, and property requirements.

What Are the Current Mortgage Rates in Vermont?

Here’s a summary of the current mortgage rates in Vermont as of May 22, 2024.

How to Close a Mortgage

To close a mortgage, ensure the homeowner's insurance and funds are ready for the down payment and closing costs. You’ll conduct a final walk-through of the property, review and sign loan documents, provide necessary documentation, settle payments, and set up an escrow account if required. 

Receive the keys to your new property after completing all legal formalities and payments. Store all closing documents safely and update your address on various documents.

Frequently Asked Questions