Press: News clips

New home loans available for first-time buyers
by Dan MacLean
Free Press Staff Writer

Up to 60 Vermont families will have the opportunity to secure long-term, low interest loans to help purchase their first home through a program announced by the Vermont Housing Finance Authority (sic) on Tuesday.

The terms of the program, however, make it difficult to find a qualifying home in Chittenden County.

The program — which is available to households with an annual income of less than $62,000 — offers 4.75 percent, 30-year fixed-rate mortgage on newly constructed homes that costs no more than $235,000.

As of Friday, the average market rate for a similar mortgage was 6.58 percent, according to Fannie Mae, one of the country's largest mortgage companies.

Despite the low interest rate, there is "not a lot of opportunity at this price point," Sarah Carpenter, executive director of the VHFA, said of the $235,000 limit.

But she is hopeful the program will encourage developers to build cheaper housing. No developers in the state have signed on, yet, to build homes that would be eligible for the program, she said.

So far this year, the median price for new construction in Chittenden County — including both condominiums and single-family homes — is $371,160, according to Maura Collins, policy and planning coordinator of the VHFA. The median price for just condos sold in the county this year is $239,900, she said.

Not including subsidized condo units, the statewide median price of a new home or condo was $299,900 last year, she said.

The program will be more successful outside Chittenden County, Carpenter said, adding first-time buyers should lower their expectations. Market conditions, in general, are forcing buyers to change their concept of the "starter home," she said.

"I think condos are the starter homes," Carpenter said after the news conference. "I think people have to change their expectations. It's just unrealistic — particularly in the more developed part of the state — to think your first home will be a single-family home with a picket fence on an acre of land."

The 4.75 percent interest program is only for new building projects because "we need to create more units," she said. To be eligible, the homes must also "promote smart growth" by being built near downtown or villages centers. Carpenter expects the agency to commit all of the money within a year.

The VHFA program is funded with $10 million from the sale or tax-exempt bonds, said John Fairbanks, spokesman for the VHFA, which was created by the Legislature in 1974 promote affordable housing.

New VHFA borrowers will also have two new benefits provided by the Mortgage Guaranty Insurance Corp.: up to $2,000 per month to make mortgage payments if the borrower loses their job during the first two years of the loan and a program that reduces mortgage insurance costs by 25 percent.

No state or federal money was used to create any of the programs announced Tuesday.

For more information on applying and finding a participating lender: www.vhfa.org/homeownership/applying.php. General information on the Vermont Housing Finance Authority (sic) can be found at www.vhfa.org or by calling 864-5743.

Contact Dan McLean at (802) 651-4877 or dmclean@bfp.burlingtonfree press.com.