Historically low mortgage interest rates continued to improve home buying affordability in 2012, according to an index prepared each year by the Vermont Economy Newsletter. Assuming a house priced at the statewide median and household income equal to the median for a married-couple family, the percentage of income a Vermont family spent on mortgage payments for their newly purchased home decreased to 11.7%, relative to the year before.
Unfortunately, many Vermont households are unable to save the $40,000 down payment required to purchase a median-priced house. Since 2008, both down payment requirements and mortgage underwriting standards have become tighter among mainstream financial lenders.
It is no surprise that the number of lower-income Vermont home buyers using federal government programs offered by VHFA that require little to no down payments increased by 25% in 2012. These programs are among the limited options available to the many Vermont house hunters who are unable to afford a 20% down payment.
Only 50% of Vermont households include married couples, according to the 2011 American Community Survey. The remaining households across the state, such as single parent families and single person households, have lower incomes on average, making the affordability of purchasing a home more challenging.