The Vermont Housing Finance Agency says an increase in the income and purchase price limits for mortgages it provides will make it possible for more Vermonters to buy homes.
VHFA recalculates the limits annually using a formula based partly on federal Housing and Urban Development data on median incomes and home sale purchase prices.
VHFA Policy and Planning Manager Maura Collins says the annual adjustments in the income and home price limits allow VHFA to keep pace with market realities.
“We want to make sure that the income limits that we have match the purchase price limits, and that there’s some reasonable math in between the two. We wouldn’t want low income limits and super high purchase price limits that someone earning that income couldn’t afford,” says Collins.
The agency facilitates home ownership for low and moderate income Vermonters and finances the development of affordable rental units. Many of VHFA’s borrowers don’t have the down payments typically required by lenders.
VHFA purchases loans from participating lenders. Its programs are funded largely through the sale of tax-exempt bonds.
The newly established income and home price limits vary from county to county. The federal government considers some counties ‘target areas’, where the limits can be higher.
“They have some calculations that are actually a mystery to us that choose areas they think are more difficult to do lending in. That doesn’t always match with our knowledge of the local market,” says Collins.
HUD target areas in Vermont include Caledonia, Essex, Franklin, Lamoille, Orange, Orleans, Rutland, Washington and Windham counties. An area of Burlington’s Old North End is also a target area.
“It’s unfortunate because it means that in Bennington County and Windsor County the limits that we have are a bit lower than we have in other counties,” says Collins.
Collins says the pace of home sales has been picking up in Vermont, although the market is still soft.
“At its peak in 2005, we had almost 10,000 primary home sales in this state. Last year we were at 5,500,” she says. According to Collins, between the end of last year and now, prices rose by five percent; from $196,000 to $205,000.
At one time VHFA handled 20 percent of the sales of Vermont homes that were sold at prices within the limits established each year. As a result of the economic downturn, the government’s intervention to stimulate the housing market and more favorable mortgage offerings, the agency’s share of the market fell to six percent in 2011. VHFA says the market share is likely to improve as interest rates rise.
Collins says one areas of lending that’s become more difficult for the agency is providing loans to mobile home buyers. At once time VHFA was the state’s largest mobile home lender.
“The rating agencies that look at us are wary when you have too many mobile homes in your portfolio. And we have a good number of them in our portfolio already,” she says.
Collins says VHFA has worked with other agencies to provide some financing through the state’s housing tax credit program, particularly for mobile home owners affected by Tropical Storm Irene.
Since it was established by the legislature in 1974, the agency says it has helped provide affordable mortgages to approximately 27,000 households. Collins says the agency is able to meet the demand for its services, but there are some people who fail to qualify because of credit issues or work histories.
“Those are always the cases that are difficult to hear about when a loan can’t be made. There are still limits to any of these programs,” she says.
