VHFA outlines strain on down-payment program, asks legislature to extend state tax-credit authority and fund first-generation grants

Maura Collins, executive director of the Vermont Housing Finance Agency, told the General & Housing committee on Jan. 17 that the agency’s down-payment assistance (DPA) program is under pressure because repayments have slowed as mortgage refinancing and turnover dropped after interest rates rose.

Collins said VHFA funds DPA largely by selling a state tax-credit allocation; banks and other purchasers buy those credits and VHFA receives the proceeds up front. “We get $1,100,000 that funds this down payment assistance pool that we can lend out,” Collins said, adding that the credits are sold as a five‑year tax credit worth $1,250,000 in total face value but discounted when sold. She said the statutory authority to sell those credits now ends in fiscal 2026 and asked the committee to consider allowing VHFA to sell credits through 2031 to sustain the program.

The request matters because VHFA uses the credit sales plus loan repayments to operate a revolving DPA loan fund. “These are 0% loans … they only get repaid when you refinance your mortgage or you sell your home,” Collins said. With refinancing and turnover down in the past two years, the amount returning to the fund has fallen, she said, forcing VHFA to reduce the maximum DPA award from pandemic-era levels and consider further reductions or changes to asset limits or geographic targeting.

Nut graf: Collins framed three near-term priorities for the committee: (1) extend the tax-credit authority that funds the DPA program, (2) secure ongoing appropriations to sustain the first‑generation homebuyer grant program, and (3) allow VHFA limited flexibility to manage a statutory 3% annual rent-increase cap in projects funded through VHFA loan subsidies.

Details on how the programs work

Collins described several funding streams and program rules. The state tax-credit mechanism is a five‑year credit sold to purchasers; because…