Mark Collins, executive director of the Vermont Housing Finance Agency, told the Vermont House Committee on Commerce and Economic Development on Jan. 17 that rising prices and mortgage rates have squeezed potential homebuyers and strained VHFA’s down-payment assistance (DPA) revolving fund.

"So we're about to go ask for $45,000,000," Collins said, describing an upcoming tax-exempt bond sale intended to replenish VHFA lending capital.

Collins reviewed how VHFA’s DPA program is funded and why the agency expects to ratchet back assistance unless the legislature extends the authority to sell state tax credits. The agency’s DPA program has used proceeds from the sale of a state tax-credit allocation (a five-year credit vehicle) together with revolving loan repayments; Collins said the program currently generates roughly $1.1 million annually from tax-credit sales and that repayments have dropped as refinancing slowed when interest rates rose.

He outlined the program’s evolution: initial DPA awards of $5,000 per household (established in 2015), later increases to $7,500 and a pandemic-era maximum of $10,000 (with a $15,000 option for very low-income borrowers). Collins said many DPA borrowers are lower-income first-time buyers, often with higher loan-to-value ratios and lower credit scores, and that the program reaches borrowers who otherwise would not qualify for homeownership financing.

Collins also summarized the first-generation homebuyer grant, a $15,000 grant for qualifying first-generation buyers (defined in VHFA rules as buyers whose parents did not own a home, or who experienced foster care or foreclosure). He said the legislature has appropriated $1 million a year for the grant in recent years and that VHFA seeks a sustainable path to continue that support, including possibly folding grant funding into extended tax-credit authority.

Collins highlighted racial disparities in Vermont homeownership: "74% of white households in Vermont own their home, and only 27% of black or African American households own their home," he said, noting the first-generation grant is one tool the agency uses to reach historically underserved borrowers without race-based criteria.

On rental and middle-income housing, Collins reviewed a $10 million rental revolving loan fund VHFA launched last year to subsidize financing gaps and encourage employer and municipal participation. He said the fund was fully allocated at VHFA’s board meeting and that the agency structured loans to target middle-income needs (65% to 150% of area median income), require limited affordability periods tied to loan terms, and incentivize employer contributions.

Collins asked the committee to consider three near-term items: extend VHFA’s authority to sell the state tax credits for five more years; provide $1 million in continuing support for the first-generation grant program; and allow VHFA flexibility to manage a statutory 3% annual rent-increase benchmark for properties financed from its rental revolving loan fund by requiring owners to justify deviations to VHFA rather than an absolute statutory cap.

A committee member asked whether the racial homeownership statistics covered all generations; Collins said the figures refer to all Vermonters by race.

Collins offered to return with additional analysis and to brief the committee on VHFA’s new report on off-site construction and manufactured housing, and on employer-assisted housing tools and local developer technical assistance resources available through VHFA.