Vermont HELOC Rates & Lenders: Your 2026 Guide to Home Equity Lines of Credit

Vermont's housing market has quietly become one of the tightest in New England. The pandemic-era migration brought waves of remote workers from New York and Boston, driving up home values across the Green Mountain State—from Burlington's walkable neighborhoods to rural properties in the Northeast Kingdom.

For Vermont homeowners who've ridden this appreciation wave, a HELOC offers a flexible way to tap accumulated equity. But Vermont has its own lending landscape, tax structure, and regulatory environment that shape the HELOC experience. Here's what you need to know.

Vermont Housing Market Overview

Vermont's small size and limited housing inventory amplify price movements. The market picture heading into 2026:

• Median [home value](/blog/appraisal-process-explained) (statewide): Approximately $370,000
• Burlington metro (Chittenden County): $450,000–$500,000
• Montpelier/Washington County: $330,000–$360,000
• Rutland area: $260,000–$290,000
• Bennington area: $270,000–$300,000
• Northeast Kingdom (Caledonia, Essex, Orleans): $220,000–$270,000
• Stowe/Lamoille County: $500,000–$600,000+ (resort premium)

Vermont home values have increased roughly 35–45% over the past five years, with even stronger gains in desirable areas like Chittenden County and Stowe. The state's housing supply remains critically low—Vermont has one of the lowest new-construction rates in the country due to topography, zoning, and Act 250 environmental review requirements.

The state's economy is modest in scale but stable, anchored by healthcare (UVM Medical Center is the state's largest employer), education, tourism, specialty food and beverage (hello, Ben & Jerry's and craft breweries), and a growing remote-work population. Unemployment sits around 2.5%.

Current HELOC Rates in Vermont

Vermont's HELOC market is served by a mix of community banks, credit unions, and national lenders. Rates are competitive:

Vermont's lending market is dominated by community banks and credit unions rather than national giants. This is actually an advantage for HELOC borrowers—local institutions are more likely to offer flexible underwriting and competitive rates for borrowers they know.

[HELOC Requirements](/blog/heloc-application-process-step-by-step) in Vermont

Standard criteria apply, with some Vermont-specific nuances:

• Credit score: 680+ for best rates; 620–640 minimum
• CLTV: 80%–85% at most lenders; some Vermont credit unions go to 90% for strong borrowers
• DTI: 43% standard; community banks may allow higher with compensating factors
• Equity: Minimum 15%–20%
• Income: Standard W-2s and pay stubs; Vermont's significant self-employed and seasonal worker population means local lenders are experienced with non-traditional income documentation
• Property type: Primary residences get the best terms; Vermont's vacation home market (ski properties, lakefront homes) means many lenders handle second-home HELOCs
• Property condition: Vermont's older housing stock (many homes built before 1970) means lenders may flag condition issues during appraisal. Deferred maintenance can reduce appraised values.

Vermont-specific note: Flood zone properties are common in Vermont, particularly after the devastating 2023 flooding. Lenders require [flood insurance](/blog/hurricane-insurance-guide) for properties in FEMA-designated flood zones, which adds to your carrying costs. Some properties in recently re-mapped flood zones may face new insurance requirements.

Best HELOC Lenders in Vermont

Local and Regional Options

New England Federal Credit Union (NEFCU) Vermont's largest credit union, NEFCU consistently offers among the [lowest HELOC rates](/blog/best-heloc-rates-2026) in the state. Based in the Burlington area with branches across Chittenden County and beyond. Their loan officers understand Vermont's quirky real estate market—including everything from converted farmhouses to village properties with non-standard lot configurations.

Vermont Federal Credit Union Another strong local option with competitive HELOC products. Serving the Burlington metro and surrounding areas, VT FCU offers both variable and fixed-rate home equity options with minimal fees.

Community National Bank Serving the Northeast Kingdom and northern Vermont, Community National Bank offers HELOC products tailored to the area's more affordable housing market. Their underwriters understand rural properties, including homes on larger acreage.

Union Bank With roots in northern Vermont, Union Bank offers competitive HELOC rates and has experience with the full range of Vermont property types. Good option for borrowers outside the Burlington metro.

Merchants Bank (now part of Community Bancorp network) Serving central and southern Vermont, Merchants Bank offers HELOC products with competitive local pricing and strong community ties.

Mascoma Savings Bank Serving the Upper Valley (White River Junction area) and beyond, Mascoma is a mutual savings bank with competitive HELOC offerings. Their community-focused model often translates to borrower-friendly terms.

National Lenders Active in Vermont

TD Bank The largest national bank with significant Vermont presence. TD Bank offers HELOCs with competitive rates and the convenience of an extensive branch and ATM network across the state. They frequently run HELOC promotions with reduced intro rates.

Citizens Bank Active in Vermont with competitive home equity products. Relationship discounts available for existing customers.

U.S. Bank Offers HELOCs in Vermont with no closing costs on many products and rate-lock features. Less physical presence but fully available online.

Figure Online HELOC lender with fast processing. Their fixed-rate product provides payment certainty. Available in Vermont.

Vermont HELOC Regulations

Vermont provides meaningful consumer protections:

• Consumer protection laws: Vermont's Consumer Protection Act (9 V.S.A. Chapter 63) provides broad protections against unfair lending practices. The Attorney General's office actively enforces consumer lending rules.
• Foreclosure process: Vermont uses judicial foreclosure, requiring lenders to go through the court system. This is a significant borrower protection—judicial foreclosure in Vermont typically takes 7–12 months or longer, giving borrowers substantial time to cure defaults or negotiate alternatives.
• Strict foreclosure option: Vermont also allows "strict foreclosure," where the court can transfer title to the lender without a sale. This is uncommon but legally available.
• Right of rescission: Standard federal 3-day right applies.
• Licensing: Lenders must be licensed by the Vermont Department of Financial Regulation (DFR), which provides oversight and a complaint resolution process.
• Recording fees: Deed of trust/mortgage recording in Vermont involves recording fees at the town clerk's office (typically $15 per page) and a property transfer tax consideration for certain transactions.
• Homestead declaration: Vermont allows homeowners to file a homestead declaration, which provides protection of up to $125,000 in equity from certain creditors. This doesn't directly affect HELOC lending but provides background asset protection.

Tax Implications of a Vermont HELOC

Vermont has a meaningful state income tax that affects the HELOC equation:

• Vermont state income tax: Progressive rates from 3.35% to 8.75% (one of the higher state rates nationally)
• Federal interest deduction: HELOC interest is deductible if funds are used for home improvements. Combined mortgage debt cap: $750,000.
• Vermont state deduction: Vermont's income tax calculation starts from federal AGI. Qualifying mortgage interest deductions on your federal return reduce your Vermont taxable income as well.
• Combined tax benefit: For a Vermont borrower in the 24% federal bracket and 6.6% Vermont bracket, deducting $5,000 in qualifying HELOC interest saves approximately $1,530 in combined federal and state taxes. That's meaningful.
• Non-qualifying use: Interest on funds used for non-home purposes isn't deductible at either level.

Vermont Property Tax Context

Vermont property taxes are above the national average and structured uniquely:

• Average effective property tax rate: Approximately 1.83%
• Median annual property tax: $4,800–$5,500
• Education tax: Vermont's property tax system is heavily tied to school funding. The education tax rate varies by town based on per-pupil spending.
• Municipal tax: Added on top of the education tax, varying by municipality.
• [Homestead exemption](/blog/homestead-exemption-guide)/prebate: Vermont offers an income-based property tax adjustment (essentially a circuit breaker program) for homestead properties. Eligible homeowners can receive significant rebates through the "property tax credit" on their state income tax return.
• Current use program: Rural properties enrolled in Vermont's Current Use program receive reduced property tax assessments on agricultural and forest land. This can affect [property valuation](/blog/cap-rate-explained-real-estate-investors) for HELOC purposes.
• Homestead declaration: You must file an annual homestead declaration (Form HS-122) to qualify for the property tax adjustment.

Key takeaway: Vermont's high property taxes make the total cost of homeownership significant. When adding a HELOC payment, run the complete numbers—mortgage, HELOC, property taxes, insurance, and any flood insurance—to ensure affordability.

How to Get the Best HELOC Rate in Vermont

1. Lean into local lenders. Vermont's community banks and credit unions know the market and often beat national pricing. NEFCU and Vermont Federal Credit Union are strong starting points.

2. Get a proper appraisal. Vermont's diverse housing stock—from 1800s farmhouses to modern builds—means automated valuations can miss the mark. A local appraiser who knows the micro-market will give a more accurate (often higher) value.

3. Address property issues first. If your home has deferred maintenance, consider addressing visible issues before the appraisal. Vermont's older housing stock can be penalized for condition issues.

4. Ask about flood insurance requirements. If your property is in or near a flood zone, factor in flood insurance costs when calculating HELOC affordability. Post-2023 flood re-mapping has affected many Vermont properties.

5. File your homestead declaration. This ensures you qualify for property tax adjustments and signals to lenders that the property is owner-occupied (qualifying for better HELOC terms).

6. Maximize the tax benefit. Given Vermont's high state income tax rate, [using HELOC funds](/blog/heloc-draw-period-explained) for qualifying home improvements creates meaningful tax savings at both the federal and state level.

Frequently Asked Questions

How long does a Vermont HELOC take to close?

Vermont HELOC timelines typically run 3–6 weeks, slightly longer than the national average. Contributing factors include the state's reliance on local appraisals (automated valuations are less reliable for Vermont's diverse housing stock), title search complexity in a state with properties dating to the 18th century, and the generally smaller staff at community lenders. TD Bank and other national lenders may process slightly faster.

Can I get a HELOC on a Vermont ski house or vacation property?

Yes—Vermont lenders are experienced with vacation property HELOCs given the state's significant second-home market (Stowe, Killington, Woodstock, etc.). Expect tighter requirements: 65%–75% maximum CLTV, 700+ credit score, and rates 0.50%–1.00% higher than primary residence HELOCs. NEFCU and TD Bank both handle vacation property HELOCs.

Does Vermont's judicial foreclosure process make HELOCs less risky for borrowers?

Relatively speaking, yes. Vermont's judicial foreclosure requirement means the lender must go through the court system to foreclose, which typically takes 7–12 months. This gives you significant time to catch up on payments, negotiate a modification, or sell the property. However, this doesn't make the debt go away—you still owe what you borrowed, and foreclosure still damages your credit severely.

Are Vermont HELOC rates higher because of high property taxes?

No. HELOC rates are determined by credit profile, CLTV, and market conditions—not by property tax levels. However, high property taxes do affect your DTI ratio, which can indirectly affect your qualification and rate tier. If property taxes consume a large portion of your income, your DTI may push you into a higher rate tier.

What Vermont home improvements give the best return for HELOC-funded projects?

In Vermont, energy efficiency upgrades tend to offer strong returns due to the state's cold climate and high heating costs. Weatherization, insulation, heat pump installation, and window replacement are popular and practical. Kitchen and bathroom renovations also add value. Given Vermont's older housing stock, structural improvements (foundation work, roof replacement, electrical updates) preserve value even if they're not glamorous.

The Bottom Line

Vermont's tight housing market has created real equity for homeowners, and a HELOC is a smart way to access it—especially if you're investing in energy efficiency or other improvements that make sense for the climate and housing stock.

Start with Vermont's credit unions: NEFCU and Vermont Federal Credit Union offer the best combination of rates and local expertise. TD Bank is your best bet among national lenders with Vermont presence. Take advantage of the state's judicial foreclosure protections and strong consumer protection laws, but borrow responsibly—Vermont's high property taxes and state income tax mean your total housing costs add up quickly.

The silver lining of Vermont's high income tax rate is that qualifying HELOC interest deductions save you more per dollar than in low-tax states. Use that to your advantage by directing HELOC funds toward home improvements that qualify for the deduction while also increasing your property's value.

Related Articles

• [Home [Equity Explained](/blog/home-equity-explained): What It Is and How to Build It](/blog/home-equity-explained)
• Property Taxes Explained: How They Work and How to Reduce Them
• Best HELOC Lenders in 2026 - Compare Rates and Draw Periods