Hard money lenders in Vermont: usury, licensing, foreclosure speed and costs

Vermont in one sentence, from the lender’s chair: vermont is one of the least hard-money-friendly states in the country: a 12% usury cap with narrow exemptions, broad lender licensing, and a judicial foreclosure with mandatory mediation and a six-month redemption period.

Can a lender charge 12% in Vermont? Usury and business-purpose exemptions

Vermont’s general usury cap is 12%, with exemptions for certain commercial loans and loans above statutory thresholds; business-purpose hard money loans are structured to fit the exemptions, and Vermont construes lender regulation broadly, so legal review is standard.

The exemptions turn on details — entity borrower, loan amount, documented business purpose — and on how courts read them. A state-licensed attorney should bless the structure before funding.

Who may lend: Vermont licensing rules

Vermont requires a lender license for most lending activity, including many business-purpose loans, with limited exemptions; the Department of Financial Regulation administers licensing and treats commercial lenders making loans in Vermont as subject to licensing in many cases. Licensing is the first thing to verify — see vetting a lender — because advance-fee scams imitate licensed lenders.

How fast a lender gets the property back in Vermont

Speed of recovery is the first thing a hard money lender prices. In Vermont, foreclosure is judicial: Vermont lenders foreclose in the civil division of the superior court. Residential foreclosures generally proceed by judicial sale (strict foreclosure is reserved for cases with no equity); owner-occupants are entitled to mediation under the state’s program before judgment. After judgment, the redemption period runs, and only then can the property be sold at public auction and the sale confirmed. From the first formal notice or filing, a typical uncontested case reaches a sale in 10 to 18 months.

The redemption period in Vermont is six months after the judgment (the court may shorten it to as little as one month for good cause, or extend it). The homeowner may redeem by paying the full amount due before the period expires; there is no redemption after the sale is confirmed.

A Vermont court may enter a deficiency judgment after a judicial sale for the balance remaining after the sale proceeds are applied; in a strict foreclosure, the lender may seek a deficiency based on the property’s appraised value. The borrower may contest the adequacy of the price at the confirmation hearing. Full homeowner-side detail on our Vermont foreclosure page; the investor-side consequences are in hard money default.

Costs on the way in and out

Vermont’s property transfer tax is 1.25% of the price (0.5% on the first $100,000 of a principal residence, and a 1.45% combined rate including the clean water surcharge on the portion above), customarily paid by the buyer; VHFA and USDA financed purchases get a further exemption on the first portion. Count it on both sides of a flip. Carrying costs add Vermont’s property tax at about 1.83% of value a year — near $7,320 on a median-priced $400,000 home — plus insurance and utilities for every month of the hold.

Because the transfer tax falls on the buyer, Vermont closing costs are among the highest in New England — commonly 3% to 4% of the price including attorney, title and lender fees — though VHFA buyers get a partial transfer tax exemption.

Flip and rental markets in Vermont

Burlington and Chittenden County are the only sizable investor market, with Rutland, Montpelier-Barre, St. Albans and the ski-town short-term rental markets as niches; inventory is thin statewide and new construction is constrained.

Treat this as a starting list for research, not a recommendation. Every metro above has neighborhoods where flips lose money.

Frequently asked questions

Is hard money lending legal in Vermont?

Yes. Vermont’s general usury cap is 12%, with exemptions for certain commercial loans and loans above statutory thresholds; business-purpose hard money loans are structured to fit the exemptions, and Vermont construes lender regulation broadly, so legal review is standard. Vermont requires a lender license for most lending activity, including many business-purpose loans, with limited exemptions; the Department of Financial Regulation administers licensing and treats commercial lenders making loans in Vermont as subject to licensing in many cases.

How fast can a hard money lender foreclose in Vermont?

Typically 10 to 18 months from the first formal notice or filing to the sale, under a judicial process. The redemption period in Vermont is six months after the judgment (the court may shorten it to as little as one month for good cause, or extend it).

What does a typical hard money loan cost in Vermont?

Rates of 9% to 14% and 1 to 4 points are the national range. As an illustration only: $340,000 borrowed at 11% with 2 points for nine months is about $34,853 in interest and points, plus fees and carrying costs. See rates, points and LTV.

Hard money guides

• Bridge loans: buying before you sell, and other short gaps
• BRRRR: refinancing a hard money rehab into a conventional or DSCR loan
• Hard money for beginners: your first loan, step by step
• How hard money lenders evaluate ARV — and how to estimate it yourself

Same state, other questions: first-time home buyer programs in Vermont · foreclosure in Vermont.

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