The small town the Farmers come to call home in "Funny Farm" is Rosebud, Vermont. While Rosebud itself is a fictional place, the locations in which "Funny Farm" filmed were real enough. And yes, the cast and crew of the film actually did trek all the way to Vermont for the production, with Vermonter.com claiming virtually every frame of "Funny Farm" was indeed filmed in the Green Mountain State.
Per a 2019 "Nick P Was Here" YouTube video, however, it seems not every scene in "Funny Farm" was shot in Vermont, as the film's opening moments were lensed in front of a posh New York apartment building. Still, once the Farmers make their Big Apple exit, Vermont takes center stage the rest of the way. That includes the gorgeous, pond-side house the Farmers call home in Redbud, as both Vermonter and Nick P confirm the Cape Cod styled structure is very much a real place, and remains a private residence located in Grafton, Vermont.
If you're wondering about Redbud's Rockwell-esque town square, it seems nearby Townshend, Vermont proved a perfect stand in. And per Nick P's video, not much has changed since "Funny Farm" shot there, with even a gazebo built by the film's production crew remaining in tact. So too is the infamous Downer's Covered Bridge, which is very much still standing, and can currently be driven by anyone who makes their way to Weatherton, VT to see it.
