Not much is known about the house in which Babydoll lived with her Stepfather, Mother and younger Sister. According to her mother's will, the house is located in Windham County, Vermont.
The terms of the will left the entire estate to Babydoll and her sister. When their stepfather found out, he drank himself into a stupor and set the movie's story in motion.
The fate of the house at the end of the movie is unknown, but it can be assumed that it was still in Babydoll's name. However, as a lobotomized ward of the state, Vermont officials probably seized it at some point to pay for her medical bills.