FHA Loans: What You Need to Know in 2022
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2022 FHA Loan Limits in Rhode Island

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Mortgage loans backed by the Federal Housing Administration (FHA) can offer a more accessible path to homebuying for those with lower credit scores and limited down payment funds. Homebuyers in Rhode Island wishing to borrow with an FHA loan in 2022 can borrow up to $592,250 for a single-family home, while multifamily homes have higher loan limits.

Rhode Island FHA loan limits by county

County nameOne unitTwo unitsThree unitsFour unitsMedian sales price
BRISTOL$592,250$758,200$916,450$1,138,950$515,000
KENT$592,250$758,200$916,450$1,138,950$515,000
NEWPORT$592,250$758,200$916,450$1,138,950$515,000
PROVIDENCE$592,250$758,200$916,450$1,138,950$515,000
WASHINGTON$592,250$758,200$916,450$1,138,950$515,000

How are FHA loan limits determined?

FHA loan limits are based on the previous year’s average home sales price in each county. Last year’s strong increase in home sales price — 18% — spurred a rise in 2022’s loan limits.

These numbers are first calculated by the Federal Housing Finance Agency (FHFA). It analyzes the home price data and sets the conforming loan limit, which are mortgages backed by Freddie Mac and Fannie Mae. Then, the U.S. Department of Housing and Urban Development (HUD) uses the conforming loan limits to set FHA loan limits.

The FHA lowest limit, the “floor,” is 65% of the conforming loan limit and the highest, known as the “ceiling,” is 150%. For 2022, the floor is $420,680 and the ceiling is $970,800.

How to qualify for an FHA loan in Rhode Island

Rhode Island FHA loans have lower requirements — namely down payment percentages and credit score minimums — which can make homeownership more accessible for those who wouldn’t necessarily meet conventional loan requirements.

Additional benefits and opportunities are available for Rhode Island first-time homebuyers, including down payment assistance, homebuyer education and tax credits.

If you’re interested in an FHA loan, you’ll need to meet the following FHA loan requirements to qualify:

A mortgage amount under the FHA loan limit: For homes above the county’s stated limit, a larger down payment could be used to make up the difference.

A minimum 3.5% down payment: A credit score of 580 or higher qualifies you for a 3.5% down payment, but a lower score credit will require a higher down payment.

A 500 credit score or better: A credit score of 500 to 579 credit score will require at least 10% down. Check your credit score here.

A debt-to-income (DTI) ratio of 43% or less: Lenders consider your DTI ratio to determine whether you can afford mortgage payments based on your monthly debt spending. A DTI below 43% is typically required for an FHA loan, though some lenders may be willing to make exceptions.  

An FHA home appraisal: Before you close, an FHA appraisal is required.

Mortgage insurance: For FHA loans, two premiums apply. The annual mortgage insurance premium (MIP) is 0.45% to 1.05% of your loan amount, while the upfront mortgage insurance premium (UFMIP) is 1.75% of your loan amount. Typically, UFMIP costs are rolled into the mortgage, while MIP is added to your monthly payment.

Occupancy: FHA loan borrowers must live in the home for at least a year, and it must be their primary home.

Buying a multifamily property with an FHA loan

With an FHA loan, you can also buy a multifamily home for just 3.5% down. Properties of up to four separate living units qualify with the stipulation you occupy one unit for at least a year.

FHA lenders in Rhode Island

Click on the links below to learn more about six highly rated mortgage lenders available in Rhode Island.

Lender name LT ratingMinimum FHA credit score
Lower Mortgage10/10580
Rocket Mortgage9.5/10580
PennyMac Mortgage9/10640
Guild Mortgage9/10540
AmeriSave Mortgage8/10600

 

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