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Rhode Island First-Time Homebuyer Programs

Rhode Island may be the smallest state in America, but it still offers a number of incentives and assists for first-time homebuyers. The help includes multiple programs that can aid first-time buyers in finding affordable mortgages, assistance with down payments and closing costs, mortgage interest tax credits, mortgages that wrap renovation costs into borrowing limits and 0% down payment options.

In January 2019, we researched first-time homebuyer programs across the state. This included a review of the Rhode Island Housing website, specific assistance programs and other state resources.

In this guide, we’ll cover:

Rhode Island first-time homebuyer programs

Rhode Island Housing is the public agency that administers statewide programs for helping first-time homebuyers. Buyers may be able to use more than one program to get help, such as combining down payment and closing cost assistance and a mortgage interest tax credit. Each program has its own eligibility requirements, which are detailed below, but all require that first-time buyers must be state residents and take a homeowner education course if they plan to ask for a mortgage or down payment help.

First Down

Features

  • Down payment assistance of up to $7,500 in the form of a second mortgage loan
  • Second mortgage loan is forgiven five years into homeownership
  • Buyers who sell, refinance or no longer live in their home within five years must repay a portion of the loan
  • Funds are limited

Eligibility

    • Borrower must be a first-time homebuyer
    • Property must be in one of these five communities: Cranston, Pawtucket, Providence, Warwick or Woonsocket
    • Loan limit is $431,250 for a single-family home, condo or up to 4-unit property
    • Household income limit is $93,623 (for a 1-2 person household) or $107,667 (for a 3+ person household)
    • The program is available to borrowers who get a Rhode Island Housing FirstHome mortgage (detailed below) through Rhode Island Housing’s in-house loan center or a participating lender
  • Homebuyer education required

How it works

First-time buyers must enroll in homebuyer education classes and may then work directly with a mortgage originator at the Rhode Island Housing loan center or with an approved lender to learn how much they can borrow and how much home they can afford. To learn more about how First Down may help with down payment costs, go here.

FirstHomes100

Features

  • Down payment assistance
  • Closing cost assistance
  • 100% financing available (100% LTV)
  • No mortgage insurance payments for well-qualified buyers
  • Fixed-rate, 30-year mortgage
  • Program may incorporate $2,000 tax credit, depending on mortgage type and other factors

Eligibility

  • Borrower must be a first-time homebuyer
  • Income limits: $93,623 (for up 1-2 person household) or $107,667 (for a 3+ person household)
  • Buyer must work with a qualified lender
  • Maximum purchase price of $441,176 for a condo, single-family home or 2-4 unit multifamily property
  • Homebuyer education required

How it works

First-time buyers enroll in homebuyer education and then work directly with a mortgage originator at the Rhode Island Housing loan center or with an approved lender to learn how much they can borrow and afford. For more details about FirstHomes100 loans, look here.

FirstHomes 100+

Features

  • Designed for homebuyers purchasing a home that needs renovation
  • Lets buyers borrow more than the home’s sale price so they may wrap their renovation costs into the mortgage
  • 0% down payment (100% LTV)
  • Fixed-rate, 30-year mortgage
  • Closing cost assistance is available, including through low-interest loans repayable over a 15-year term
  • Tax credit applicable

Eligibility

  • Borrowers must be first-time homebuyers
  • No minimum credit score; buyers finances are evaluated comprehensively
  • Free FHA 203(k) homebuyer education course required and available online
  • Purchase price maximum is $441,176 for a single-family home, condo or up to 4-unit residence
  • Borrowers with income above $93,623 (for a 1-2 person household) or $107,667 (for a 3+ person household) may apply via participating lenders or the Rhode Island Housing loan center
  • Borrowers with income levels below these amounts must work with the loan center

How it works

First-time buyers first enroll in homebuyer education and then, depending on their incomes levels, work directly with a mortgage originator at the Rhode Island Housing loan center or with an approved lender to learn how much they can borrow and afford.

Once a buyer is preparing to make an offer on a home, they will need to make sure their offer includes a contingency for a home inspection. The home inspection information is used to determine the ultimate loan amount, which includes funding for renovations. A HUD consultant works with buyers on this, and buyers should seek bids from contractors. Once estimates are in, the mortgage may be approved, and the buyer can move in and pursue renovations. Rhode Island Housing offers a step-by-step guide to the process here.

FirstHomes Tax Credit

Features

  • Borrowers can claim up to 20% of their total mortgage interest each year as a dollar-for-dollar tax credit on federal returns, up to $2,000
  • Homeowners can itemize the remaining 80% of their total mortgage interest on federal tax returns
  • Mortgage tax credit permitted annually, as long as the buyer remains in their home
  • Fees apply to participate in the tax credit program, but some may be covered by separate down payment assistance programs

Eligibility

  • Available to first-time homebuyers and those purchasing properties in select areas of Providence, Pawtucket, Central Falls and Woonsocket
  • Income must be less than $93,623 (for a 1-2 person household) or $107,667 (for a 3+ person household)
  • Maximum home purchase price is $441,176 for a single-family home, condominium or up to 4-unit home
  • Buyers must work with an approved lender

How it works

First-time buyers work directly with an approved lender that will check your eligibility for the tax credit program. If approved, you will receive a credit on your federal taxes for up to 20% of the mortgage interest you paid that year, up to $2,000. You may deduct the remaining 80% of your mortgage interest on your federal tax return. You qualify for the tax credit each year you own and occupy the home and pay your mortgage. To learn more about the tax credit, go here.

National first-time homebuyer programs

If Rhode Island’s homebuying assistance options are not right for you, consider tapping into several special loan programs that may help you buy a home with a low down payment. These include loans through national agencies, such as the FHA, Freddie Mac, Fannie Mae and the VA. These loan programs require minimum credit scores, carry purchase price maximums and generally require that the buyer’s choice of home is ready for immediate occupancy. For more details about the benefits and the variety of national programs for first-time buyers, LendingTree offers this guide.

 

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