How much of a down payment do I need to buy a house in Rhode Island?

Rhode Island home buyers may qualify for down payment assistance under one of three RIHousing programs. These offer anywhere from $15,000 to $25,000 in assistance that can be used for down payments and closing costs. Many home buyers in Rhode Island will qualify for this assistance, but even if you don't, you may qualify for a zero down payment mortgage through VA or the USDA. In addition, conventional mortgages typically only require 3% down, and FHA mortgages just 3.5%.

How much are closing costs in Rhode Island?

Rhode Island home buyers can expect to pay an average of $5,568 at closing, or about 1.4% of their home's value. This can be covered by one of Rhode Island's down payment and closing cost assistance programs, or paid out of the buyer's funds.

What does homeowners insurance cost in Rhode Island?

Homeowners insurance on a $400,000 home in Rhode Island is very reasonable when compared to the national average. It's just $2,381, or 26% below the national average.

What is the property tax rate in Rhode Island?

Rhode Island is 12th in the nation for property taxes as a percentage of property value. You'll pay 1.35% of your home's assessed fair market value in taxes.

Rhode Island Mortgage Calculator

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Rhode Island is a small state, but a mighty one steeped in history, so why not consider buying your next home there? Little Rhody has a lot to offer potential buyers, and plenty of great homes to choose from. Your housing expenses may change, though, so use our Rhode Island mortgage calculator to get the best idea of what you'll spend to live in the Ocean State.

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Rhode Island housing market

Rhode Island was once a state where you could buy a typical home for below the national median home sales price, but that has changed. Now the median sales price in this state is above the national median home sales price ever so slightly. This is likely due to a mix of low inventory and too many buyers looking for homes in the state.

In fact, Rhode Island has been plagued by extremely low inventory since July 2020, with only three months since then reaching two full months of homes to buy. This has led to intense pressure on buyers, with over 50% of homes for sale selling above their asking price from April 2023 to November 2023, and that seasonal trend seeming to have picked up again in March 2024.

You will very likely find yourself in a bidding war, or at least in a very tight time crunch to make an offer, if you're buying in Rhode Island this spring or summer. It will help you immensely to go ahead and talk to a mortgage lender with the best rates to get a pre-approval that will help you bring the strongest offer possible.

Here's a quick snapshot of some of the most important Rhode Island markets and how prices look there.

Metropolitan Area	Median Home Value	1-Year Change
Cranston	$417,500	8.4%
East Providence	$435,000	16.6%
Pawtucket	$372,500	6.3%
Providence	$475,000	20.0%
Warwick	$395,000	12.5%
Woonsocket	$375,500	15.0%

Data source: Redfin. Figures accurate as of May 2, 2024.

How do I calculate my mortgage payment?

Using a mortgage calculator is the fastest and easiest way to calculate your mortgage payment, but if you're truly mathematically curious and want to do it by hand, try the formula below.

Mortgage payments, in the most basic form, are made up of principal and interest, which yields your P&I. But most mortgage payments today also have escrow accounts, which are accounts that banks use to help you save up for bigger yearly expenses like your taxes and homeowners insurance. That's why a standard mortgage payment is typically referred to as PITI -- it includes principal, interest, taxes, and insurance.

Other costs that might be included in your mortgage payment include:

Private mortgage insurance (for a conventional loan)
Mortgage insurance premium (for an FHA loan)
Homeowners association dues
Homeowners association assessments
Flood insurance
Wind insurance
Wildfire insurance

Things to know before buying a house in Rhode Island

Rhode Island's real estate market is more or less in line with the larger U.S. housing market, though that could be changing. But for now, prices are still reasonable, but taxes are a bit on the high side. Rhode Island ranks 12th in the nation for property tax as a percentage of assessed fair market value at 1.35%. That means that if your home is assessed at $267,100, you'll pay $3,618 per year in taxes.

Climate change is also a concern for Rhode Island. It has warmed twice as much as the rest of the lower 48 states, which is contributing to a range of other problems, like earlier snow melts and increasing drought conditions. Rainfall from extremely heavy storms has also increased by 70% since 1958, which increases the risk of flooding both inland and at the coast, where sea level rise is creating further complications.

Due to increasing issues with flooding, it's a good idea to get flood insurance along with your homeowners insurance policy, even if your home isn't in a listed flood zone. Your insurance agent can help you better understand your risk and give you a price for different types of coverage. Add that number to the Rhode Island mortgage calculator to help give you a better estimate of your overall housing payment.

Tips for first-time home buyers in Rhode Island

Rhode Island has first-time home buyer assistance available through RIHousing. There are three programs: Extra Assistance, 15kDPA, and FirstGenHomeRI.

Extra Assistance

Extra Assistance consists of a second mortgage on your property, much like many other states' assistance programs. You must income qualify for the assistance, which is based on your household size. For example, a household of up to two people cannot have more than $134,320 in yearly income.

You'll be eligible for up to 6% of your home's purchase price, or $15,000, whichever is lower, with an interest rate on your second mortgage that matches your primary mortgage loan. There are no additional fees or charges, but you're expected to repay your assistance monthly.

15kDPA

The 15kDPA is exactly what it sounds like: a $15,000 down payment assistance loan. Unlike the Extra Assistance program, the 15kDPA is a 0% interest rate loan with no payments due until the home is sold, refinanced, or is no longer occupied by the original borrower, at which time the entire amount borrowed will be due.

Buyers will need to complete a home buyer education program in order to meet eligibility requirements.

FirstGenHomeRI

First-generation home buyers in Rhode Island may also qualify for $25,000 in assistance with down payments and closing costs under the FirstGenHomeRI program. This is a five-year forgivable second mortgage with no payments due and no interest. You will have to complete home buyer education to qualify, live within the program's targeted ZIP codes at the time of application, and income qualify for this program.

Advice for all first-time borrowers

Even if you don't qualify for one of the down payment and closing cost assistance programs in Rhode Island, there are other great low-to-no down payment mortgages available for first-time home buyers. You'll need to make sure you're presenting the best version of your financial self possible, though.

If you can, start years before you're ready to buy, and focus on factors like:

Consistent employment with at least two years of job history at the same place.
On-time payments for all of your bills and no collection accounts.
A closing fund for your home that's in a dedicated account so the bank can verify it.
Maintaining low balances on your credit lines or paying cards off in full each month.

Once you're approved and you've got your house under contract, guard your approval viciously. Don't open new credit lines, spend from your down payment account, increase your debt on your existing credit lines, or quit your job until after closing. Your underwriter can still revoke your approval up to closing day if there are too many differences in your borrowing profile.

FAQs

Rhode Island home buyers may qualify for down payment assistance under one of three RIHousing programs. These offer anywhere from $15,000 to $25,000 in assistance that can be used for down payments and closing costs. Many home buyers in Rhode Island will qualify for this assistance, but even if you don't, you may qualify for a zero down payment mortgage through VA or the USDA. In addition, conventional mortgages typically only require 3% down, and FHA mortgages just 3.5%.
Rhode Island home buyers can expect to pay an average of $5,568 at closing, or about 1.4% of their home's value. This can be covered by one of Rhode Island's down payment and closing cost assistance programs, or paid out of the buyer's funds.
Homeowners insurance on a $400,000 home in Rhode Island is very reasonable when compared to the national average. It's just $2,381, or 26% below the national average.
Rhode Island is 12th in the nation for property taxes as a percentage of property value. You'll pay 1.35% of your home's assessed fair market value in taxes.

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