The state's first-time homebuyer grant has run out. What other help is there to buy a house in RI?
When the state announced on Oct. 27 it was no longer taking applications for its $17,500 first-time homebuyers grant, real estate agent Jill Sweetman was swamped with panicked phone calls and frantic text messages.
Her clients all wanted to know: Am I still eligible?
For most, their applications to the program went in under the wire, while a few are out of luck. For those who can afford it, Sweetman is showing them homes across the state line in Killingly, Connecticut, where where a three-bedroom, two-bathroom house can still be bought for $250,000, the 2019-era median price of a house in Rhode Island.
"A couple of our clients were knocked out of homebuying completely," she said.
Across Rhode Island, first-time home-buyers making from $112,550 to $129,438 a year had been receiving grants of $17,500, putting them toward down payments or closing costs, until Oct. 27, when RIHousing closed the program to new applications.
So far, an estimated $22.8 million has gone to over 1,300 homebuyers, since the program opened on Jan. 25, although that number is expected to rise and be closer to 1,650.
RIHousing Director of Homeownership Peter Pagonis said they paused taking "reservations" for the program nine months after it opened. Internal projections put the program lasting closer to two calendar years.
"It went a lot quicker than we expected," Pagonis said.
Down payment assistance is at the core of RIHousing's mission, Executive Director Carol Ventura said.
Fostering homeownership helps build wealth and a sense of belonging in neighborhoods and communities. Down payments are often one of the biggest hurdles to buying a house, she said.
"It's gone a long way," she said.
While the grant program may be exhausted, RIHousing still has three programs open to many first-time homebuyers.
Who did the program help?
The program has, so far, provided grants to 51% minority households and 49% white households in a state that is 70% white. That came as no surprise to Pagonis and Ventura because those statistics are in line with their other programs.
According to the 2023 HousingWorksRI fact book, 69% of white households own their own homes, compared to 37% of Black households, 38% of Hispanic households, 51% of Asian households and 54% of mixed-race households.
Those percentages are liable to change slightly as purchases close and the remaining grant money is doled out.
The average household size was two people, the average purchaser's age was 36 and the average household income was $90,600, Pagonis said. Women were the head of the household in just under 50% of the grants.
The program was limited to people making less than $112,550 for households of up to two people and $129,438 a year for households of three or more.
For RIHousing officials, one key takeaway from the success of the program was that down payment assistance was key for low- and middle-income households to "get off the sidelines" and purchase a house, even with mortgage rates and house prices soaring to record highs, Pagonis said.
Making homeownership a possibility
For many real estate agents, the program was vital in helping their clients buy homes in Rhode Island, as interest rates have shot up close to 8% and the median price of a single-family home is $455,000.
One client of real estate agent Constance Stowers was on the fence about buying a condo, but Stowers was worried the money for the program was about to run out. Her client got in just a week before the program stopped accepting applications.
"It was a great program," Stowers said. "It helped get a lot of people in the door who would not buy otherwise."
For many of Sweetman's clients, the program made home ownership possible, with six of her clients getting in before the program closed. Some of her clients who missed it are now looking at houses over the line in Connecticut because the prices are so much lower.
Where was the grant money spent?
Statistics provided by RIHousing show where the most people bought houses using the grant money:
Providence: 18%
Warwick: 13%
Cranston: 11%
Pawtucket: 10%
West Warwick: 6%
North Providence: 6%
Woonsocket: 5%
Coventry: 4%
East Providence: 4%
Number of grants expected to grow
The total number of grants paid out is expected to grow to about 1,650, based on the number of reservations in the system that have not yet closed.
The program was funded with $30 million from the federal American Rescue Plan Act, or ARPA. The original goal for the program was 1,629 grants, with 95% of the funds being used for grants and 5% for administration of the program.
More: Where is the most expensive place to buy a house in RI? Here's the list.
One of Stowers' clients illustrates both why not all the money has been used up yet and the broader problems in the housing market. They received a reservation in the program in August, but their house purchase, under contract, is contingent on the seller finding a suitable house to buy themselves. The seller recently found a new home to buy but, ironically, their home purchase is itself contingent on that family finding suitable housing themselves.
"They've been locked in to the $17,500 program and have been waiting since August but if they try to find another house, they'll lose it," Stowers said.
What other home buyer programs are still available in Rhode Island?
These three RIHousing programs are still running and cannot be used in combination with one another. A fourth program, called the FirstHomes Tax Credit, was suspended in February.
RIHousing's no-interest down payment loan
The $10,000 down payment assistance loan is intended to help those getting a loan through RIHousing to clear the hurdle of a down payment. The 0% interest loan has no monthly payments and is due only when the house is no longer being used as a primary residence or the property is sold or transferred.
The loan requires a minimum credit score of 660, the maximum purchase price is $546,752 and the income limits are the same for the other programs, $112,555 for a one- to two-person household and $129,438 for a three-plus-person household.
First-generation homebuyers grant
The $25,000 grant for first-generation homebuyers is a 0% loan toward a down payment that is forgiven after five years, so long as the house is the buyer's primary residence during that time.
The grant is available only to people living in Central Falls, East Providence, Pawtucket, Woonsocket and all of Providence except zip code 02906. It's also available to people in census tract 405 of Newport.
More: What are the richest towns in Rhode Island? Here's where they rank.
The minimum credit score is 660 and the same income limits apply.
The state defines first-generation homebuyers as "any person whose parents or guardian never owned a home during the homebuyer’s lifetime or lost the home to a foreclosure or short sale and does not own a home now," as well as anyone who lived in foster care. If two people are signing for the mortgage, they both must be first-generation homebuyers.
Extra assistance loan
The extra assistance loan, available to people with a credit score lower than 620, allows for a second loan, up to 6% of the purchase price, up to $15,000. The interest rate is usually the same as on the mortgage and is a second lien on the home.
Want to buy somewhere that is still affordable?
While the median price of a single-family home continues to hit new record highs each month, not all communities cost the same.
The Providence Journal took a deep dive into the communities where buying a house or a condo or a multi-family property is still, mostly, attainable.
Read our stories on the most affordable places to buy a single-family home and the most affordable places to buy a condo or multi-family building.
For the opposite end of the income spectrum, read our story on the most expensive communities to buy a house in the state.
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Reach reporter Wheeler Cowperthwaite at wcowperthwaite@providencejournal.com or follow him on Twitter @WheelerReporter.
This article originally appeared on The Providence Journal: RIHousing still has ways to help first time homebuyers in Rhode Island
