What to know about Rhode Island mortgage rates

A couple assists girl in kitchen.Image: A couple assists girl in kitchen.
Editorial Note: Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our marketing partners don’t review, approve or endorse our editorial content. It’s accurate to the best of our knowledge when posted.
Advertiser Disclosure

We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.

Of course, the offers on our platform don't represent all financial products out there, but our goal is to show you as many great options as we can.

Rhode Island may be the smallest state in the U.S., but it’s full of charming villages, fresh seafood and breathtaking beaches. All of these features make the Ocean State a great place to call home.

If you’re searching for a home in Rhode Island, remember to shop around and compare mortgage rates. What may seem like a small difference could add up to thousands over the course of a 15-year or 30-year mortgage.

Mortgage debt in Rhode Island

Credit Karma members with mortgages in Rhode Island had average mortgage debt of $211,682 in 2020, with average monthly mortgage payments of $1,517.

That puts Rhode Island a bit above average for both mortgage debt and average monthly mortgage payments compared to Credit Karma members across the U.S. in 2020.

Types of home loans

If you choose to finance your dream home, you might be overwhelmed with the number of mortgage loan options out there. Here are some of the more common mortgage types Rhode Island homeowners may consider.

Conventional loans in Rhode Island

Conventional loans are mortgages that aren’t part of government programs. These loans tend to be good for people with solid credit and a down payment of at least 3% to 5%.

Rhode Island FHA loans

FHA loans are a good option for first-time homebuyers to explore — particularly if your credit is less than perfect. That’s because you may be able to qualify with credit scores as low as 580 with a 3.5% down payment or 500 with a down payment of 10%. This FICO® score requirement is the FHA minimum standard. In general, additional lender credit score requirements may apply.

The FHA loan limit in 2021 is generally $356,352 for a one-unit property, but it can reach as high as $822,375 depending on where you live.

Every area in Rhode Island has a higher limit.

You can find the exact limit by county on the U.S. Department of Housing and Urban Development website.

VA loans in Rhode Island

If you’re an eligible veteran or service member comparing mortgage rates in Rhode Island, a VA loan can be attractive since down payments and mortgage insurance aren’t typically required, and you may be able to qualify even if you don’t have great credit.

Similar to FHA loans, VA loans are insured by the federal government but issued by private lenders.

Conforming loan limits in Rhode Island

Conforming loans are a type of home loan that meets certain loan limits set by the Federal Housing Finance Agency. This means they can be bought by Fannie Mae and Freddie Mac, federal-government-sponsored enterprises that guarantee mortgages.

Loans that exceed conforming loan limits are known as jumbo loans. Lenders often consider these loans riskier than conforming loans.

All of Rhode Island’s counties have a conforming loan limit of $548,250 in 2021.

First-time homebuyer programs in Rhode Island

If you’re hoping to buy your first home, there may be some assistance programs available to you in Rhode Island.

  • First-Time Homebuyer Loan and Extra Assistance Program: Offered by Rhode Island Housing (RIHousing), the First-Time Homebuyer Loan offers a home loan as well as down payment assistance loans for up to 100% financing. To take advantage of the home loan, you must be a first-time homebuyer and meet certain income and purchase price limits. To be eligible for the Extra Assistance down payment program, you must also have a minimum credit score of 620 and take a homebuyer education course.
  • 10kDPA Loan: With RIHousing’s 10kDPA Loan, homebuyers can get a down payment assistance loan with 0% interest for up to $10,000. Borrowers won’t have to make payments on the loan until they sell the home, pay it off, transfer it or move. To qualify, you must be a first-time homebuyer and meet certain income and purchase price limits. You’ll also need a credit score of at least 660 and an RIHousing-funded first mortgage. Plus, you must a complete homebuyer education course.
  • FirstHomes Tax Credit: This program offers a federal tax credit for first-time homebuyers or certain homebuyers who purchased a home in a targeted area. You may receive a tax credit equal to 20% of your mortgage interest, up to $2,000 per year, for the lifetime of your mortgage (as long as the house is your primary residence). To be eligible, you must meet income and purchase price limits.

Mortgage refinancing rates in Rhode Island

If you’re thinking about refinancing your mortgage, keep a few things in mind:

  • Break-even cost — Once you know the closing costs for your refinance, you can use any savings on your monthly mortgage payment to calculate how long it will take you to recoup that investment and “break even.”
  • Cash-out refinance — Have you accumulated equity in your home that you’d like to convert to cash? A cash-out refinance lets you refinance your home for more than what you owe and get cash in return. But you’ll owe the full amount plus interest and you’ll end up owning less equity in your home, which means less cash in your pocket if you sell in the future.
  • Loan term — You also may want to either shorten or extend your loan term. For instance, if you have a 30-year mortgage, you may want to convert it to a 15-year loan. Keep in mind that reducing your term likely means you’re paying more each month — but less in interest over time. Lengthening your loan term may mean you pay less each month, but more interest over the course of the mortgage.

About the author: Anna Baluch is a freelance personal finance writer from Cleveland, Ohio. You can find her work on sites like The Balance, Freedom Debt Relief, LendingTree and RateGenius. Anna has an MBA in marketing from Roosevelt Un… Read more.