For many aspiring homeowners, the idea of putting down a 20% down payment feels like a major roadblock—especially as home prices and mortgage rates continue to climb. In fact, the traditional benchmark of 20% can seem unattainable for many buyers in today’s housing market. But what if you could buy a home with no down payment at all?
The good news is that for qualified buyers, zero-down payment options do exist. Between government-backed loans and local assistance programs like those offered by RIHousing, many Rhode Islanders are finding ways to achieve homeownership without the hefty upfront costs.
At Slocum Home Team, we’re committed to helping buyers understand their options and navigate the process of purchasing a home—whether it’s your first house or your next move. Here’s what you need to know about buying a home with little or no money down in Rhode Island.
What Is a Down Payment, and Why Does It Matter?
A down payment is the initial upfront cost a buyer pays toward the purchase price of a home. Traditionally, many lenders recommend a 20% down payment, which can offer several benefits:
Lower Monthly Payments: A larger down payment means you borrow less, reducing your mortgage balance and lowering your monthly payments.
Lower Interest Rates: Lenders often offer better rates to buyers who can make a significant down payment.
No Private Mortgage Insurance (PMI): Buyers who put down less than 20% typically need to pay PMI, which protects the lender in case of default.
However, the reality is that many buyers don’t put down 20%. According to recent data from Realtor.com, the average down payment in late 2024 was just 14.5%. For first-time buyers, especially in high-demand markets like Providence or Warwick, coming up with even that amount can be a significant challenge.
Can You Buy a Home With No Down Payment?
Yes, it’s possible to purchase a home with no down payment—but it often requires meeting specific criteria through government-backed loans or specialized local programs.
1. Government-Backed Loan Programs
Several federally-backed loans allow qualified buyers to purchase a home with little or no money down:
VA Loans: Available through the Department of Veterans Affairs, VA loans allow eligible veterans, active-duty service members, and some surviving spouses to purchase a home with no down payment and no PMI. This is one of the most generous loan programs available.
USDA Loans: Designed for buyers in designated rural areas, these loans are backed by the U.S. Department of Agriculture and offer 100% financing. Many areas in Rhode Island qualify for USDA loans, making them a viable option for buyers outside major metro areas.
FHA Loans: Although not technically a zero-down loan, Federal Housing Administration (FHA) loans require as little as 3.5% down and are available to buyers with credit scores as low as 580. This makes them a popular choice for first-time buyers.
2. Rhode Island-Specific Down Payment Assistance Programs
In addition to federal programs, RIHousing offers several initiatives to help first-time homebuyers and those struggling to cover upfront costs.
RIHousing Down Payment and Closing Cost Assistance Programs
100% Financing for First-Time Buyers: Eligible first-time buyers can secure loans with no down payment required, making homeownership more accessible for those who qualify.
$15,000 Down Payment Assistance (15kDPA): This program provides eligible first-time buyers with up to $15,000 toward down payment and closing costs, in the form of a zero-interest loan.
FirstGenHomeRI: Designed for first-generation homebuyers, this program offers $25,000 in down payment and closing cost assistance—an incredible opportunity for those whose families haven’t owned homes previously.
Extra Assistance Program: Provides additional financial support for qualified first-time buyers in Rhode Island to cover down payment and closing costs.
RI REALTORS® Homebuyer Grant
In partnership with the REALTOR® Foundation: Rhode Island, this grant offers:
$1,000 in assistance for eligible first-time homebuyers
$2,000 for eligible veterans or active military personnel who are buying their first home
3. Other Ways to Cover Your Down Payment
Even if you don’t qualify for government-backed loans or assistance programs, there are other creative ways to fund your down payment:
Gifted Funds
Many lenders allow buyers to use gifted funds from friends or family to cover their down payment. However, lenders typically require a signed gift letter stating that the money doesn’t need to be repaid.
Employer Assistance Programs
Some employers offer homeownership assistance as part of their benefits packages, particularly in fields like education, healthcare, or public service.
Grants and Nonprofit Assistance
Certain nonprofits offer grants for first-time buyers. While competition for these grants can be high, they’re worth exploring if you’re eligible.
The Risks of Buying a Home With No Down Payment
While zero-down payment options can make homeownership accessible, they come with certain risks and trade-offs that buyers should be aware of:
Higher Monthly Payments: With no down payment, your loan balance is higher, which means higher monthly payments.
Private Mortgage Insurance (PMI): Most loans with down payments below 20% require PMI, adding an extra cost to your monthly mortgage payment.
Less Equity to Start: A down payment gives you immediate equity in your home. Without it, you start with zero equity, leaving you vulnerable if property values decrease.
Greater Financial Responsibility: Homeownership comes with additional costs like maintenance, repairs, and property taxes. Without a financial cushion, unexpected expenses can be more challenging to manage.
Is Buying a Home With No Down Payment Right for You?
Deciding whether to buy a home with no down payment depends on your financial situation and long-term goals. It’s essential to weigh the benefits against potential risks and consider factors such as:
Your monthly budget and savings
Stability of your income and job security
Future plans for staying in the home
Market conditions in Rhode Island
Working with a knowledgeable real estate team can help you determine the best strategy for your situation. At Slocum Home Team, we’ll guide you through every step of the homebuying process, helping you understand your loan options and connect with local resources.
Final Thoughts: You Can Buy a Home in Rhode Island Without a Down Payment
If saving for a traditional down payment feels out of reach, don’t lose hope. With the right strategy and resources, buying a home in Rhode Island without a large upfront payment is possible. From RIHousing programs to government-backed loans, there are many options available to help you get the keys to your new home.
At Slocum Home Team, we’re here to help you explore all available opportunities and find the perfect path to homeownership.
Ready to take the first step toward owning your dream home? Contact us today to get started.
