James Diossa talks state program to offer below-market-rate mortgages
James Diossa talks about the RI AnchorHome program, to offer below-market rate mortgages to people making 110% of the area median income or less.
- The Rhode Island Treasurer’s Office is expanding its RI AnchorHome program with an additional $80 million in state deposits.
- This program offers below-market mortgage rates, starting at 3.99%, to qualified first-time homebuyers.
- Borrowers must meet specific criteria, including income limits and restrictions on savings and retirement accounts.
PROVIDENCE – The Rhode Island treasurer’s office is expanding a pilot program to offer mortgages with below-market interest rates, with no private mortgage insurance, through $80 million in state deposits.
The program originally launched as a pilot in December with $60 million in deposits. At the time, that amount was estimated to secure mortgages for 80 to 90 homes.
So far, 60 mortgages have been purchased through the program, using $21 million.
Program offering mortgages below market rate
Market mortgage rates are at 6.2% for a 30-year fixed-rate loan, a slight decrease from a year ago.
The program promises mortgages “starting” at 3.99% and, importantly, no private mortgage insurance, which is estimated to cost $118 a month. The initial 60 buyers have rates of 3.99%.
Three banks are participating in the program, Centreville Bank, BankNewport, Washington Trust and Navigant Credit Union,
Called RI AnchorHome, the program launched in 2025 and is a new flavor for the treasurer’s office’s Community Deposit Program, which provides deposits of state money to “support” qualifying loans at participating banks and credit unions. That program normally provides deposits for loans under $250,000 to small businesses.
The new $60 million allocation, approved by the State Investment Commission, “uses the new deposits, along with remaining uncommitted funds from the Community Deposit Program,” treasurer’s office spokeswoman Carla Rojo wrote in response to questions by The Providence Journal.
What a smaller mortgage looks like
A $525,000 loan at 3.99% costs $2,503 a month, or $30,036 a year, according to the Fannie Mae mortgage calculator.
A $525,000 loan at 6.23% costs $3,226 a month or $38,712 a year.
That’s a difference of $723 a month or $8,676 a year.
Program limits
In addition to being limited to people making 110% of the area median income, the program has other limitations:
- Max loan amount of $525,000 for a single-family home
- Max loan amount of $575,000 for a duplex
- No loans for houses larger than two units
- Borrowers can’t already own other residential property by closing
- “First-time homebuyers” only
- Minimum credit score of 660
- Maximum debt-to-income ratio of 50%
- People with big savings or retirement accounts are disqualified: Anyone with either more than 12 months of principal, interest, taxes and insurance (called PITI in real estate lingo) or more than $500,000 in retirement accounts is ineligible
Little savings allowed
The limit on principal, interest, taxes and insurance, or PITI, is a big one.
For a maximum loan of $525,000 (the median sales price in the state in March was $514,000), with an interest rate of 3.99%, the mortgage payment would be $2,503 a month or $30,036 for a year. Add in another $8,000 for property taxes and insurance, and the maximum amount someone, or a couple, would be allowed to have in savings is $38,036, or the equivalent of a 7% down payment on that $525,000 house.
Income qualifications
The program is available to people making up to 110% of the area median income. RIHousing offers a table of income limits based on household median income, at 100% of the area median income and 115%, but not 110%. Official documentation for the program points to RIHousing’s area median income table, which has 115%, but not 110%.
At 115%, just slightly above the program limit, the maximum income limits are:
- $91,120 for a single person
- $105,220 for two people
- $118,330 for three people
- $131,450 for four people
- $142,030 for five people