Come Home to Providence:  Neighborhood Stabilization Program (NSP) Homebuyer Assistance

Now is the time to "Come Home to Providence."  In partnership with the State of Rhode Island and U.S. Department of Housing and Urban Development (HUD), the City of Providence is now offering financial incentives to encourage homebuyers to purchase, repair and occupy previously foreclosed, vacant homes in Providence.  If you meet the eligibility requirements listed below, you can obtain down payment and/or repair/renovation loans to help make your homeownership dream a reality. 

Down Payment Loans
The City of Providence is offering Equity Sharing Down Payment loans to help buyers purchase foreclosed homes.  These loans have no monthly payments, and borrowers are only required to repay 50% of "simple gain" when the home is sold.  To qualify for an Equity Sharing Down Payment Loan from the Neighborhood Stabilization Program:

• You must have a household income at or below 120% of the median income
• You must be purchasing a vacant, previously foreclosed home in the City of Providence directly from a bank/lender for at least 10% below its "as-is" appraised value or you are purchasing a previously foreclosed home that has been renovated from an NSP Qualified Development
• Every adult (18 years of age and older) in the household must have completed a home-buyer education course
• The property must be owner occupied

If you are currently looking to purchase a home, you may apply for pre-qualification through this program. Pre-qualified applicants will be given a certificate that can be presented to local real estate brokers and mortgage companies indicating that you have met the income guidelines for this program.  For more information on how to become pre-qualified, contact us at 401.351.4300.

All mortgages obtained by participants in this program will be reviewed to ensure that they are not a sub-prime or predatory mortgage product.   Applications that involve a sub-prime or predatory mortgage product will be rejected.

*You must complete the NSP loan process before purchasing the home; otherwise, you will not be eligible for this loan.

How to Apply
Contact the Department of Planning and Development at 401.351.4300 for more information on the program or to set up a pre-application appointment with one of our housing specialists.  You can also download and complete the required application forms, listed below.

• Come Home to Providence Brochure (English)
• Come Home to Providence Brochure (Spanish)
• NSP Down Payment Program Information Sheet
• NSP Repair/Renovation Program Information Sheet
• NSP Pre-Qualification Application for Down Payment Assistance
• Housing Loan Application Form (required for both NSP Down Payment and Repair/Renovation Loans)
• Housing Loan Application-Documentation Package B (Required for NSP Down Payment Loans)
• Housing Loan Application-Documentation Package C (Required for NSP Repair/Renovation Loans)

Frequently Asked Questions

What do I need to provide to be pre-qualified for a down payment loan?

Pre-qualification is based on your income.  You will need to complete the pre-qualification application and submit documentation on your income.

What are the criteria used in determining whether or not a loan application is approved?

For the Down Payment program, you must meet the eligibility requirements listed above (income, homebuyer education, foreclosed property, etc.).  Additionally, we will review the terms of the first mortgage to determine whether it would be classified as a sub-prime first mortgage produce.  If we believe the first mortgage to be a sub-prime product, your down payment loan application will be denied. Loan approval is also dependent on availability of funds.

Repair/renovation loans are also based on the above listed eligibility criteria; however,  we also have loan underwriting guidelines that take your credit history, debt to income ratio and ability to repay the loan into account.  Loan approval is also dependent on availability of funds.

How does equity-sharing work?

If you receive a down-payment assistance loan through this program, you will only need to repay 50% of the 'simple gain' when the home is resold.  Simple gain is defined as the difference between the original contract purchase price and the resale price, minus certain closing costs and any rehabilitation loan paid off upon sale.

Example:  You purchased a foreclosed home in 2009 for $150,000.  The City provided a 20% down-payment ($30,000) and a $50,000 loan to rehabilitate the house through the NSP program.  You decide to sell the house in 2020, for a price of $230,000.  Assuming closing costs of $3,500 and repayment of the $50,000 rehab loan, the simple gain would be $26,500 ($230,000-$150,000-$50,000-$3,500).  Fifty percent (50%) - or $13,250 - of that simple gain would be due to the city as repayment for the downpayment assistance,

How does the repayment of repair/renovation loans work?

Repair/renovation loans must be repaid in full when:

• The property is sold
• The property is transferred
• The property is no longer owner-occupied
• The property is subject to a "cash-out" refinancing 

What types of repairs can be made using the rehab loan?

The first repairs made using this loan are correction of major housing violations.  Once those have been completed, remaining funds can be used for the following types of repairs:

• Mechanical systems – heating, plumbing and electrical work
• Roofs, gutters, downspouts
• Other exterior problems such as defective paint and siding
• Kitchen and bath repairs that are health/safety concerns
• Weatherization and energy efficiencies – windows, doors and insulation
• Any other work required for healthy and safe occupancy as determined by the assigned inspector

Are there any other loan programs that I can use to help with the renovation/repair costs?

Prospective homebuyers with household incomes at or below 80% of the area median income may also apply for a lead abatement loan. 

Contact Us
For more information, please contact Barbara Barone, Verification Specialist:

Telephone:  401.351.4300 (extension 405)
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