How to Buy a House in Arkansas: A Homebuyer’s Guide
Updated: November 13, 2023
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A typical home in Arkansas is valued at around $188K, which is a 15.1% increase from last year’s home value prices. Arkansas home prices are significantly lower than the national average of around $358K, making it one of the least expensive places to buy a home in the U.S. However, the growth in median home prices in Arkansas is higher than the national average of 13.5%.
Knowing how homebuying works in Arkansas helps you avoid the trap of buying a home that isn’t in your budget. That is why it’s important to be aware of the current real estate trends and the local economy, among other things.
Homebuying can be an exciting yet stressful journey that involves a lot of paperwork. Whether you are buying a home for the first time or are ready to purchase a second home, MoneyGeek guides you in the process.
Choose an Ideal Location
The real estate market is nuanced from city to city within the state of Arkansas. You might be able to save money by buying a home in Bigelow where median home prices averages at around $90,860, versus buying a home in Maumelle, which costs around $284,693.
When calculating how much it costs to buy a house in Arkansas, you should consider the cost of the property and the cost of living, access to amenities and more.
Calculate Mortgage Rates
Unless you are buying your home using cash, you’ll need to find a mortgage rate that you can afford. Understanding mortgages involves evaluating the various mortgage rate options and loan programs available to you.
This implies having your lender take a look at your financial information, including income, credit history and debt-to-income ratio, in order to identify the mortgage that you are qualified for. You could save thousands of dollars by comparing offers and rates.
Prepare Down Payment Requirements
Mortgages require a certain amount for a down payment. This is generally as low as 3.5% up to as high as 20% of the total cost of the home. The amount you need primarily depends on the type of mortgage option that you choose.
Some loans, like a VA or USDA home loan, may waive the down payment. This makes homeownership possible even for low-income earners.
Get Pre-Approved for a Mortgage
When planning to buy a home in Arkansas, you may want to get pre-approved for a mortgage before looking at properties. Some home sellers may require a mortgage pre-approval.
Prequalification is often used interchangeably with pre-approval, but these are different steps in the application process. Prequalifying shows that you are eligible to take out a loan. Often requiring submission of financial documents, getting pre-approved means you already have an amount that’s been granted by your lender.
Conduct a Home Inspection
A home inspection identifies the condition of the real estate property and ensures that, if there are any issues, you are aware of any significant problems with the home you are purchasing.
It may also give you the opportunity to negotiate for a lower total amount to account for the cost of upgrades and needed repairs. Some lenders may even require you to conduct a home inspection before they give you a loan.
Close Your Mortgage Loan
Once you finish conducting the home inspection and appraisal, the next step is closing the mortgage loan. Carefully review your loan offer, including any important fees that your specific lender may charge.
During the closing process, there could be fees involved, which you need to include in your budget. For buyers working with a limited budget, down payment assistance programs in Arkansas can help cover some of the closing costs.
Arkansas Homebuying Details
In Arkansas, homebuyers can choose between conventional and government-backed loans. Those who cannot afford a sufficient down payment might still be able to purchase a home through various down payment assistance programs.
As you shop for a home in Arkansas, keep in mind that although median prices in the state are statistically much cheaper than in other states, it’s still important to consider other factors like cost of living and accessibility to specific amenities that you might need.
The Arkansas Homeowner Assistance Fund (ARKANSASHAF) is a federally-funded program that helps low to moderate-income homeowners get through financial hardships through assistance on a mortgage, defaults, foreclosures and loss of utilities.
The Mortgage Credit Certificate lets eligible first-time homebuyers in Arkansas claim a tax credit of up to 35% of their mortgage interest. This can be up to a maximum of $2,000 per year. The credit can be claimed for the lifetime of the home loan.
First-time homebuyers in Arkansas can take advantage of the Arkansas Dream Down Payment Initiative (ADDI) program. This gives them up to $25,000 on a second mortgage loan for a down payment and closing costs.
Frequently Asked Questions About Buying a Home in Arkansas
MoneyGeek answered commonly asked questions from homebuyers about how to buy a home in Arkansas.
When purchasing your Arkansas home, some of the questions you might need to ask include the following:
- Which is the best location based on your needs and budget?
- What type of mortgage and mortgage rates can you qualify for?
- How much can you afford to put in as a down payment?
Among the U.S. states, Arkansas is one of the best places to buy cheaper homes. It also has a lower cost of living compared to other states. However, deciding whether or not buying a home in the state is a good idea comes down to your personal needs.
Home prices in Arkansas recorded a 15.1% increase from last year’s home value prices. This may make it a good place to buy a house. However, the market is constantly changing, so there’s no guarantee that the value of your purchased home will continue to appreciate.
Income requirements vary based on your lender and are likely to be based on the type of mortgage you can get. However, you are typically required to pay a 20% down payment or get private mortgage insurance (PMI) as an alternative.
Property tax in Arkansas varies from county to county.
Within the state of Arkansas, Bigelow is the cheapest city to live in, while Maumelle is the most expensive.
sources
- ADFA. "Arkansas Dream Down Payment Initiative." Accessed November 18, 2022.
- ADFA. "Mortgage Credit Certificate." Accessed November 18, 2022.
- Arkansas Department of Health. "Is My Home Safe?." Accessed October 20, 2022.
- Arkansas Homeowners Assistance Fund. "Arkansas Homeowner Assistance Fund (ARKANSASHAF)." Accessed October 22, 2022.
- Arkansas Real Estate Commission. "Is Property Condition Disclosure Required by Law." Accessed October 20, 2022.
- Homeloans Arkansas. "ADFA Down Payment Assistance Program (DPA)." Accessed October 22, 2022.
- Homeloans Arkansas. "ADFA Move-Up Loan Program." Accessed October 22, 2022.
- Living Cost.org. "Cost of Living in Arkansas." Accessed October 20, 2022.
- Living Cost.org. "Cost of Living in Rogers, AR." Accessed October 20, 2022.
- Living Cost.org. "Cost of Living in Russellville, AR." Accessed October 20, 2022.
- Living Cost.org. "Cost of Living in Cabot, AR." Accessed October 20, 2022.
- Living Cost.org. "Cost of Living in West Memphis, AR." Accessed October 20, 2022.
- Official Website of the State of Arkansas. "Property Tax Center." Accessed October 22, 2022.
- U.S. Department of Housing and Urban Development. "Homeownership Assistance: Arkansas." Accessed October 22, 2022.
- United States Department of Agriculture. "Property Eligibility Disclaimer." Accessed October 22, 2022.
- Zillow. "Arkansas Home Prices and Home Value." Accessed October 20, 2022.
- Zillow. "Bigelow Home Values." Accessed October 20, 2022.
- Zillow. "Maumelle Home Values." Accessed October 20, 2022.
- Zillow. "Mortgage Rates in Arkansas." Accessed October 20, 2022.
- Zillow. "United States Home Values." Accessed October 20, 2022.