First-Time Homebuyer Programs in Arkansas

The down payment on a new home is often the biggest hurdle for first-time homebuyers. In Arkansas, with an average home value of $207,627, you would need a down payment of $41,525 to avoid private mortgage insurance.

Fortunately, first-time homebuyer programs in Arkansas can help you achieve homeownership. There are also mortgages that allow you to put less down on a home, although these typically have income requirements and require mortgage insurance. MoneyGeek explores several state-specific and government-backed first-time homebuyer programs for people from different financial backgrounds.

Arkansas First-Time Homebuyer Programs

Arkansas offers grants and loans to assist first-time homebuyers with down payments and closing costs. We compiled the first-time homebuyer programs offered by the Arkansas Development Finance Authority (ADFA) to help you find the best option for your needs.

ADFA Move-Up Loan Program

The ADFA Move-Up Loan Program provides a 30-year fixed-rate mortgage with no prepayment penalty. It can be used with FHA, VA, conventional or Rural Development (RD) loans. Additionally, the Move-Up Loan can be paired with ADFA's down payment assistance program.

tax icon
ELIGIBILITY REQUIREMENTS

To qualify for the ADFA Move-Up Loan Program, you must meet specific eligibility requirements. These requirements ensure that the program is accessible to those who need it most.

  • Minimum credit score of 640
  • Maximum purchase price of $424,100 for conventional conforming loans
  • Property must be your primary residence and a single-family home

ADFA StartSmart Mortgage Loan Program

Through the StartSmart Mortgage Loan Program, ADFA uses IRS regulations to issue tax-exempt mortgage revenue bonds, passing on savings to homebuyers through below-market interest rates and lower monthly payments. This program offers 30-year fixed-rate FHA, VA or RD loans with no prepayment penalty.

house icon
ELIGIBILITY REQUIREMENTS

To qualify for the ADFA StartSmart Mortgage Loan Program, you must meet specific eligibility requirements. These are outlined below:

  • Have not owned a home for three years
  • Meet income limits, which can vary by county and household size
  • Maximum purchase price of $425,000
  • Minimum credit score of 640
  • Property must be used as the primary residence
  • Work with an approved lender

ADFA Down Payment Assistance Program

The ADFA Down Payment Assistance (DPA) program offers qualifying applicants of ADFA's StartSmart or Move-Up mortgages financial support for down payments and closing costs. The program provides between $1,000 to $15,000, structured as a second mortgage with the same interest rate as the first and a 10-year term. Borrowers can also receive cash back for expenses paid outside of closing (POC).

house2 icon
ELIGIBILITY REQUIREMENTS

To qualify for the ADFA Down Payment Assistance Program, you must meet specific eligibility requirements. These criteria are designed to ensure that applicants are prepared for homeownership and can successfully manage their mortgage obligations.

  • Have ADFA StartSmart or ADFA Move-Up first mortgage
  • Complete a homebuyer education course if pairing DPA with an HFA Preferred conventional mortgage

Arkansas First-Time Homebuyer Programs by City

Aside from statewide first-time homebuyer programs in Arkansas, there are also city-specific programs available to help you pursue homeownership in a city of your choosing. Check out the table below for some of the cities in Arkansas that provide first-time homebuyer programs for potential residents.

City
First-Time Homebuyer Program

Jacksonville

Jacksonville's Homebuyers Assistance Grant (HAG) program pays half of your out-of-pocket expenses at the time of closing, for a maximum of $3,000. This assistance comes in the form of a grant, which doesn't have to be paid back.

Jonesboro

Jonesboro's First Time Homebuyer Assistance program provides low- and moderate-income first-time homebuyers with the Community Development Block Grant (CDBG) to help them achieve homeowner status. Qualifications include buying a house within the city limits of Jonesboro. It must not be located within a flood zone. Additionally, the property must meet the minimum housing quality standards established by the U.S. Department of Housing and Urban Development (HUD).

Little Rock

Little Rock provides low- and moderate-income first-time homebuyers with down payment assistance of up to 6% of the purchase price or $10,000. To qualify, your annual household income must be at or below 80% of the Area Median Income (AMI) and you must agree to occupy the property for a minimum of five years.

Pine Bluff

With the Home Buyer's Assistance Program in Pine Bluff, low-to-moderate income families with household incomes below 80% of the AMI can receive assistance in the form of $2,000 for down payment and up to $3,000 of eligible closing costs, not including prepaid items for a home on the open market. To qualify, you must contribute a minimum of $500 toward the down payment.

Zero-Down-Payment Loan Programs in Arkansas

In Arkansas, there are zero-down-payment loan programs that allow you to purchase a home without putting money down. USDA and VA loans are two government-backed options that provide this benefit.

USDA Loans

USDA loans are offered by the U.S. Department of Agriculture through its Rural Development Guaranteed Housing Loan program. These loans are designed to assist individuals in rural areas who may not have access to conventional mortgage options.

USDA loans provide several benefits, including no down payment, reduced mortgage insurance costs, and competitive interest rates. These loans are specifically aimed at helping low- to moderate-income homebuyers in rural areas. The program ensures that borrowers can afford their homes without the financial burden of a large down payment.

To qualify for a USDA loan, certain criteria must be met. The property must be no larger than 2,000 square feet and located in a USDA-eligible rural area with a population of less than 35,000 people. Additionally, income limits vary by location; for instance, in Ashley County, AR, the income limit is $52,150, while in Clark County, AR, it is $56,550 for a four-person, low-income household.

VA Loans

VA loans are a valuable resource for eligible veterans, active-duty service members, and certain members of the National Guard and Reserves. These loans are issued by the U.S. Department of Veterans Affairs, providing a pathway to homeownership for those who have served their country. Learn more about VA loans and how they can benefit you.

VA loans offer several advantages, including the ability to purchase a home with no down payment. Unlike conventional loans, they do not require private mortgage insurance (PMI), which can significantly reduce monthly payments. Additionally, VA loans generally have lower interest rates than private loans, making them a cost-effective option. As of November 2024, the APR for a 15-year fixed-rate VA loan in Arkansas is 6.13%, while a 30-year fixed-rate VA loan stands at 6.37%.

To qualify for a VA loan, applicants must meet specific eligibility requirements. These include a certain length of service or service commitment, duty status, and character of service. Additionally, applicants must meet income limits, which vary depending on their location. A valid Certificate of Eligibility (COE) is also required to demonstrate qualification for the loan.

Low-Down-Payment Loan Programs in Arkansas

First-time homebuyers in Arkansas can take advantage of low-down-payment loan programs that allow them to finance their home with a down payment of 3.5% or less. These programs include conventional, FHA and FHA 203(k) loans.

    loans icon

    Conventional Loans

    Conventional loans are a popular mortgage option, divided into conforming and non-conforming types. Conforming loans follow Freddie Mac or Fannie Mae guidelines, while non-conforming loans exceed these limits. You can obtain a mortgage with a 3% down payment, depending on the lender. However, a down payment of 20% or less requires private mortgage insurance. Eligibility requirements include a minimum credit score of 620 and a debt-to-income ratio of 43% or lower. For more information, visit conventional loans.

    homeMortgage icon

    FHA Loans

    FHA loans follow Federal Housing Administration policies, offering flexibility with a minimum credit score of 500 and a 3.5% down payment. In Arkansas, the mortgage limit for single-family properties is $766,550, and for two-family properties, it's $981,500. Private mortgage insurance is mandatory if your down payment is less than 20%.

    paintingRoller icon

    FHA 203(k)

    FHA 203(k) loans are designed to combine renovation costs into the mortgage. There are two main types: the Standard 203(k) and the Limited 203(k). You can secure this loan with a 3.5% down payment. Eligibility requires a credit score between 500 and 580 and a front-end debt-to-income ratio of 31% or less. This option is not limited to first-time homebuyers, but you cannot hold two FHA loans simultaneously.

FHA vs. Conventional Loan: Which Is Right for You?

FHA loans and conventional loans are the two most common types of mortgages, often compared by homebuyers. FHA loans require a minimum down payment of 3.5%, while conventional loans can require as low as 3% for first-time homebuyers. Conventional loans typically have stricter credit score and debt-to-income ratio requirements, making them a better fit for those with stronger credit profiles.

The current APR for a 15-year fixed-rate conforming loan in Arkansas is 6.06% (November 2024), whereas a 15-year fixed-rate FHA loan has an APR of 7.60%. FHA loans often have higher APRs due to additional fees and costs associated with government-backed loans.

Use our FHA vs. conventional loan calculator below to compare both FHA and conventional mortgage programs and determine the best option for you.

FHA vs. Conventional Loan Calculator

Compare FHA and conventional mortgage programs to better understand your loan opportunities in Arkansas.

Basic Details

Some basic details about the property and loan
$
$
%

Interest Rate

%
%
Calculation Results
Financial AnalysisFHAConventionalDifference
Monthly Payment (First Year)FHA$0Conventional$0Difference$0
Upfront Costs FHA$0Conventional$0Difference$0
Total 30-Year CostFHA$0Conventional$0Difference$0
Total 5-Year CostFHA$0Conventional$0Difference$0
Monthly Mortgage Insurance (First Year)FHA$0Conventional$0Difference$0
Down PaymentFHA$0Conventional$0Difference$0
Calculator results are rounded to the nearest whole dollar.
fairCredit icon
RECOMMENDED CREDIT SCORES FOR FIRST-TIME HOMEBUYERS

Qualifying for first-time homebuyer programs often involves meeting minimum credit score requirements, which vary depending on the loan program. Conventional loans typically require a credit score of 620, while government-backed loans, such as FHA loans, may only need a minimum score of 500. Understanding these requirements can help you determine your eligibility for different loan options.

In the third quarter of 2023, the average credit score in Arkansas was 696, according to Experian. This suggests many residents can qualify for both conventional and FHA loans, as their average score exceeds the minimum requirements. This information can be reassuring if you are considering purchasing a home, as it indicates a strong likelihood of meeting the credit score criteria for these programs.

FAQ: First-Time Homebuyer Programs in Arkansas

We have answered frequently asked questions about first-time homebuyer programs in Arkansas to help you identify the best option and move closer to achieving homeownership.

Does Arkansas have first-time homebuyer programs?

What qualifies me as a first-time homebuyer in Arkansas?

Can you buy a house in Arkansas with no down payment?

Who can help me with my down payment on a house in Arkansas?

Additional Resources for First-Time Homebuyers in Arkansas

Explore additional MoneyGeek resources for first-time homebuyers in Arkansas to help you with the homebuying process.

About Zachary Romeo, CBCA


Zachary Romeo, CBCA headshot

Zachary Romeo is a certified Commercial Banking and Credit Analyst (CBCA), and the Head of Loans and Banking at MoneyGeek. Previously, he led production teams for some of the largest online informational resources in higher education, with over 13 years of experience in editorial production.

Romeo has a bachelor's degree in biological engineering from Cornell University. He geeks out on minimizing personal debt and helping others do the same through people-first content.


sources