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 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.

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.

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.

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).

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.

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 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 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.

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.

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.

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.

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