2025 Arkansas First-Time Homebuyer Programs and Loans

First-time homebuyer programs in Arkansas are designed to make homeownership more accessible. These programs, many of which are available through the Arkansas Development Finance Authority (ADFA), ease the financial burden of purchasing a home by offering low interest rates and assistance with down payment and closing costs.

Take a look at first-time homebuyer programs in Arkansas and discover how qualifying individuals and families can use them to achieve their dream of owning a home.

First-time homebuyer programs in Arkansas

Explore first-time homebuyer programs in Arkansas to get the support and resources needed to purchase your dream home. These programs include:

• ADFA Move-Up Loan Program: Good option for homebuyers in Arkansas seeking a first mortgage with no prepayment penalty and access to down payment assistance.
• ADFA StartSmart: Good option for first-time homebuyers looking for an affordable, accessible mortgage with fixed interest rates and no prepayment penalty.
• ADFA Down Payment Assistance: Good option for first-time homebuyers who need financial support to cover down payment and closing costs.
• Little Rock Down Payment Assistance: Good option for first-time homebuyers in Little Rock who need financial assistance to overcome the initial costs of homeownership.

ADFA Move-Up Loan Program

The ADFA Move-Up Loan Program offers Federal Housing Administration (FHA), Department of Veterans Affairs (VA), Rural Development (RD) and conventional loans with a 30-year term. Interest rates vary, but there is no prepayment penalty. Borrowers may also be eligible for assistance with paying their down payment. This program is a great fit for homebuyers seeking a first mortgage with the added benefits of down payment assistance and no prepayment penalties.

Requirements

• Maximum purchase price of $424,100
• Maximum annual income of $142,000
• Minimum credit score of 640
• Property must be the owner’s primary residence

Pros and cons

ADFA StartSmart

The StartSmart First-Time Home Buyer Program utilizes IRS regulations to issue tax-exempt mortgage revenue bonds, passing on savings to homebuyers through mortgages with below-market interest rates and lower monthly payments. The 30-year, fixed-rate Freddie Mac conventional (HFA Advantage), FHA, VA or RD loans with no prepayment penalty were created for first-time homebuyers, making homeownership affordable and accessible for a variety of buyers.

Requirements

• Purchase price limit of $425,000, which varies by property type
• Minimum credit score of 640
• Income limit of $124,040, which varies by county and household size
• Property must be the primary residence
• Use of an approved lender required
• First-time homebuyer status (unless living in certain federally targeted counties, buyer must not have owned a principal residence in past three years)

Pros and cons

ADFA Down Payment Assistance

The ADFA Down Payment Assistance (DPA) Program provides eligible homebuyers $1,000 to $15,000 to cover down payment and closing costs for their new home. This is through a 10-year second mortgage with an interest rate matching their ADFA StartSmart or ADFA Move-Up first mortgage. Ideal for homebuyers seeking financial support to cover the down payment and closing costs, this program ensures a smooth transition into homeownership with favorable terms.

Requirements

• ADFA StartSmart or ADFA Move-Up first mortgage

Pros and cons

Little Rock Down Payment Assistance

The Little Rock Down Payment Assistance Program supports low- and moderate-income individuals purchasing their first homes in the city. Offered by the city of Little Rock, Ark., this loan is capped at 6% of the property’s purchase price, with a maximum amount of $10,000, and is forgiven in monthly installments. This program is ideal for first-time homebuyers in Little Rock who need financial help to overcome the initial costs of homeownership.

Requirements

• Income at or below 80% area median income
• First-time homebuyer status (must not have owned a residence in the past three years)
• Property must be located in Little Rock and be no more than four units
• Property must undergo inspection by city staff to ensure compliance with the city’s minimum housing code standards
• Reside in the property for a minimum of five years
• Completion of a city-approved homebuyer counseling course

Pros and cons

Arkansas first-time homebuyer qualifications

To qualify for Arkansas first-time homebuyer programs, applicants typically must:

• Be a first-time homebuyer
• Have a minimum 640 credit score
• Buy a home worth below $424,100 (varies by program)
• Earn less than $124,040 annually (depending on program county and household size)
• Use the home as a primary residence
• Work with an approved lender

Steps to apply for a first-time homebuyer program

Here are the steps to apply for a first-time homebuyer’s program in Arkansas:

1. Select a program: Review each program’s requirements to check your eligibility. Consider factors like income, credit score, property type and location. If you’re seeking down payment assistance, ensure you understand the requirements, such as how long you must stay in the home and whether it involves a forgivable second mortgage.
2. Get preapproved: Select a lender and start the mortgage preapproval process. You can first get prequalified to review rates, and if you’re satisfied, proceed with getting preapproved for a more accurate rate estimate. Although most Arkansas programs require a minimum credit score of 640, having a higher score could help you secure lower rates. As of 2024, the average credit score in Arkansas was 695.
3. Complete a homebuyer education course: Some programs may require you to complete a homebuyer education course before purchasing a home. Check with your lender if this applies.
4. Begin searching for your home: With preapproval in hand, you can confidently shop for a home. You can work with a real estate agent to help you find the right property, and then complete the loan application and provide any necessary documents to your lender before it’s sent to underwriting. You’ll also schedule the appraisal and inspections your lender may require at this stage.
5. Close on your home: Once approved, you can get the keys to your new home, but only after you’ve signed the loan documents and made any required payments.

Understanding Arkansas first-time homebuyer down payment assistance

Arkansas homebuyer down payment assistance programs provide an affordable pathway for homebuyers to achieve their homeownership dreams. While each program has specific requirements, it can help approved homebuyers ease the financial burden of purchasing a home.

Data from Down Payment Resource’s homeownership program index showed that, as of the fourth quarter of 2024, there were 10 DPA programs in Arkansas, with eight having about 80% funding available.

Deferred second mortgage

Requires repayment? Yes

A deferred second mortgage allows buyers to defer payment on a portion of the down payment until a later date. Repayment is typically due when the home is sold or the first mortgage is refinanced. This option offers homebuyers additional flexibility and lowers upfront costs.

Forgivable second mortgage

Requires repayment? No

A forgivable second mortgage is another avenue for homebuyers who want to save on their home purchase. With this option, the money received for the down payment is forgiven after a certain period.

Grant

Requires repayment? No

Down payment assistance can come in the form of a grant. Eligible buyers may receive a certain amount without the requirement of repayment to help with their home purchase.

Mortgage credit certificate

Requires repayment? No

Through the mortgage credit certificate (MCC) program, homebuyers may be eligible to receive money back based on their mortgage interest. The total credit equals a percentage of the mortgage interest paid, up to a maximum of $2,000.

Keep these things in mind about DPA programs

Down payment assistance programs offer financial aid to homebuyers to help cover the upfront costs of purchasing a home, often in the form of loans and grants. When seeking this support, it’s important to thoroughly review the program requirements. Pay close attention to the income thresholds to qualify for assistance and stipulations regarding repayment if the property is sold, refinanced or vacated, especially since you may have to repay a portion if you don’t stay in the home for the required time.

How much down payment do I need to buy a house in Arkansas?

The down payment amount can vary depending on factors such as loan type, creditworthiness and lender requirements. For example, a homebuyer with a VA loan may require no down payment, while someone with an FHA loan might need to put down as little as 3.5%. In Arkansas, the average down payment for first-time homebuyers is $22,577, according to LendingTree data.

Can I qualify for down payment assistance in Arkansas?

Yes, you can qualify for down payment assistance in Arkansas, depending on the program. Requirements vary, but programs offering down payment assistance generally require applicants to have a low-to-moderate income, be first-time homebuyers, and live in the home for a certain period.

How do I apply for Arkansas first-time homebuyer down payment assistance?

To apply for Arkansas down payment assistance, visit the website of the agency or organization offering the program. You can also check with your lender on how to apply and confirm program requirements.

 Here’s what you need to know about the process of applying for a home loan.

Other first-time homebuyer loan programs

Conventional loans

Conventional loans typically require a down payment of 3% to 20% of the home’s price. They are not government-backed but offer flexible terms and lower interest rates for homebuyers with higher credit scores.

FHA loans

FHA loans, insured by the Federal Housing Administration, have some lenient requirements, including down payments as low as 3.5%. Additionally, FHA loan interest rates are competitive, making them appealing to first-time homebuyers and individuals with lower credit scores who may not qualify for a conventional mortgage.

VA loans

VA loans, backed by the Department of Veterans Affairs, are reserved for eligible military service members, veterans and their families. No down payment is required, and there’s no mortgage insurance, while closing costs are capped at 1% of the loan amount. Another perk is VA loan interest rates are often lower than conventional loans.

USDA loans

USDA loans, backed by the U.S. Department of Agriculture, are available to rural homebuyers. These loans come with income restrictions and require properties to be located in designated rural areas, but no down payment or minimum credit score is required.

What are the best first-time homebuyer loans?

When selecting a home loan, it’s important to consider multiple factors. Evaluating your creditworthiness, income and down payment ability can help you choose a loan that fits your financial situation and homeownership goals. Furthermore, comparing interest rates, loan terms and eligibility criteria across different loan programs is crucial for making the right decision.

Home price trends in Arkansas’ major areas

U.S. home prices rose by 4.5% between the third quarters of 2023 and 2024, according to Federal Housing Finance Agency data.

In contrast, Arkansas experienced more modest price changes. The Little Rock-North Little Rock-Conway metro area saw a year-over-year increase of 2.9% and a 0.4% decrease between the second and third quarters of 2024.

Is there a first-time homebuyer tax credit in Arkansas?

No, Arkansas does not provide first-time homebuyers with mortgage credit certificates (MCC).

What are the current mortgage rate trends in Arkansas?

In Arkansas, the current mortgage rate trends align with the national forecast, coming in between 6% and 8%. Expert mortgage rate predictions from LendingTree forecast that interest rates will remain close to or above 6% into 2025.