Arkansas First-Time Home Buyer: 2024 Programs and Grants

What to know about buying a house in Arkansas

Home prices in Arkansas are on the rise. That can be scary if you’re an Arkansas first-time home buyer.

But there’s good news, too: Arkansas offers real, tangible help to many first-time buyers. That might include special mortgages, mortgage credit certificates that can slash your federal tax bill, and down payment assistance. Here’s what you should know.

In this article (Skip to ...)

• AR home buyer overview
• Home loan options
• AR home buyer programs
• First-time buyer grants
• Buying in Arkansas’ cities
• Resources
• AR mortgage rates

Arkansas home buyer overview

The median list price for homes in Arkansas was $256,800 in September 2024. That increased 2.1% year-over-year, according to Redfin.

However, Arkansas’s cost of living remains low compared to other states, making it an appealing option for home buyers looking for affordable real estate. Also, the state offers many kinds of housing help, from classes on how to buy a home to special mortgages. Arkansas has a lot to offer first-time home buyers as well as those looking to upgrade.

Arkansas home buyer stats

Down payment amounts are based on the state's most recently available average home sale price. "Minimum" down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.

If you're eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the U.S. Department of Agriculture), you may not need any down payment at all.

First-time home buyer loans in Arkansas

If you’re an Arkansas first-time home buyer with a 20% down payment, you can get a conventional loan with a low interest rate and no private mortgage insurance (PMI). Of course, few first-time buyers have saved for a 20% down payment. But the good news is that you don’t need 20% down. Not by a long shot.

Arkansas home buyers can often get into a new home with as little as 3% or even 0% down using one of these low-down-payment mortgage programs:

• Conventional 97: With Freddie Mac or Fannie Mae, you may qualify with a 3% down payment and 620 minimum credit score. You can usually stop paying private mortgage insurance after a few years
• FHA loan: Backed by the Federal Housing Administration, you could qualify for an FHA loan with a 3.5% down and a 580 minimum credit score. But you’re on the hook for mortgage insurance premiums (MIP) until you refinance to a different type of mortgage, move, or pay off your loan
• VA loan: Only for veterans and service members, the VA mortgage offers a zero-down-payment option. Minimum credit score varies by lender but often 620. There’s no ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible
• USDA loan: For those on low-to-moderate incomes buying in designated rural areas. Zero down payment requirement. Credit score requirements vary by lender but often 640. Low mortgage insurance rates
• ADFA mortgage programs: May include affordable mortgages, mortgage credit certificates that could reduce your annual federal tax bill, and down payment assistance

Note that government loan programs (including FHA, VA, and USDA home loans) require you to buy a primary residence. That means you can’t use these loans for a vacation home or investment property.

In addition, most programs let you use gifted money or down payment assistance (DPA) to cover your down payment and closing costs. Depending on your mortgage loan, you could get into your new house with minimal cash out of pocket.

If you’re unsure which program to choose for your first mortgage, your lender or real estate agent can help you find the right match based on your finances and homeownership goals.

Arkansas first-time home buyer programs

There are numerous programs aimed at supporting first-time home buyers in Arkansas, particularly those with low to moderate incomes. The type of loan or financial aid offered varies depending on the program, but some options include fixed-rate loans or financial support to reduce the overall cost of purchasing a home.

ADFA Move-Up Program

The Arkansas Development Finance Authority (ADFA) has a mortgage program called “Move Up” that offers several types of 30-year fixed-rate mortgages: FHA, VA, USDA, and conforming loans. When you get one of these ADFA programs, you may be in line for additional assistance with your home buying costs.

Here are the Move-Up loan requirements:

• Annual household income must not exceed $137,000
• Minimum credit score of 640
• Maximum debt-to-income ratio of 45%
• Must purchase a primary residence
• Must complete a home buyer education course

You’ll pay a lower interest rate on the loan if you meet the criteria for low-income buyers when your annual income is at or below 80% of the area median income (AMI).

ADFA Mortgage Credit Certificate

In addition to an affordable loan, you may be eligible for a mortgage credit certificate (MCC). ADFA explains: “An MCC is a dollar-for-dollar tax credit for first-time, low-to-moderate-income borrowers. The ADFA issues the certificate and allows qualifying, tax-paying home buyers to claim a tax credit of up to 35 percent of the mortgage interest paid per year, capped at $2,000 annually.”

You might also be in line for one of ADFA’s down payment assistance programs (details coming next).

Arkansas first-time home buyer grants

First-time home buyers in Arkansas can access various forms of down payment assistance. These may include grants, low-interest loans, and subsidies to help cover the initial costs of purchasing a home.

In fact, the Arkansas Development Finance Authority has two down payment assistance programs:

1. DPA, which stands for down payment assistance
2. Arkansas Dream Down Payment Initiative (ADDI)

In both cases, you’ll need an ADFA Move Up mortgage to benefit from the program.

AFDA Down Payment Assistance (DPA)

It’s easier to qualify for Arkansas’ DPA than ADDI, but you benefit less. With the Arkansas DPA, you get a 10-year loan in the form of a second mortgage with the same interest rate as your first (main) mortgage. Note that you’ll have to pay both loans back in parallel.

If you’re eligible, you can borrow between $1,000 and $10,000, which should cover both your down payment and closing costs on a fine home in most of the state. You can even use it for expenses “paid outside of closing.”

Arkansas Dream Down Payment Initiative (ADDI)

ADDI is open only to those with modest incomes. There are also purchase price limits by county that are well below median home prices across the state.

If you qualify and are happy with what’s on offer, you get a sweet deal. You can borrow up to 10% of the home’s purchase price, capped at $10,000. However, unlike with the DPA program, you shouldn’t usually have to repay that loan.

It comes as a “silent” second mortgage, which means you don’t make monthly payments and the interest rate is 0%. If you stay in residence and don’t sell the home or refinance the mortgage, the loan is fully forgiven after five years.

Other Arkansas first-time home buyer assistance

In addition to down payment assistance, several other types of support are available for Arkansas first-time home buyers. Tax credits, mortgage credit certificates, and lower interest rates may be among them. As additional assistance for first-time buyers, some programs provide educational materials, counseling, and other forms of support.

Additionally, there might be state- and local-level programs designed to increase first-time buyers’ access to and affordability of homeownership. For instance, the Department of Housing and Urban Development offers a nationwide homebuyer assistance program called Good Neighbor Next Door (HUD).

It gives people in all states the chance to realize their dream of owning a home for the first time. Good Neighbor Next Door gives teachers, police officers, firefighters, and EMTs of all income levels a 50% discount on homes in revitalized areas. HUD makes buyers sign a second mortgage and note for the discounted amount and live in the home for at least three years.

Buying a home in Arkansas’ major cities

The housing market in Arkansas’ three largest cities, Little Rock, Fort Smith, and Fayetteville, varies in terms of home prices.

In Little Rock, the state capital, the median home value offers a range of options available for both first-time buyers and those looking for upscale properties. Fayetteville, located in the northwest part of the state, is a college town with a thriving economy, and the median home value is higher compared to other parts of the state.

Little Rock first-time home buyers

The median home listing price in Little Rock was $279,900 in September 2024. That grew 3.7% year-over-year, according to Realtor.com.

If you want to buy a home at that median price, your down payment options might fall between:

• $8,397 for 3% down payment
• $55,980 for 20% down payment

The City of Little Rock has a helpful down payment assistance program for first-time home buyers with modest incomes.

Those who are eligible can borrow up to 6% of the home purchase price, capped at $5,000. This takes the form of a silent second mortgage that lasts five years. That means you make no monthly payments and pay zero interest. In addition, the loan is forgiven at a rate of one-sixtieth of the total each month. So, after 60 months (five years), you owe nothing.

Fayetteville first-time home buyers

The median home listing price in Fayetteville was $449,000 in September 2024. That rose 4.4% year-over-year, according to Realtor.com.

If you want to buy a home at that median price, your down payment options might fall between:

• $13,470 for 3% down payment
• $89,800 for 20% down payment

We could find no trace of a down payment assistance program on the websites of either the City of Fayetteville or Washington County. But you can try applying to the ADFA’s statewide program.

Fort Smith first-time home buyers

The median home listing price in Fort Smith was $270,000 in September 2024. That increased 8.4% year-over-year, according to Realtor.com.

If you want to buy a home at that median price, your down payment options might fall between:

• $8,100 for 3% down payment
• $54,000 for 20% down payment

The Crawford-Sebastian Community Development Council, Inc. lists three down payment assistance programs open to those buying in Fort Smith. Check out all three to see which suits you best. All three are available only to those with certain incomes. You must also complete an eight-hour homebuyer education course to be eligible.

All the programs offer silent second mortgages with no monthly payments and a 0% interest rate. Those mortgages are forgiven after five years, provided you remain in residence for that period and observe other requirements.

Where to find home buying help in Arkansas

All the organizations we’ve listed above should provide advice freely to any first-time home buyer in the state of Arkansas or the local areas they serve. In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides a few lists of statewide, regional, and local resources:

Statewide and regional Arkansas home buyer programs

• Arkansas Development Finance Authority: Homeowner assistance programs, including homebuyer education courses, and down payment and closing cost assistance
• Crawford-Sebastian Community Development Council: Down payment and closing cost assistance for Fort Smith home buyers
• City of Little Rock: Down payment assistance program for first-time buyers
• Habitat for Humanity: Through volunteer labor, it builds and rehabilitates houses for families in need
• U.S. Department of Agriculture Rural Housing: Home buyer assistance programs in rural communities

Arkansas home buyer programs by city/town

• Jacksonville
• Jonesboro
• Little Rock
• Pine Bluff

What are today’s mortgage rates in Arkansas?

You can see today’s live mortgage rates in Arkansas here. Experiment with a mortgage calculator to see how your down payment, interest rates, homeowners insurance, and property taxes affect your monthly mortgage payment.

Get personalized rate quotes from at least three mortgage lenders when you’re ready to start the home-buying process. Don’t just look at the rates that are advertised online. Instead, apply for preapproval and compare the interest rates and fees that you are given. That’s the only way to be sure your new home loan is the best deal possible.

¹Source: Redfin.com Arkansas Housing Market Report

²Source: Experian.com study of 2022 and 2021 data

³Based on a review of the state's available DPA grants at the time this was written