Arkansas First-Time Home buyer Programs
Buying a home for the first time can be a challenging process. From the house hunting to the reams of paperwork to managing the down payment and closing costs, there is a lot to wade through.
Fortunately, first-time home buyers in Arkansas have access to several state programs that provide mortgage and down payment assistance, among other services. If you meet the requirements, these programs can provide significant savings and make home ownership a reality sooner than you might expect.
In this guide, we will cover:
Arkansas first-time home buyer programs
The Arkansas Development Finance Authority administers the state’s home buyer programs. The agency receives a combination of federal funds, local investment funds and loan earnings, which it uses to offer several housing-related programs.
In January 2019, we researched the most current information on first-time home buyer programs in Arkansas, which included reviewing program websites and guidelines from the Arkansas Development Finance Authority. Here’s what first-time home buyers in Arkansas need to know.
Eligibility for Arkansas assistance
The main eligibility requirement for Arkansas housing assistance is Arkansas residence. Beyond that, your mortgage must be an FHA-insured loan, a VA loan, a rural development 502 loan through the USDA or a conventional HFA preferred 97% or 95% loan.
You also are required to purchase an eligible property type, which includes single-family homes (detached or a duplex), modular homes or condos. Manufactured homes are not eligible for assistance programs.
ADFA Move-Up loan program
Features
Provides an affordable, 30-year fixed-rate mortgage
No mortgage prepayment penalty
Can be combined with other ADFA programs
Eligibility
Maximum home purchase price of $424,100
Debt-to-income ratio of 45% or less for FHA, VA and rural development loans
Debt-to-income ratio of 45% to 50% for conventional loans
Credit score requirements based on loan type:
FHA: 660
VA, rural development and FHA conventional loans: 640
Education class is required for conventional loans if borrower is a first-time home buyer
How it works
Although the ADFA Move-Up loan program isn’t specifically a first-time homebuyer program, it could be a good fit if this is your first home purchase due to the relatively low credit score requirements and assistance with finding an affordable mortgage.
All ADFA programs require you to work with an approved lender who can guide you if you aren’t sure if you meet the eligibility requirements. You can locate a participating lender in your area by visiting the ADFA website.
ADFA down payment assistance
Features
Provides $1,000 to $10,000 for your down payment and closing costs
Down payment assistance is repaid as a 10-year second mortgage, with the same interest rate as your qualifying Move-Up program mortgage
Eligibility
Can only be used with an ADFA Move-Up program loan
How it works
Like the ADFA’s other programs, it’s not limited to first-time home buyers, but it could help make home ownership more achievable if this is your first time. To find out if you qualify for the down payment assistance and the Move-Up program, you’ll need to contact a participating lender in your area. You can find one by visiting the ADFA website.
Arkansas Dream Down Payment Initiative
Features
Provides down payment assistance of up to 10% of the home purchase price, with a maximum of $10,000
The down payment assistance is a no-payment, forgivable loan
Eligibility
Can only be used with an ADFA Move-Up Program loan
Must attend a homebuyer education class
Must meet income requirements, which vary by county and by family size
Find your county’s income requirements by visiting their website and clicking on “income limits” in the “How to Qualify” section
Maximum home purchase price of $250,000
Must complete a home inspection
How it works
The ADDI doesn’t need to be paid back, so if you qualify for it, it’s a better deal than the down payment assistance program, which must be paid back (at a low interest rate). To find out if you qualify, visit this website and find a participating lender in your area. Let the lender know you’d like to apply for the ADDI.
ADFA mortgage credit certificate
Features
Provides a federal tax credit of up to $2,000
Can be claimed for the life of the home loan as long as it’s your primary residence
Can be combined with all ADFA programs
The mortgage credit certificate (MCC) is free if you have an ADFA mortgage
Eligibility
Must be a first-time homebuyer, a veteran or veteran’s spouse, or you must purchase a home in a targeted county (an economically distressed area defined by the federal government): Bradley, Calhoun, Chicot, Clark, Cleburne, Columbia, Conway, Crawford, Crittenden, Cross, Dallas, Desha, Drew, Jefferson, Lafayette, Lee, Lincoln, Madison, Mississippi, Monroe, Nevada, Ouachita, Perry, Phillips, Prairie, St. Francis, Scott, Searcy, White, Woodruff and Yell
Home purchase price must be $270,000 or less
You must use the home as your primary residence
You must meet the income limits, which vary by county and household size
Find the income limit for your area and family size by visiting the ADFA website and clicking on “maximum limits” in the “How to Qualify” section
How it works
The MCC is unique in that it doesn’t help you with upfront home financing costs. Instead, it helps lower your federal tax burden. To take the MCC, you will need to file with Form 1040 and submit Form 8396 (mortgage interest credit). Consult a tax professional if you need assistance.
The MCC allows you to claim up to 50% of the mortgage interest you paid during a given tax year, with a maximum of $2,000. For example, if you paid $3,000 in interest during a tax year, you could be eligible for a tax credit of $1,500, which is 50% of the interest you paid. For more information on the MCC, contact an ADFA-participating lender. You can find one by visiting their website.
Jonesboro home ownership assistance
Features
Provides a grant to assist with closing or down payment costs
Eligibility
Must purchase a home within the Jonesboro city limits
Home can’t be in a flood zone
Home must meet HUD minimum standards
The household must meet income limits for the area based on family size:
For a family of four: $44,950
For a family of three: $40,500
For a family of two: $36,000
For a family of one: $31,500
How it works
The first step to qualifying for Jonesboro home ownership assistance is to apply for a mortgage. Once you’re approved, you can apply for the assistance program. To apply, visit the Jonesboro website and download the application. Carefully complete the application and include all the requested documentation, then submit it to the address indicated at the top of the form.
Pine Bluff home ownership assistance
Features
Provides up to $2,000 for down payment assistance
Provides up to $3,000 for closing costs
Provides up to $10,000 in assistance for purchases in the Turtle Creek Subdivision
Eligibility
Must pay at least $500 toward your down payment
Property must be in Pine Bluff city limits
Must complete two inspections
The household must meet income limits for the area based on family size:
For a family of four: $36,500
For a family of three: $32,850
For a family of two: $29,200
For a family of one: $25,550
How it works
Pine Bluff offers a home buyer assistance program to first-time and repeat home buyers. They provide extra incentives for purchasing a home in their Turtle Creek Subdivision, but the program can be used for other homes, too. Pine Bluff recommends starting the process by making an appointment with the Department of Economic and Community Development. You can find their contact information at the bottom of their website.
National first-time home buyer programs
In addition to Arkansas’ home buying assistance programs, there are also several national programs designed to help first-time home buyers. These include VA loans, FHA loans and USDA loans, which typically target those buying homes in rural areas. For more information on national first-time home buying programs, check out our guide.