Arkansas First-Time Homebuyer Programs
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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 homebuyers 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 homeownership a reality sooner than you might expect.
In this guide, we will cover:
- Eligibility for Arkansas assistance
- ADFA Move-Up loan program
- ADFA down payment assistance
- Arkansas Dream Down Payment Initiative
- ADFA mortgage credit certificate
- Jonesboro homeownership assistance program
- Pine Bluff homeownership assistance program
- National first-time homebuyer programs
Arkansas first-time homebuyer programs
The Arkansas Development Finance Authority administers the state’s homebuyer 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 homebuyer programs in Arkansas, which included reviewing program websites and guidelines from the Arkansas Development Finance Authority. Here’s what first-time homebuyers 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.
You can check current mortgage rates for the state of Arkansas here.
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
- <href=”https://www.lendingtree.com/home/mortgage/minimum-mortgage-requirements/”>Credit score requirements based on loan type:
- FHA: 660
- VA, rural development and HFA conventional loans: 640
- Education class is required for conventional loans if borrower is a first-time homebuyer
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 homebuyers, but it could help make homeownership 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 homeownership 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 homeownership 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 homeownership 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 homebuyer assistance program to first-time and repeat homebuyers. 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 homebuyer programs
In addition to Arkansas’ homebuying assistance programs, there are also several national programs designed to help first-time homebuyers. 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 homebuying programs, check out our guide.
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