In 2025, Arkansas’s housing market remains an attractive option for first-time buyers, with median home prices hovering around $220,000 statewide, according to recent market analyses. This affordability, combined with stabilizing interest rates at 6-7% and low property taxes averaging 0.6%, makes the Natural State a prime destination for new homeowners. However, challenges like limited inventory in growing areas such as Northwest Arkansas and rising costs in Little Rock persist. The RefiGuide published this guide so Arkansas first time home buyers can compare amazing house buying grants and get connected with trusted banks and lenders that offer affordable mortgages with competitive interest rates.

Top Rated Arkansas First Time Home Buyer Loan Programs in 2025

arkansas home buyers

The good news is that, the Arkansas Development Finance Authority (ADFA) and local AR programs offer robust support through low-interest loans, down-payment assistance (DPA), and incentives tailored for first-time buyers—defined as those who haven’t owned a home in the past three years. These initiatives, often funded by federal HOME and CDBG grants, helped over 1,000 buyers in 2024, with similar impacts expected in 2025 amid steady funding. This article highlights the top-rated programs, including state-wide DPA and local incentives, with direct reference URLs. We’ll also explore eligibility, benefits, and two case studies to illustrate their real-world value.

Who Qualifies as a First-Time Home Buyer in Arkansas?

Arkansas aligns with federal definitions: a first-time buyer hasn’t owned a primary residence in three years. Key eligibility across programs includes:

  • Income Limits: Typically 80-115% of area median income (AMI), varying by county. For a family of four in Pulaski County, AMI is about $85,000, so limits might range from $68,000 to $97,750.
  • Credit Score: Minimum 620-640, though some programs allow flexibility with education.
  • Home Price Caps: $300,000-$400,000, location-dependent.
  • Education Requirement: HUD-approved homebuyer course, often online or through local agencies.
  • Residency: Must occupy as primary residence; no flips or rentals.

Programs stack with FHA (3.5% down), VA (0% for veterans), or USDA (0% in rural areas) loans for enhanced benefits.

Top State-Wide Arkansas Down-Payment Assistance Programs

ADFA administers Arkansas’s core programs, offering low-rate mortgages paired with DPA. Rated highly for accessibility and forgiveness terms, here’s a breakdown with reference URLs:

StartSmart First-Time Home Buyer Program: This top-rated option provides below-market 30-year fixed-rate mortgages for first-timers, with rates around 5.5-6% in 2025. Eligibility: Income ≤115% AMI, credit ≥640, home price ≤$331,000 in most areas. Benefits: Combines with DPA for minimal upfront costs.

Reference URL: https://adfa.arkansas.gov/programs/homeloans/startsmart-first-time-home-buyer-program/

Down Payment Assistance (DPA) Program: Offers $1,000-$15,000 as a second mortgage at 0% interest, forgivable after 5-10 years based on amount. Eligibility: Pairs with ADFA loans, first-time or repeat buyers in targeted areas, income limits apply. Benefits: Covers down payments/closing; cash back allowed for extras.

Reference URL: https://adfa.arkansas.gov/programs/homeloans/down-payment-assistance-program/

Arkansas Dream Downpayment Initiative (ADDI): Provides up to $10,000 in forgivable loans for DPA and closing costs, targeted at low-income first-timers. Eligibility: Income ≤80% AMI, HUD education required. Benefits: Forgivable after 5 years.

Reference URL: https://www.fha.com/fha-grants?state=AR

These Arkansas DPA programs assisted hundreds in 2024, with 2025 enhancements including higher caps in high-cost counties.

Best Local First-Time Home Buyer Incentives

Local programs, often CDBG-funded, provide targeted aid in cities. Rated for community focus, here are standouts with URLs:

Little Rock First-Time Homebuyers Program: Grants up to 6% of purchase price (max $10,000) as forgivable second mortgage for DPA/closing. Eligibility: Low-moderate income (≤80% AMI), first-time, home in city limits, HUD education. Benefits: Forgivable over 5-10 years.

Reference URL: https://www.fha.com/first-time-home-buyers-program/little-rock-down-payment-assistance-program

Jonesboro Homeownership Assistance Program: Up to $5,000 grant for DPA/closing “out-of-pocket” expenses. Eligibility: First-time, federal income guidelines, home in city (no flood zone), HUD education, forgivable lien for 3 years. Benefits: Paid to title company.

Reference URL: https://www.jonesboro.org/155/Homeownership-Assistance

Fort Smith Down Payment Assistance (via Crawford-Sebastian Homeownership Center): Grants for DPA/closing, up to $25,000 HOME subsidy for new construction. Eligibility: Low-moderate income, first-time/repeat, education/counseling, primary residence. Benefits: For qualified families.

Reference URL: https://www.fortsmithar.gov/building-business/building-development/housing-assistance-and-grants

Fayetteville Affordable Housing Proposals (HOME Funds): Up to $1.6 million in grants for low-income housing, including first-time buyer aid via partnerships. Eligibility: Low-income, proposals for development. Benefits: Supports DPA in projects.

Reference URL: https://www.5newsonline.com/article/news/local/fayetteville-proposals-federal-funds-affordable-housing/527-123d9327-3ad2-4113-869e-bf76f4e2b941

These locals enhance state aid, focusing on urban revitalization.

Arkansas Mortgage Options and Tips for Success

Pair with FHA, USDA (rural AR), or conventional loans. Lenders like First Community Bank offer additional incentives. Tips:

  • Pre-approve via ADFA lender search: https://adfa.arkansas.gov/lenders/
  • Complete education early (e.g., eHome America).
  • Budget taxes (0.6%), insurance.
  • Apply timely; funds limited.

In 2025, rate cuts could boost affordability.

Case Study 1: Emily’s Little Rock Launch with Local DPA

Emily, a 27-year-old nurse earning $52,000 (<80% AMI) in Little Rock, eyed a $180,000 condo as a first-timer. In February 2025, she applied for the city’s program. Qualifying after HUD course, she received $10,000 forgivable DPA (5.5%). Paired with ADFA StartSmart loan at 5.75%, she closed in April with minimal out-of-pocket. Forgivable over 5 years, it stabilized her budget. “The grant covered what I couldn’t save,” Emily says. By July, equity rose 4%, enabling upgrades.

Case Study 2: Marcus’ Jonesboro Jump with State and Local Aid

Marcus, a 32-year-old teacher in Jonesboro earning $48,000, targeted a $160,000 home. As first-timer, he used ADFA DPA ($8,000 forgivable) and Jonesboro’s $5,000 grant in March 2025. After education, he closed in May with FHA loan. Total aid: $13,000, forgivable liens 3-5 years. “Stacked programs made it feasible,” Marcus notes. In 2025, he built emergency fund from savings.

Arkansas’s 2025 programs, from ADFA’s StartSmart and DPA to locals in Little Rock and Jonesboro, rank highly for accessibility and impact. With forgivable aid and low barriers, they empower first-timers amid market growth. Check URLs for applications, consult lenders—your AR home is within reach.

FAQ for Arkansas First Time Home Buyers

What are the requirements for first-time homebuyer programs in Arkansas?

Arkansas offers multiple programs through the Arkansas Development Finance Authority (ADFA), such as StartSmart, Move-Up, and Down Payment Assistance (DPA). You must be a first-time buyer (no primary residence in last three years, with exceptions for veterans or purchases in targeted counties), complete a homebuyer education course, have a minimum credit score of 640, meet income and purchase price limits, and use an approved lender. DPA provides $1,000–$15,000 in second mortgage loans, and the Arkansas Dream Down Payment Initiative (ADDI) can offer up to 10% of the purchase price—up to $10,000—forgivable after five years.

Are there first-time homebuyer programs in Arkansas for buyers with bad credit?

There are no specific first-time homebuyer programs designed for individuals with poor credit in Arkansas. Programs like StartSmart, Move-Up, DPA, and ADDI require a minimum credit score of around 640. Borrowers with significantly lower scores typically won’t qualify for these state-backed programs, but may pursue FHA loans (minimum credit typically 580, sometimes 500) or VA/USDA loans depending on eligibility.

Can I get a first-time homebuyer program in Arkansas with no down payment?

Yes—certain loan types offer no down payment. VA loans (for veterans and military) and USDA loans (for eligible rural buyers) often require zero down payment. However, the state’s ADFA programs like DPA and ADDI assist with down payment and closing costs but don’t eliminate the need for a primary loan down payment. Those still must meet minimums required by the primary mortgage (e.g., conventional at 3–5%, FHA at 3.5%) .

How many people rent vs. buy homes in Arkansas?

Approximately 66% of occupied housing units in Arkansas are owner-occupied, while roughly 34% are renter-occupied. This equates to around 765,000 homeowners and 393,000 renters across the state. These rates suggest homeownership is slightly above the U.S. average, reflecting Arkansas’s relatively affordable housing market and stable ownership trends.

facebookShare on Facebook
TwitterTweet
FollowFollow us