First-time homebuyers in Arkansas are in a competitive housing market. A combination of pandemic-related factors and low mortgage rates have driven a flurry of in- and out-of-state buyers, and many homes in the current seller’s market are receiving multiple offers within hours of being listed.
Arkansas first-time buyers can get a leg up with help from the Arkansas Development Finance Authority, which offers programs including affordable mortgages, an ongoing mortgage tax credit and grants or loans to help cover the upfront costs of buying a home. Here’s a look at the agency’s programs.
Arkansas first-time homebuyer loan programs
ADFA Move-Up Program
The Arkansas Development Finance Authority’s (ADFA) Move-Up Program provides affordable 30-year fixed-rate mortgages to low- to moderate-income homebuyers. This program can be used with a Freddie Mac HFA Advantage conventional loan — either 97 percent or 105 percent financing — or an FHA, VA or USDA loan.
You can be a first-time or repeat homebuyer to be eligible, but you must live in the home as your primary residence, and if you’re getting a conventional mortgage, you must not own more than two homes. If you’re a first-time buyer and getting a conventional mortgage, you must also take a homebuyer education course.
For any buyer to qualify, your annual income can’t be greater than $137,000, and your credit score must be at least 640. The maximum debt-to-income (DTI) ratio is 45 percent.
With this program, you can buy a single-family home, condominium, townhome or other unit in a planned unit development (PUD); a duplex if using an FHA loan; or a manufactured home if using an FHA, VA or USDA loan. Whichever type of property you buy, the price can’t exceed more than $424,100.
ADFA Move-Up Choice Program
ADFA’s Move-Up Choice Program is also available to both first-time and repeat homebuyers, but can only be used in conjunction with a Fannie Mae HFA Preferred conventional loan, either for 95 percent or 97 percent financing. This program includes a 4 percent grant to help with a down payment and closing costs. Like the Move-Up program, the maximum home purchase price is $424,100.
Arkansas down payment assistance
ADFA Down Payment Assistance Program (DPA)
ADFA’s Down Payment Assistance Program (DPA) provides a minimum of $1,000 and up to $10,000 to help cover the down payment and closing costs. The funds come in the form of a 10-year second mortgage that has the same interest rate as a Move-Up first loan.
Arkansas Dream Down Payment Initiative (ADDI)
Homebuyers in Arkansas who get a mortgage through ADFA’s Move-Up Program can receive up to 10 percent of their home’s purchase price, up to a maximum of $10,000, through the Arkansas Dream Down Payment Initiative (ADDI). This assistance is given as a second loan and has no monthly payment, and is forgivable after five years. If you’re a first-time homebuyer and leveraging this program, you could also be eligible for a free MCC.
To qualify, you must be obtaining a Move-Up first loan, meet the household income limits and complete a homebuyer education course.
Other Arkansas homebuyer assistance programs
Mortgage credit certificate (MCC)
If you’re purchasing a home with an ADFA Move-Up or Move-Up Choice mortgage, you might be eligible to apply for a mortgage credit certificate (MCC) that can help lower your tax bill. The MCC in Arkansas is available to first-time homebuyers, veterans and their spouses, or those buying a home in a targeted county.
With the MCC, you get an annual tax credit of up to 50 percent of the mortgage interest you pay, up to $2,000 per year, for as long as you live in the home as your primary residence.
To qualify, you’ll need to meet household income limits, which vary based on county and the size of your household, and the purchase price of the home can’t exceed $270,000.
Keep in mind you must apply for the MCC prior to closing on your mortgage to get this benefit. There are also costs to get the certificate: an issuance fee of 0.50 percent of your mortgage amount, and a lender fee of up to $150.
Other first-time homebuyer loan programs
As you shop for an affordable mortgage, be sure to check out other national programs and grants you could be eligible for. You can learn more about low- or zero-down payment mortgages in Bankrate’s guide to first-time homebuyer loans and programs. Some of these programs offer down payment assistance, loans for energy-efficient upgrades, rehab loans and more. If you work in public service — for example, as a law enforcement officer, firefighter or in another eligible profession — you could even qualify for the Good Neighbor Next Door program, which has a very low down payment requirement.
For other Arkansas homeownership programs, including by city, visit HUD.gov.
To learn more about Arkansas homeownership and down payment assistance programs, consider starting with the Arkansas Development Finance Authority (ADFA). As you compare options, take time to research the latest mortgage rates and loan offers from a variety of mortgage lenders. If you’d like to apply for an ADFA program, you can connect with a participating lender through the agency’s website.
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