Arkansas First Time Home Buyer Guide (2026 Updates)

Ready to buy a home in the Hoosier State?

With a mild four-season climate and a relatively low cost of living, Arkansas offers a desirable lifestyle with financial benefits. Your dream home could be a charming single-family house in Little Rock or a lakeside retreat near Hot Springs.

Whether you’re a first-time homebuyer or new to the Arkansas housing market, this guide will teach you everything you need to know. We’ve broken down the entire home-buying process into 13 actionable steps.

How to Buy a Home for the First Time in Arkansas: 13 Steps!

These steps to buy a house in Arkansas will walk you through everything, from assessing finances and budgeting for a down payment to choosing the right mortgage. These 13 steps make the Arkansas real estate process clear, simple, and manageable.

Step 1: Assess Your Finances

As a first-time home buyer in Arkansas, the two factors that should matter the most to you are your credit score and Debt-to-Income (DTI) ratio. Additionally, you must also consider how much you can afford for a down payment, a monthly mortgage, taxes, and insurance.

What Is Your Credit Score?

A credit score is a three-digit number that indicates your creditworthiness to lenders. The minimum credit score to buy a house in Arkansas depends on the type of mortgage you get.

Minimum and Ideal Credit Scores by Loan Type

Loan Type	Minimum Score	Ideal Score
FHA	500 (10% down)	580+ (3.5% down)
Conventional	620	740+ for best rates
VA	No minimum	620
USDA	No minimum	640

Portfolio mortgage loans are easy to qualify for. Here, the credit score needed to buy a house starts at around 580. VA loans are available only to veterans and active-duty service members, and require a score of 620. FHA loans also accept scores as low as 580. They are good for buyers with lower credit scores looking for houses in Arkansas.

How to Calculate Your Monthly Mortgage Payment in Arkansas?

As a first time home buyer in Arkansas, knowing your average mortgage payment helps you plan your budget. Your total payment includes 4 key components, often called PITI:

• Principal and Interest: This is a major chunk of your payment, covering the amount you borrowed (principal) and the cost of borrowing (interest). It’s determined by your loan amount, interest rate, and loan term.​
• Taxes: Arkansas property taxes are based on your home’s assessed value. The lender holds these funds in an escrow account and pays the tax on your behalf.​
• Insurance: Lenders require you to have homeowners’ insurance to protect the property. The annual premium is usually divided by 12 and added to your monthly payment, also managed through the escrow account.

Apart from PITI, your monthly payment may also include Private Mortgage Insurance if your down payment is less than 20%, and HOA fees.

What Is a Debt-to-Income (DTI) Ratio?

Your debt-to-income ratio shows how much of your monthly income goes toward debt payments, including mortgage, car loans, credit cards, and student loans. To calculate it, add all monthly debts and divide the total by your gross pre-tax monthly income.

A high DTI can prevent you from qualifying for a mortgage, as it shows that you struggle to manage your debt. For the best mortgage rates and a higher likelihood of mortgage approval in Arkansas, aim for a DTI ratio of 36% or lower.

💡 You can still qualify for a loan in Arkansas despite a high DTI if you have compensating factors like a strong credit history, significant cash reserves or savings, stable long-term employment, etc.

Recommended DTI Ratios by Loan Type

Loan Type	Recommended DTI Ratio	With Compensating Factors
Conventional	36% back-end	45-50%
FHA	43% back-end	Up to 50%
VA	41%	Can exceed 50% with the residual income test
USDA	41% back-end	44% with strong credit

Step 2: Budget for Your Down Payment and Closing Costs

You should set aside money for the down payment and closing costs. Arkansas’s first time home buyer programs help make homeownership accessible and affordable.

How Much Down Payment Does a Arkansas First Time Home Buyer Need?

Typically, the down payment on a house for a first time home buyer in Arkansas usually ranges from 3% to 20% of the property’s price. However, it can vary based on the loan type. FHA loans require just 3.5% down, while some conventional loans allow a 3% down payment.

To help with these upfront costs, there are many state and local down payment assistance programs in Arkansas. They provide grants or loans to cover these expenses.

👉 First-Time Home Buyer Programs in Arkansas: Find out which is the #1 downpayment assistance program in the Hoosier State.

How to Estimate Closing Costs in Arkansas?

Closing costs are fees and expenses paid at closing beyond your down payment. Typically, buyer closing costs in Arkansas usually range from 2% to 5% of the home’s price. So, for a $269,700 home, buyers might pay $5,394 to $13,485.

These fees cover lender charges, appraisals, inspections, title insurance, taxes, agent commissions, and recording fees when buying a property in Arkansas.

Step 3: Get Pre-Approved for a Mortgage

Secure your financing early by getting pre-approved for a mortgage as a first time homebuyer in Arkansas. This step helps you understand your budget and strengthens your offer when buying a house.

How to Get Pre-approved as a First Time Home Buyer in Arkansas?

You need to follow these steps to get pre-approved when buying a house in Arkansas:

1. Gather Financial Documents: Provide proof of income (recent pay stubs and W-2s), tax returns (last two years), asset statements, debt information, and a government-issued ID.
2. Choose a Lender and Apply: Compare lenders in Arkansas and submit a mortgage application to get the best rates and terms.
3. Receive Pre-Approval Letter: The lender verifies your info and issues a letter stating your approved loan amount, usually valid for 30–90 days.

Step 4: Choose the Right Mortgage

As a first time homebuyer in Arkansas, assess your finances and select a loan that fits your budget and qualifies you for available programs.

Feature	Conventional	FHA	VA	USDA
Min Credit Score	620	580 (500 w/10% down)	No minimum	640
Min Down Payment	5% to 20%	3.5%	0%	0%
Max DTI	45% to 50%	43% to 50%	41%+	41% to 44%
Mortgage Insurance	PMI if <20%	Always	None	Always
Loan Limits	$766,550+	$498,257 to $766,550	$766,550+	Varies
Property Eligibility Criteria	Few	Must meet FHA standards	Must meet VA standards	Rural/suburban areas only

Step 5: Decide Where to Buy a Home in Arkansas

Deciding where to buy is one of the most important steps for a first time homebuyer in Arkansas. Consider factors like local housing markets, popular neighborhoods, cost of living, and amenities to help you find the best places to live in Arkansas.

Why Now Is the Time to Buy in Arkansas

The Arkansas housing market is a seller’s market. You now have more negotiating power and a wider selection of properties to choose from:

• Housing Supply is High: Arkansas has a 4-month housing supply, which is the benchmark for a buyer’s market.
• Prices Have Stabilized: The median home price has remained relatively constant at $404,300.​ This allows you to set your budget with more certainty.
• Sellers are Negotiating: 16.4% of homes in Arkansas have seen price drops, signaling increased seller flexibility.​
• Homes are on the Market Longer: Properties are taking an average of 62 days to sell, which allows you to make more informed decisions.

These trends show that now is the best time to buy a house in Arkansas. According to Mauricio Umansky, founder of The Agency, the current market provides “great opportunities for buyers to be aggressive and write strong offers.”

Popular Areas for Different Buyer Types

With the market now in your favor, you can be more selective about where you buy. Use this advantage to find a neighborhood that matches your priorities, whether it’s schools, commute, or lifestyle.

• Best Areas for Families: Neighborhoods like Bentonville, Rogers, and Cabot are top choices for their excellent schools and family-friendly parks. If you envision life in a community designed for family connection, explore homes for sale in Fayetteville. Properties with access to top-tier schools and parks typically range between $250,000 and $600,000.
• Best Areas for Retirees: For those seeking an active retirement, Hot Springs Village, Bella Vista, and Mountain Home offer low-maintenance living and vibrant social activities. If you are interested in a community renowned for its active lifestyle, consider homes for sale in Hot Springs, where prices generally range from $200,000 to $400,000.
• Best Areas for Young Adults: Cities like Little Rock, Fayetteville, and Bentonville offer thriving job markets and vibrant social scenes. If a cosmopolitan lifestyle is what you seek, browse the latest Conway houses for sale, where you can find modern condos and apartments starting at just $200,000.

Consider the Cost of Living When Choosing a Location

When looking for the best place to buy a house in Arkansas, consider the overall cost of living, as lower home prices can be offset by higher taxes or insurance.

• High-Cost Areas: Bentonville and Fayetteville are 10–20% above the national average.
• Moderate-Cost Areas: Little Rock and Conway are near or just below the national average.
• Low-Cost Areas: Cities like Fort Smith, Pine Bluff, and Jonesboro are 10–25% below the national average.

Step 6: Start House Hunting in Arkansas

Once you’re pre-approved and know where you want to live, the next step is finding the right house. As a first-time home buyer in Arkansas, you have two options:

1. Work with a Realtor.
2. Search for homes online.

An experienced agent can give you valuable local insights and expert guidance on neighborhood trends. However, you’ll have to negotiate the buyer agent commission with the seller, which may raise the home sale price.

If you prefer to take the lead, a high-tech platform like Houzeo is what you need. Whether you’re looking for beachfront mansions, high‑rise penthouses, spacious big homes, or luxury homes in Arkansas, Houzeo has you covered. You can browse through thousands of listings, set alerts, and save your search. You can even schedule showings and submit offers, all by yourself.

Step 7: Schedule and Attend Home Showings

After you narrow down your list of potential homes, schedule and attend showings to see each property in person. For a first-time home buyer in Arkansas, visiting homes firsthand helps you evaluate condition, layout, and neighborhood, ensuring you make an informed choice.

During the showing, ask specific questions like:

• How long has the home been on the market?
• Why is the owner selling?
• What is the age of the roof, HVAC system, and water heater?
• Are there any HOA fees or pending special assessments?
• Is the property located in a flood zone?

When buying a home in Arkansas for the first-time, check the property carefully during the open house. Look for roof sagging, foundation cracks, water stains, uneven floors, or sticking doors, which may indicate serious issues.

Step 8: Make an Offer

When crafting an offer, make a competitive bid but stay within your budget. As a first-time home buyer in Arkansas, consider factors like the home’s market value, recent comparable sales, and any repairs needed. This increases your chances of getting a fair deal.

Step 1: Analyze Recent Sales

Your agent will pull up real estate comps that are similar to the one you want. Focus on the final sale price, not the list price. Home prices in many Arkansas metro areas have seen modest declines, so your offer should reflect this trend.​

Step 2: Adjust for the Home’s Condition

Factor in the age and condition of the roof and HVAC. If a comparable home sold for $$269,700 but had a new roof, and your target home needs a $20,000 replacement, adjust your offer to account for that expense.

Step 3: Factor in Today’s Market

With more homes for sale, you have leverage. Even home builders are lowering their prices by almost 6% to attract buyers. So, for a home that is priced fairly, offer 3% to 5% less. If it is overpriced, you can justify an even lower offer, citing both the comps and market trends.

What is an Earnest Money Deposit in Arkansas?

An earnest money deposit is a “good-faith” payment that shows you are a serious buyer. This money is held in escrow and applied towards your down payment at closing.

In Arkansas, the standard deposit is 1% to 3% of the purchase price. On a $269,700 home, this would be between $2,697 and $8,091. In highly competitive markets like Miami or Naples, sellers may expect a deposit closer to 10%.​

Once your offer is accepted, you typically have 3 business days to submit the deposit to an escrow agent, such as a title company or real estate attorney.

Step 9: Conduct Home Inspections

First-time home buyers in Arkansas should schedule home inspections to uncover any issues before buying a house. You typically get the inspection report within 24 to 48 hours.

Which Arkansas Home Inspections Should You Schedule?

A standard home inspection in Arkansas isn’t enough. The state’s unique climate and weather risks require a few specialized inspections:

• General Home Inspection ($300–$500): A licensed Arkansas home inspector will evaluate the property from roof to foundation, with close attention to foundation movement, drainage issues, roof condition, and HVAC age. Inspectors also look for damage from tornadoes, hail, heavy rain, and seasonal humidity, which are common across the state.
• 4-Point Inspection ($150–$250): Insurance companies require a 4-point inspection for homes over 30 years old. It focuses on the four most critical systems: the roof, HVAC, electrical, and plumbing. An old roof or an outdated electrical panel can result in the insurance coverage being denied.​
• Radon Testing ($150–$250): The Ozark Plateau (Northwest Arkansas) and the Ouachita Mountains have higher-than-average radon levels due to the shale and granite in the soil. Testing is highly recommended if you are buying in the NWA or Hot Springs areas.
• WDO / Termite Inspection ($75–$150): A termite inspection is mandatory for government-backed loans like FHA and VA, and is highly recommended for all others. Arkansas’s warm, humid climate is a breeding ground for termites and other pests that can cause severe structural damage.

Consider Other Specialized Inspections

Based on the property, a Arkansas first-time home buyer may want to conduct additional tests. For older homes, a sewer scope can detect cracks or tree roots in the main sewer line, saving you from a $15,000 repair down the road. If you see large cracks or uneven floors, a $700 foundation inspection is worth the investment.

For rural properties, a septic inspection is essential. If the home has a pool, a separate pool inspection will check the pump, filter, and structure for costly defects.

Step 10: Complete the Home Appraisal

After the inspection, your lender will typically order a home appraisal, which professionally values the property to ensure it matches your offer.

Why Do Lenders Need Appraisals?

A home appraisal in Arkansas confirms the property’s market value. Appraisers typically focus on the following parameters:

• Flood Zone and Elevation: Homes located in high-risk flood zones, especially those near the Arkansas, White, or Ouachita Rivers, may appraise lower than similar properties outside flood zones due to the added cost of flood insurance and increased perceived risk.
• Insurance and Mitigation Features: In Arkansas, wind and hail are major drivers of homeowner insurance costs, so roof age and mitigation features have a direct impact on insurability and value. Moreover, impact‑resistant roofing, fortified roof‑deck attachment, and high‑quality windows and doors matter for Arkansas carriers that heavily rate for hail and straight‑line wind risk.
• Condo/HOA Health: Appraisers closely examine a condo association’s financial health. They look for anything that may reduce the unit’s value, like the association’s reserve funds or any pending special assessments.

A standard appraisal in Arkansas costs between $500-$600 and typically takes 7 to 14 days to complete. For luxury or waterfront properties, the cost and timeline can be higher.

Step 11: Negotiate Repairs and Credits

As a first time home buyer in Arkansas, use your home inspection results to negotiate repairs and request credits from the seller. This step can help reduce unexpected costs and ensure your new house is move-in ready.

How to Use Your Inspection Report to Negotiate Repairs?

Your negotiation strategy should center on issues that impact the home’s safety, structural integrity, and insurability. Minor cosmetic flaws are not worth fighting over and can make you seem unreasonable. ​It’s easy to make this mistake as a first home buyer in Arkansas.

Focus your request on these critical areas:

• Safety Hazards: This includes outdated and dangerous electrical panels, faulty wiring, or missing safety features like GFCI outlets near water.​
• Structural Problems: Any issues with the foundation, load-bearing walls, or the roof structure.
• System Failures: A failing HVAC system, major plumbing leaks, or an old roof.

Get 2 to 3 written estimates from licensed contractors for any major repairs. A repair request that includes professional quotes shows you are serious and have done your homework.​

Should You Ask for Repair Credit?

While you can ask the seller to perform the repairs themselves, it’s better to ask for credit instead. Credit gives you the funds to hire your own contractors and ensures the work is done to your standards, not just the cheapest way possible.​ It also allows the sale to proceed on schedule, without any delays.

How to Negotiate Seller Concessions

Seller concessions are a powerful tool for reducing your out-of-pocket closing costs when buying real estate in Arkansas. Here, the seller pays for some of your expenses, such as the appraisal, title insurance, or property taxes.​

Your ability to negotiate concessions depends on your loan type. Each loan program sets a maximum limit on how much a seller can contribute:

Loan Type	Minimum Down Payment	Maximum Seller Concession
Conventional	Less than 10%	3% of the purchase price
Conventional	10% or more	6% of the purchase price
FHA Loan	Any amount	6% of the purchase price
VA Loan	Any amount	4% of the purchase price
USDA Loan	Any amount	6% of the purchase price

Step 12: Review Your Closing Costs

After negotiating repairs and credit as a first time home buyer in Arkansas, review all closing costs carefully. Check title fees, escrow, insurance, and taxes so you can finalize your budget and confidently buy your house.

Understanding Closing Costs in Arkansas

• Arkansas-Specific Taxes ($1,500+): Your closing costs will include two specific state taxes. The Documentary Stamp Tax costs $0.35 per $100 of your loan amount, while the Intangible Tax costs $0.20 per $100. On a $300,000 loan, these two taxes alone will add $1,650 to your bill.
• Title Fees ($2,000+): These fees cover the title search, settlement services, and title insurance policies for both you and your lender. In Arkansas, the party responsible for paying the owner’s title insurance varies by county.
• Third-Party Fees ($1,000 to $1,500): This category includes the appraisal fee, credit report fee, and flood certification fee. It also covers any inspections you ordered, like the general, 4-point, and WDO inspections.
• Prepaid and Escrow Costs ($3,000 to $6,000): You will pay for your first year of homeowners’ and flood insurance upfront. You will also fund your escrow account with several months of property tax and insurance payments to cover future bills.​​

Step 13: Close on Your New Home

Closing day is the moment you officially become the owner of your new Arkansas home. Its success depends on a careful final walk-through, a smooth funding process, and making sure all legal documents are properly signed and recorded.

Complete Your Final Walk-Through

Within 24 hours of closing, you will do one last walk-through of the property. This is not a formal inspection, but rather your final chance to see if you want this home. Use this checklist:​

• Verify Repairs: Bring your inspection report and repair addendum. Confirm that all negotiated repairs have been completed to a professional standard.
• Test Everything: Run the air conditioning and test all appliances. Make sure every system is functioning as it should.
• Check for Included Items: Ensure all items that were supposed to be included in the sale, like appliances, window treatments, and light fixtures, are still in place.
• Look for Signs of Additional Damage: Make sure no new damage has occurred since your last visit. If you see any issues, notify your agent and the title company immediately before you sign any documents.

Sign the Documents

While there are numerous documents to sign, the most important ones are​:

• The Closing Disclosure: You will sign the final version of this document, which outlines all your loan terms and costs.
• The Promissory Note: This is your legal promise to repay the loan. The promissory note outlines the loan amount, interest rate, repayment schedule, and maturity date.
• The Mortgage: This document secures the property as collateral for your loan.

Once you have signed everything, you will provide your “cash to close” amount via a cashier’s check or wire transfer. After your lender sends their funds to the title company, the deal is officially funded.​

Get Your Keys and Celebrate

Once the deal is funded, the title company will record the new deed with the county, officially transferring ownership to you. After they pay the seller and other parties, you will finally get the keys to your new home.​

Congratulations, you are officially a Arkansas homeowner! 🎉

🚩 What are the Red Flags to Look for When Buying a House in Arkansas?

A new home is a huge financial investment. To ensure that you don’t sink your money into a dud, look out for these red flags:

1. Bargain-Priced Homes

An asking price that’s significantly lower than comparable homes in the area seems like a dream come true. But that’s just until the roof collapses or faulty electrical systems burn the house down.

An extremely low price could mean the property is uninsurable, or is located in a high-risk flood zone with steep insurance costs. So before you put in an offer, check the home’s sale history and other permits from the local county’s office. Also, get insurance quotes to understand your total expense better.

2. Neighborhood Sell-Out

During the open house, if you notice too many “For Sale” signs on a single street or in a small community, it should ring alarm bells. It could be due to skyrocketing HOA fees, declining school quality, or a recent increase in crime rates. It could also point to a future nuisance, like a commercial development planned nearby.

Talk to potential neighbors to get their opinion on the area. You can also check community social media pages or online forums like Nextdoor for discussions about local issues.

3. Excessive Use of Air Fresheners

A few scented candles create a welcoming atmosphere, but if a home smells like a lavender bubble burst in it, then there’s something fishy. It may be covering up a musty smell that highlights the presence of mold and plumbing issues.

Pay close attention to the smell in the closets, bathrooms, and around the air conditioning unit. Open kitchen and bathroom cabinets and smell the area under the sink. If you detect a musty odor, ask for a separate mold inspection along with the standard home inspection.

4. Sloping or Uneven Floors

Noticeably sloped, bouncy, or uneven floors in Arkansas often relate to expansive clay soils, which swell when wet and shrink when dry, exerting strong pressure on foundations and piers. Over time this movement can crack slabs, shift piers, and distort framing.

Bring a marble or a golf ball with you to showings and place it on the floor in different rooms to see if it rolls. Also, look for other signs of foundation issues, like large zigzag cracks in the drywall, especially above door frames.

5. Condensation in Windows

Fog trapped between the panes of double-glazed windows is a sign that the seal has failed. When the seal breaks, the insulating argon gas leaks out and is replaced by moisture-filled air. This compromises the window’s energy efficiency and leads to higher cooling costs in Arkansas’s hot climate. 

Inspect each window and pay special attention to those that receive direct sunlight, as heat can cause seals to fail faster. If you see failed seals, get a quote for window replacement to use as a negotiating point.

6. Arkansas flood and drainage red flags

Beyond official FEMA zones, Arkansas buyers should watch for obvious drainage problems: standing water after rain, mildewed crawlspaces, sump pumps running constantly, and grading that slopes toward the house, all of which tie into the state’s frequent flash‑flood and heavy‑rain patterns.

Review Arkansas floodplain maps and local elevation information, and ask the seller about any past flooding, sewer backups, or water‑intrusion events; in SFHAs (Zones A, AE, etc.), federally backed loans will require flood insurance, which materially increases the monthly payment.

7. Roof Damage or Hail Marks

Arkansas is prone to severe hailstorms, especially in the northern part of the state. Roofs with missing shingles, dents, or patched areas may indicate storm damage, which can affect insurance rates and future repairs.

What Should You Do After Closing?

Welcome home! Now it’s time to handle a few must-dos to protect your investment:

• File for Homestead Exemption: If the house is your primary residence, apply for Arkansas’s Homestead Exemption to reduce your property taxes. This can lower the assessed value by up to $3,000, saving money on your annual taxes. It’s particularly valuable in counties with higher property tax rates, like Pulaski (Little Rock) or Benton (Bentonville).
• Set Up Utilities: Connect water, electric, gas, internet, and trash services before moving in. Arkansas’s humid summers and cold winters mean you may also want pest control and HVAC maintenance to prevent termites, ants, and mold issues.
• Get Insurance: Homeowners insurance is required if you’re financing, and flood insurance may be needed in FEMA zones. Arkansas sees hail, tornadoes, and severe thunderstorms, which can impact insurance rates, so review your coverage carefully.
• Home Maintenance Plan: Schedule AC tune-ups at least twice a year, clear gutters regularly, and inspect roofs for storm damage or algae buildup. Consider wind mitigation upgrades to reduce insurance costs.

How to Buy a House in Arkansas Without a Realtor?

Research neighborhoods and browse listings on trusted sites like Houzeo. Then, schedule showings directly with sellers or their agents. You can also hire a real estate attorney to review contracts and handle legal details.

Next, get pre-approved for a mortgage, make an offer, schedule inspections, and negotiate repairs. With the necessary due diligence, you can buy a house without a Realtor.

Which First Time Home Buyer Programs in Arkansas Can You Apply For?

Various programs make homeownership accessible for a first time home buyer in Arkansas. They assist with down payments through grants or low-interest, deferred-payment loans. Applicants must meet the income and credit score criteria and complete a homebuyer education course to avail of these programs.

Program Name	Eligibility	Grants	Key Benefit
ADFA StartSmart First‑Time Homebuyer Program	First‑time homebuyers (no principal residence in last 3 years)/ income limits apply (waived in certain low‑income counties or for veterans)	Below‑market, 30‑year fixed‑rate mortgage	Lower interest rate on your primary home loan
ADFA Down Payment Assistance (DPA)	Must use a StartSmart or Move-Up loan	$1,000 – $15,000	A 10-year second mortgage with an interest rate matching your first mortgage.
Arkansas Dream Down Payment (ADDI)	Low-income buyers (<80% AMI)	Up to 10% of price (max $10,000)	Forgivable loan after 5 years of residency; effectively a grant if you stay in the home.
Little Rock First‑Time Homebuyers Program	First‑time buyers within Little Rock city limits / income limits apply	Down payment & closing cost assistance up to 6% of purchase price (up to ~$10,000) as a forgivable loan	Helps local buyers cover upfront costs

1. Arkansas Housing Homebuyer Program (ADFA StartSmart)

• Eligible Buyers: First-time homebuyers who have not owned a principal residence in the last three years; must meet county-specific income limits (waived in certain low-income counties or for veterans).
• Credit Score: Minimum 640.
• Assistance: Access to a below-market, 30-year fixed-rate first mortgage.

The Arkansas Housing Homebuyer Program, administered through ADFA’s StartSmart program, is the state’s primary mortgage program. It provides first-time buyers with affordable, 30-year fixed-rate mortgages. To qualify, buyers must meet county-specific income and purchase price limits and complete a homebuyer education course to prepare for long-term financial success.

2. ADFA Down Payment Assistance (DPA)

• Eligible Buyers: Homebuyers using an ADFA StartSmart or Move‑Up first mortgage.
• Credit Score: Follows the underlying ADFA first‑mortgage minimum (generally 640+).
• Assistance: $1,000 – $15,000 as a 10‑year second mortgage with an interest rate matching the first mortgage.

The ADFA Down Payment Assistance (DPA) program is designed to help Arkansas buyers bridge the upfront cash gap for down payment and closing costs. It provides between $1,000 and $15,000 as a second mortgage that amortizes over 10 years at the same interest rate as your ADFA first mortgage, making the payment structure straightforward. Because the DPA must be paired with a StartSmart or Move‑Up loan, borrowers can stack affordable first‑mortgage terms with predictable, fixed‑rate repayment on their assistance, reducing the need for higher‑interest credit cards or personal loans to cover closing funds.

3. Arkansas Dream Downpayment Initiative (ADDI)

• Eligible Buyers: Low-income buyers with a total household income at or below 80% of the Area Median Income (AMI).
• Credit Score: 640+.
• Assistance: Up to 10% of the purchase price (capped at $10,000).

The ADDI program is Arkansas’s version of a “forgivable loan.” Unlike the standard DPA, this is a silent second mortgage with 0% interest and no monthly payments. If you remain in the home as your primary residence for at least five years, the entire loan is forgiven, essentially turning the assistance into a grant.

4. City of Little Rock First-Time Homebuyer Program

• Eligible Buyers: First-time buyers purchasing a primary residence within the Little Rock city limits.
• Credit Score: Must meet lender requirements; income must be at or below 80% AMI.
• Assistance: Forgivable loan up to 6% of the purchase price (capped at $10,000).

For those looking to buy in the capital city, the Little Rock DPA Program provides a significant boost. The funds are structured as a forgivable loan that is “earned” back at a rate of 1/60th per month over five years. The property must pass a specific City of Little Rock health and safety inspection to qualify.

» First Time Buyer Programs: Find the perfect program that helps you get the key to your first home.

What Should You Know Before Buying a House in Arkansas?

Before you buy a home in the Hoosier State, you must understand the factors that can impact your budget and lifestyle.​

What are Some Additional Costs When Buying Houses in Arkansas?

Apart from the purchase price, you must account for several other expenses, like property taxes and potential HOA fees. However, the most critical consideration for any Arkansas homebuyer is insurance.

• Why Homeowners Insurance is Crucial: Arkansas’s location in Tornado Alley, combined with frequent severe thunderstorms, tornadoes, and flooding along the Arkansas and Mississippi Rivers, makes homeowners insurance essential. Standard policies cover wind damage from hurricanes and storms but exclude floods, key risks in low-lying Delta regions and urban areas like Little Rock.
• High Insurance Costs: These perils drive up premiums: Arkansas’s average annual homeowners insurance cost hit about $3,700 in 2025, nearly 3x the national average of $1,300, with high-risk zones facing $5,000–$15,000+ amid rising claims from climate-driven events.
• Choosing the Right Policy: Opt for policies with robust wind/hail deductibles and separate NFIP flood insurance for FEMA-designated zones. Save 20-40% on premiums via Arkansas-approved wind mitigation features: install impact-resistant shutters, a fortified roof (Class A per IBHS standards), or concrete block construction, and qualify for credits through inspections by licensed AR adjusters.

Do You Need Separate Flood Insurance in Arkansas?

Yes, you do. Standard homeowners’ insurance does not cover flood damage, so a separate policy is necessary for protection. FEMA maps determine your property’s flood risk:

Flood Zone	Risk Level	Insurance Recommendation
A, AE, AH, AO, AR, A99	High-Risk	Mandatory for most mortgages. These areas have at least a 1% chance of flooding annually.
B, C, X	Low-to-Moderate	Highly Recommended. Roughly 25% of all flood claims happen in these “lower-risk” areas.

When is Flood Insurance Required?

Whether you need flood insurance typically depends on your property’s location, your mortgage lender, and your homeowners’ insurance provider. However, there are two main situations where flood insurance is mandatory in Arkansas:

• Federally-Backed Mortgages in High-Risk Zones: If your home previously received federal disaster grants (from FEMA) or a Small Business Administration (SBA) loan for flood damage, you are legally required to maintain flood insurance on that property forever. If you let it lapse, you will be ineligible for future federal disaster aid.
• Private Lender Requirements: Even if your mortgage isn’t “federally backed,” many private banks in Arkansas still require flood insurance for homes in moderate-to-high risk zones to protect their collateral.

Why First-Time Homebuyers Should Explore Arkansas Now?

Arkansas is a smart choice for first-time buyers, thanks to its affordable homes and a market that now favors buyers. From Bentonville’s job market to Little Rock’s friendly community, there’s a community for every budget.

With thousands of homes for sale and numerous down payment assistance programs, homeownership is more attainable than ever.

» Houzeo Reviews: Read what customers have to say about Houzeo, Arkansas’s best home buying website.