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About the ADFA Down Payment Assistance Program
The ADFA Down Payment Assistance Program, administered by the Arkansas Development Finance Authority, provides between $1,000 and $15,000 to help Arkansas homebuyers cover down payment and closing costs. The assistance is structured as a second mortgage with a 10-year repayment term, and the interest rate matches the rate on the buyer's ADFA first mortgage. Unlike many state down payment assistance programs that are limited to first-time buyers, the ADFA DPA is available to both first-time and repeat buyers because it can be paired with either the ADFA StartSmart program (first-time buyers) or the ADFA Move-Up program (all buyers including previous homeowners).
Borrowers must meet a minimum credit score of 640 across all loan types and must have a total debt-to-income ratio no higher than 45%, including the monthly payment on the DPA second mortgage. Income limits vary by county and household size based on area median income. The Move-Up program caps household income at $142,000, while StartSmart limits vary by county and are generally lower. The home must serve as the buyer's primary residence with occupancy within 60 days of closing. Homebuyer education is required for borrowers using the StartSmart first mortgage, and at least one borrower must complete an approved course.
Compared to the Arkansas Dream Down Payment Initiative (ADDI), which offers up to 10% of the sale price as a forgivable loan, the ADFA DPA provides a larger maximum amount ($15,000 versus ADDI's $10,000 cap) but requires repayment over 10 years. Buyers who prioritize lower monthly costs may prefer the ADDI forgivable structure, while those who need more assistance upfront may benefit from the higher ADFA DPA ceiling. The ADFA DPA also has broader accessibility because it works with both StartSmart and Move-Up mortgages, while ADDI may have additional restrictions.
How much assistance
Eligibility
- Income limits: Varies by county and household size based on Area Median Income (AMI)
- First-time buyer required: No
- Credit score minimum: 640
- Geographic restrictions: Statewide. Must be used with an ADFA StartSmart or Move-Up first mortgage.
- Homebuyer education required: Yes
How to Apply for ADFA Down Payment Assistance Program
Step 1: Check your eligibility
You need a minimum credit score of 640 and a total debt-to-income ratio of 45% or less, including the payment on the DPA second mortgage. Household income must fall within ADFA's limits for your county, which vary based on area median income. The Move-Up program caps income at $142,000. There is no first-time buyer requirement if using the Move-Up loan, but the StartSmart mortgage is limited to buyers who have not owned a home in the past three years. Check income limits for your county at adfa.arkansas.gov.
Step 2: Complete homebuyer education
If you are using the ADFA StartSmart first mortgage, at least one borrower must complete a HUD-approved homebuyer education course before closing. Courses are available online and in person through HUD-approved counseling agencies in Arkansas. Visit hud.gov/counseling to find an approved agency near you.
Step 3: Find an ADFA-approved lender
The DPA must be originated through an ADFA-approved lender who will process both your first mortgage (StartSmart or Move-Up) and the DPA second mortgage together. A list of participating lenders is available at adfa.arkansas.gov/find-a-lender. Contact Denise Wells, ADFA Assistant Single Family Program Manager, at 501-682-5466 or denise.wells@arkansas.gov with questions about lender availability.
Step 4: Get pre-approved for your ADFA first mortgage
Your lender will verify your income, credit, and employment, and determine whether you qualify for the StartSmart (first-time buyer) or Move-Up (all buyers) first mortgage. Provide your last two years of tax returns, last 30 days of pay stubs, last two months of bank statements, and a valid photo ID. Your lender will also calculate your maximum DPA amount based on your needs, up to $15,000.
Step 5: Find a home and make an offer
The home must be located in Arkansas and serve as your primary residence. You must occupy the property within 60 days of closing. Work with your real estate agent to find homes within your pre-approved price range that meet ADFA program requirements.
Step 6: Close on your home
Your lender processes both the ADFA first mortgage and the DPA second mortgage simultaneously. The DPA second mortgage has a 10-year term at the same interest rate as your first mortgage, with monthly payments beginning after closing. Cash back to the borrower is allowed for expenses paid outside of closing (POC items). There is no prepayment penalty on the DPA second mortgage.
Real Cost Example
On a $247,000 home in Little Rock, Arkansas, an FHA loan requires a 3.5% down payment of $8,645. The ADFA Down Payment Assistance Program can provide up to $15,000 as a second mortgage, which fully covers the $8,645 down payment with $6,355 remaining that can go toward closing costs.
Estimated closing costs in Little Rock run $5,000 to $7,500, so the $6,355 leftover from the DPA could cover most or all closing costs depending on the exact amount. The DPA second mortgage carries a 10-year term at the same interest rate as the ADFA first mortgage, so the buyer will make monthly payments on this assistance. On a $15,000 DPA at approximately 5.5%, the monthly payment would be roughly $163 per month.
A Little Rock buyer could also pair the ADFA DPA with the Arkansas Dream Down Payment Initiative (ADDI), which provides up to 10% of the sale price (up to $10,000) as a forgivable loan. If eligible for both, the combined assistance could total up to $24,700 on this home, covering the full down payment and all closing costs with funds to spare. Contact an ADFA-approved lender to confirm whether both programs can be used on the same transaction.
Combining With Other Programs
The ADFA Down Payment Assistance Program must be paired with either an ADFA StartSmart or ADFA Move-Up first mortgage, and it may be possible to layer additional assistance on top. The Arkansas Dream Down Payment Initiative (ADDI) provides up to 10% of the sale price (maximum $10,000) as a forgivable loan, and buyers eligible for both programs could potentially receive up to $25,000 in combined assistance. Contact ADFA or an approved lender to confirm current stacking rules for DPA and ADDI.
The ADFA DPA cannot be used with non-ADFA first mortgages. Buyers who want to use FHA, VA, or conventional financing through a non-ADFA lender would not have access to this program. The DPA is exclusively paired with StartSmart or Move-Up loans originated through ADFA-approved lenders, and both the first mortgage and second mortgage close simultaneously.
For the strongest combination in Arkansas, a first-time buyer could pair the ADFA StartSmart first mortgage (below-market interest rate) with the $15,000 DPA second mortgage and the ADDI forgivable loan (up to $10,000), potentially reaching $25,000 in combined assistance. On a median-priced Little Rock home of $247,000, this would cover the full 3.5% FHA down payment plus all estimated closing costs.
Pros and Cons
The ADFA Down Payment Assistance Program's primary strength is its flexibility and maximum amount. At up to $15,000, it offers more upfront assistance than the Arkansas Dream Down Payment Initiative (ADDI), which caps at $10,000 or 10% of the sale price. The DPA is also available to repeat buyers through the Move-Up program, while many state DPA programs nationwide restrict assistance to first-time buyers only. The program pairs with FHA, VA, USDA, and conventional first mortgages through the ADFA platform, giving borrowers flexibility in choosing their loan type.
The main drawback is that the ADFA DPA requires full repayment over 10 years with interest, which adds a monthly payment on top of your first mortgage. Buyers who can qualify for the ADDI forgivable loan may prefer that option for the lower long-term cost, even though the maximum amount is smaller. The requirement to use an ADFA-approved lender and ADFA first mortgage also limits your ability to shop for the most competitive interest rate on the open market. Buyers with credit scores above 680 and sufficient income may find that conventional financing without DPA produces a lower total monthly cost than the combined ADFA first mortgage plus DPA second mortgage payment.
Frequently Asked Questions
Program details last verified: May 12, 2026