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About the ADFA StartSmart First-Time Homebuyer Program
The ADFA StartSmart First-Time Homebuyer Program provides below-market interest rate mortgages to qualified first-time buyers purchasing homes in Arkansas. Administered by the Arkansas Development Finance Authority, StartSmart uses the power of IRS tax-exempt mortgage revenue bonds to offer rates approximately 1% below prevailing market rates on a 30-year fixed-rate loan with no prepayment penalty. As of May 2026, the StartSmart government loan rate is 5.25% and the conventional rate for borrowers below 80% AMI is 5.50%. The program accepts FHA, VA, USDA Rural Development, and Freddie Mac HFA Advantage conventional loans.
To qualify for the ADFA StartSmart program, Arkansas homebuyers must not have owned a principal residence in the past three years, have a minimum credit score of 640, and meet household income limits that vary by county and family size. The purchase price cannot exceed $500,000 and total debt-to-income ratio must stay at or below 45%. Veterans and buyers purchasing in one of 30 federally designated targeted counties are exempt from the first-time buyer requirement. Eligible properties include single-family homes, townhomes, condominiums, modular homes, manufactured homes, and even duplexes when purchasing both sides with FHA financing.
What sets StartSmart apart from other Arkansas homebuyer programs is its design as a first mortgage rate reduction rather than a traditional down payment grant or loan. The below-market rate lowers your monthly payment for the entire life of the loan, saving tens of thousands of dollars over 30 years. ADFA specifically encourages pairing StartSmart with their Down Payment Assistance Program, which provides $1,000 to $15,000 as a 10-year repayable second mortgage. Buyers who meet low-income thresholds may also qualify for the Arkansas Dream Down Payment Initiative for additional forgivable assistance.
How much assistance
Eligibility
- Income limits: Varies by county and household size based on Area Median Income (AMI)
- Purchase price limit: $500,000
- First-time buyer required: Yes — Must not have owned a principal residence in the past 3 years. Exemptions for buyers in federally targeted counties and qualifying veterans.
- Credit score minimum: 640
- Geographic restrictions: Statewide. Property must be in Arkansas.
- Homebuyer education required: Yes
How to Apply for ADFA StartSmart First-Time Homebuyer Program
Step 1: Check your eligibility
You must not have owned a principal residence in the past three years (unless you are a veteran or purchasing in a federally targeted county). Your credit score must be at least 640, and your household income must fall within ADFA limits for your county and family size. View current income limits at adfa.arkansas.gov/wp-content/uploads/2025/02/StartSmart-Income-Limits-Effective-6-03-2025.pdf or call ADFA at 501-682-5466.
Step 2: Complete homebuyer education
At least one borrower must complete a HUD-approved homebuyer education course before closing. Your ADFA lender can direct you to approved providers, or search for local HUD-approved counseling agencies at hud.gov. Courses typically run 4 to 8 hours and may be available online or in person.
Step 3: Find an ADFA-approved lender
All ADFA loans must be originated through a participating lender. Search the approved lender directory at adfa.arkansas.gov/find-a-lender. The lender handles the StartSmart application, income verification, and any DPA second mortgage paperwork together.
Step 4: Get pre-approved and lock your rate
Provide your lender with your last two years of tax returns, 30 days of pay stubs, two months of bank statements, and a valid photo ID. Your lender will verify your income falls within ADFA limits and reserve your StartSmart rate through the ADFA MITAS Lender Portal. Rates are subject to change, so discuss rate lock timing with your lender.
Step 5: Find a home within program limits
The purchase price cannot exceed $500,000. The home must be your primary residence on no more than 5 acres of land, and no more than 15% can be used for business purposes. Eligible property types include single-family homes, townhomes, condos, modular homes, and manufactured homes.
Step 6: Close on your home
Your lender submits the final loan package to ADFA for approval. If you are also using ADFA Down Payment Assistance, both the first mortgage and the DPA second mortgage close simultaneously. Contact Denise Wells, Assistant Single Family Program Manager, at 501-682-5466 or denise.wells@arkansas.gov with questions during the process.
Real Cost Example
On a $247,000 home in Little Rock using an FHA loan, the minimum 3.5% down payment is $8,645. With the StartSmart rate of 5.25%, your monthly principal and interest payment on the $238,355 loan amount would be approximately $1,316. If you financed the same home at a typical market rate of 6.5%, that payment jumps to roughly $1,506 per month.
The StartSmart rate saves you approximately $190 per month, $2,280 per year, and over $68,000 in interest over the full 30-year loan term. Those savings begin on day one and continue for as long as you hold the mortgage.
Pair StartSmart with the ADFA Down Payment Assistance Program for up to $15,000 to cover your $8,645 down payment plus a portion of your estimated $5,000 to $7,500 in closing costs. If you also qualify for the Arkansas Dream Down Payment Initiative, you could add up to $10,000 in forgivable assistance, covering virtually all your upfront costs.
Combining With Other Programs
The ADFA StartSmart program is specifically designed to pair with the ADFA Down Payment Assistance Program, which provides $1,000 to $15,000 as a repayable second mortgage with a 10-year term. This combination gives you both a below-market interest rate on your first mortgage and funds to cover your down payment and closing costs. Your ADFA-approved lender processes both loans together.
Buyers who meet the stricter low-income requirements may qualify for the Arkansas Dream Down Payment Initiative (ADDI) instead of or in addition to the standard DPA. ADDI provides up to 10% of the sale price (maximum $10,000) as a forgivable loan. Contact your ADFA lender to confirm whether ADDI and the standard DPA can be combined on the same transaction, as both are structured as second mortgages.
StartSmart cannot be combined with the ADFA Move-Up Loan Program because both are first mortgage products. You qualify for one or the other based on your first-time buyer status.
Pros and Cons
The primary advantage of ADFA StartSmart is the long-term savings from a below-market interest rate that lasts the entire 30-year loan term. Unlike one-time grants or forgivable loans that help only at closing, StartSmart reduces your housing costs every single month. The 640 credit score minimum is accessible for most buyers, and the $500,000 purchase price cap covers nearly all homes in Arkansas. The ability to pair StartSmart with up to $15,000 in ADFA Down Payment Assistance means first-time buyers can address both their monthly payment and their upfront costs in one package.
The main limitation is the first-time buyer requirement, which excludes repeat buyers unless they are veterans or purchasing in targeted counties. Income limits also apply and are lower than those for the ADFA Move-Up program, so higher-earning households may not qualify even if they have never owned a home. Because StartSmart is a first mortgage product, it cannot be combined with other first mortgage programs. Buyers who do not qualify for StartSmart income limits should look at the ADFA Move-Up Loan Program, which has more generous income thresholds up to $142,000.
Frequently Asked Questions
Program details last verified: May 12, 2026