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Now that the housing market is finally calming down after the pandemic, buyers are facing a new challenge: Soaring mortgage rates.
In Arkansas, the average 30-year fixed mortgage rate is 5.57% — up from 2021's historic lows. This raises the average monthly mortgage payment to $856 (assuming a 20% down payment at the median home value).
But buying a home in Arkansas is still possible, even for first-time home buyers. Many markets are seeing frequent price drops and fewer offers, giving motivated buyers the upper hand in negotiating for the best price.
In this guide, you’ll learn how to buy a house in Arkansas with confidence no matter what the market brings. Learn why you can trust our advice.
Whether you're actively house hunting or just starting to browse homes on Zillow, it's never too early to find a great local realtor to guide you on your search. An experienced agent can help you navigate a tricky housing market, explore your financial options, and negotiate the best deal possible.
Best of all, hiring a real estate agent comes at no extra cost to you — since the seller typically pays both their listing agent and your buyer's agent.
Ready to find a great local realtor, but not sure where to start? The best (and easiest!) option is to try a free agent matching service like Clever Real Estate. Answer a few simple questions about your home buying goals, and Clever will match you with hand-picked agents from Keller Williams, RE/MAX, and other top brokerages in your area. Find a top local agent and make your home buying dreams a reality today!
Step 1: Save for a down payment
🔑 Key takeaway:
Your down payment can be less than 20% of the purchase price — $37,414 for the typical home in Arkansas — but you'll have to purchase mortgage insurance and pay more interest over the life of your loan.
Your down payment is the first part of your home's purchase price that you pay at closing. Your mortgage lender will pay the remaining balance.
Typically, mortgage lenders in Arkansas want you to contribute 20% of the purchase price as a down payment. That would be $37,414 for a $187,071 home — the typical home value in Arkansas.
However, you have options to lower your down payment amount.
Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).
Minimum down payment (%)
Down payment ($)
Based on typical home values from Zillow (August 2022)
But making a down payment of less than 20% comes with some risks.
First, because you're borrowing more money, you'll have a higher monthly payment and pay more in interest over the life of your loan.
Based on home values from Zillow (August 2022) and a 5.57% interest rate for a 30-year loan.
Second, you may have to purchase mortgage insurance.
Conventional loans require private mortgage insurance (PMI) until your loan balance reaches 80% of the purchase price. FHA loans, on the other hand, require a mortgage insurance premium (MIP) for the life of your loans.
Mortgage insurance costs around 1% of your mortgage balance annually. However, rates vary based on your down payment and credit score. Typically, your mortgage insurance payment is added to your mortgage payment each month.
VA loans don't charge mortgage insurance. Instead, you'll pay a VA loan funding fee at closing, which can range from 1.4% to 3.6% of the purchase price.
» READ MORE: Everything you need to know about low-income home loans
Arkansas down payment assistance programs
Down payment assistance programs in Arkansas can offer government grants or mortgages with deferred or forgiven payments. Make sure to check the eligibility requirements for each program to see if you qualify.
Here are a few options currently offered in Arkansas:
ADFA Down Payment Assistance
The ADFA (Arkansas Development Finance Authority) offers a Down Payment Assistance program, which is available to eligible participants of the ADFA Move-Up loan program. The DPA can provide $1,000-10,000 to assist with closing costs, in addition to cash back for expenses paid outside of closing.
Participants must be willing to take a pre-purchase homebuyer education course, and their home's purchase price can't exceed $424,100.
Arkansas Dream Down Payment Initiative
Under the ADFA Move-Up loan program, participants may also be eligible for the Arkansas Dream Down Payment Initiative. This program grants up to $10,000 or 10% of a home's purchase price as a second loan. It requires no monthly payments and is forgivable after five years.
Applicants must take a pre-purchase homebuyer education course before closing, and they cannot earn more than the maximum household income limit. You can check all the eligibility requirements here.
U.S. Department of Housing and Urban Development
HUD’s list of alternative programs in Arkansas can be found here.
Step 2: Find a great real estate agent in Arkansas
🔑 Key takeaway:
Interview multiple agents to find one who knows your target neighborhoods, has experience in your price range, and communicates well.
Your real estate agent will be your main ally during the home buying process. Besides finding and showing you properties, your agent will help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers like title companies and inspectors to help you buy your home in Arkansas.
Don't rush into choosing an agent. Instead, take the time to research and interview multiple real estate agents who have experience in the neighborhoods you're interested in. You should pay attention to a realtor's:
- Years of experience
- Number of transactions in the last year (the more the better!)
- Experience in your price range
- Overall review score
- Individual reviews and complaints
Step 3: Get preapproved for a mortgage
🔑 Key takeaway:
Once you're preapproved for a mortgage, it's imperative that your financial situation doesn't change. If your credit drops, it can derail the process and keep you from closing on your house.
Here are some easy ways to ensure your credit doesn't change after you receive your preapproval letter:
- Avoid opening new credit accounts
- Don't close any accounts that have been open for a long time
- Make all of your credit card payments on time
» LEARN MORE: What factors do mortgage lenders consider?
A mortgage preapproval letter is an offer to lend you up to a certain amount of money to purchase a home. It shows sellers that you are a serious buyer who is financially qualified to make an offer on a home.
Most sellers in Arkansas will require preapproval before showing you their home.
You don't have to decide on one lender right now. In fact, you should compare interest rates and preapproval amounts from several lenders to make sure you're getting the absolute best terms when you buy your Arkansas home.
Step 4: Choose the right location
🔑 Key takeaway:
Search for neighborhoods where:
- Home prices are within your price range
- Home values are on the rise
- The local amenities support your lifestyle
Currently, the typical home value in Arkansas is $187,071, but don't worry if that doesn't perfectly match your budget. Home prices vary dramatically from city to city and even from neighborhood to neighborhood!
Also, look at past home value trends. This will give you an idea of how much your home's value could go up over the next few years.
To give you an idea of how appreciation could impact what your house is worth in the future, consider these examples from three neighborhoods in Little Rock:
Home value appreciation in Little Rock
Step 5: Start house hunting in Arkansas
🔑 Key takeaway:
The increasing inventory in Arkansas is leaving buyers with a decent number of homes to choose from. However, you may have to be a bit loose with your budget, as listing prices have shot up over the past year. Given the state of the market, have your realtor show you some decent options — but be a bit more flexible with your expectations. You may either have to settle for a home that won’t tick all your boxes or overshoot your budget to find the perfect home.
Searching for homes in Arkansas is the fun part of the home buying process! You'll get to look at a variety of homes and discover what you really want in a home.
Make a list of everything you want in a home and prioritize them. At the top of the list should be the items that are most important to you. This will help you separate your "must-haves" from your "nice-to-haves."
Your agent can help you understand if your wants are realistic for your budget and favorite neighborhoods or if you need to rethink what you're looking for.
Look at current housing inventory
The timing of your house hunt in Arkansas can have a big impact on your number of options. For example, in Arkansas, July has historically seen the most homes for sale. Searching in this season could give you more options and a greater likelihood of finding your dream home.
On the other hand, December gives you the fewest choices in Arkansas. Historically, there are 35.9% fewer homes for sale than during Arkansas's peak season.
Housing inventory in Arkansas by season
New listings per month
Based on data from Realtor.com (October 2022)
Step 6: Make an offer
🔑 Key takeaway:
Local markets vary greatly throughout Arkansas, so work with your realtor to figure out how aggressive and quick you have to be when putting in an offer for a house in your area. Work out options for contingencies and concessions with your agent and listen to their advice on negotiating — they can help ensure that your offer is fair while still keeping to a reasonable budget.
Once you find a Arkansas house you love, it's time to make an offer. Your real estate agent will help you write a compelling offer that gives you the best shot of convincing the homeowner to sell to you.
Currently, in Arkansas, homes stay on the market for 81 days before going under contract. However, every market goes through seasonal changes. During busier months, homes get snatched up more quickly than others.
Historically, Arkansas homes sell fastest in July, where the average property is only on the market for 69 days. If your home search falls around this time, you should be prepared to move quickly and potentially make offers on several homes before yours is accepted.
On the other hand, if you buy in February, you have a bit more time to search. Homes typically stay on the market 15 days longer than Arkansas's annual average.
Average time homes spend on market in Arkansas
Based on data from Realtor.com (October 2022)
» LEARN MORE: What should an offer include?
Step 7: Inspections and appraisals
Inspections and appraisals are an opportunity for you to better evaluate the home's condition and value before officially purchasing it. You may have an opportunity after this step to renegotiate the terms of your contract with the seller if something unexpected pops up.
🔑 Key takeaway:
- Inspections: A licensed professional checks the house for any unseen, unexpected, or potential issues.
- Appraisals: An appraiser hired by your lender examines the house to determine how much it's worth.
Home inspections in Arkansas
Having your Arkansas home inspected by a licensed inspector gives you peace of mind about the condition of the property before you commit thousands of dollars to purchase it.
Your inspector should check out the following parts of the property:
- Electrical system
- HVAC system
If the home has a septic system, you should also pay for a septic inspection to make sure it doesn't have any problems that wouldn't be covered in a typical home inspection.
Arkansas is a “buyer beware” state, so homebuyers are recommended to perform additional tests aside from the general home inspection. Before closing on a home, it's a good idea to complete the following:
- Radon testing: If the seller hasn't tested for radon recently, buyers might want to order a radon test kit or hire a certified radon contractor to check the home. Radon is a harmful chemical that can spread into a home undetected, so taking this extra precaution can help protect your health and safety.
- Termite and pest inspection: VA loans often require a termite and pest inspection, but all homebuyers should consider getting one. This will ensure that the house you'd like to purchase is structurally sound and won't have any pests that could pose health hazards.
Appraisals determine the value of the property. If you're using a mortgage to buy your new home, your lender will order an appraisal to make sure the home is worth the money that it's loaning you.
» LEARN: 3 options for buyers after a low appraisal
Step 8: Close on your new home!
🔑 Key takeaway:
Before you close on your new home, you and your agent will do a final walkthrough of the property to ensure that it's still in the expected condition.
Closing on a house in Arkansas is pretty straightforward. First, you'll have to read and sign a series of documents to finalize the deed transfer. Then, you'll pay the closing costs. Once these steps are complete, you'll be the official owner of the home!
Make sure you'll have a few hours to review all the paperwork on closing day. If you have any questions about this process, contact your agent beforehand. Otherwise, expect to read and sign multiple documents, including:
- The mortgage promissory note
- The deed of trust
- The deed
After you've finished the paperwork, you'll have to pay closing costs. This process is easiest if you work with a title company. A title company will take care of distributing your funds to the right people.
Homebuyers can usually break their closing costs into four separate categories:
- Title and escrow charges: Fees for legally transferring the property to your name. Sometimes, buyers and sellers split these charges.
- Lender fees: Costs of originating and underwriting your loan. Some mortgage lenders may charge for other loan-related expenses, such as appraisal and survey fees.
- Prepaid costs: Costs associated with ongoing homeownership, such as property taxes and homeowners insurance. Mortgage lenders usually require these expenses to be paid ahead of time and placed in an escrow account.
- Other closing costs: Miscellaneous costs that vary by buyer. These costs cover additional services like pest inspections and real estate attorney fees.
Buyers in Arkansas typically pay 3–5% of the purchase price in closing costs. For a $187,100 home — the typical home value in Arkansas — that's between $5,613 and $9,355!
Frequently asked questions
Arkansas does not require you to hire a real estate attorney to buy a home. However, depending on your circumstances, you might consider hiring one anyways. If you do, treat the process similarly to hiring an agent. Interview multiple attorneys and proceed with the one that best meets your needs.
- Save for down payment
- Get pre-approved for a mortgage
- Choose your preferred Arkansas neighborhoods
- Partner with the right real estate agent in Arkansas
- Go house hunting
- Make a strong offer
- Inspections and appraisals
- Do a final walkthrough and close
Yes, although it's not restricted to first-time buyers. The ADFA Move-Up loan program offers homebuyers a 30-year, fixed-rate loan with no prepayment penalties. Interest rates may vary, and buyers are limited to a maximum home purchase price of $424,100.
Why trust us?
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Our team of industry-leading researchers are committed to making homeownership more accessible by educating buyers through guides like this one. We've spent thousands of hours analyzing publicly available data, surveying consumers, and interviewing industry experts. Our research has been featured in The New York Times, Business Insider, Inman, Housing Wire, and many more.
Federal Reserve. "Housing Market Tightness During COVID-19: Increased Demand or Reduced Supply?." Accessed October 11, 2022. Updated July 08, 2021.
Consumer Protection Financial Bureau. "The Fed is raising interest rates. What does that mean for borrowers and savers?." Accessed October 11, 2022. Updated March 17, 2022.