What Is the $10,000 Grant for First-Time Home Buyers in Arkansas?

Many people in Arkansas hear about a $10,000 grant for first-time home buyers and assume it’s a free cash handout from the state. But that’s not how it works. There’s no single program called the "$10,000 grant" that just gives you cash to buy a house. Instead, what exists are several state and local programs that, when combined, can help first-time buyers come close to that amount in assistance - if they meet strict rules.

How the $10,000 Figure Comes Up

The $10,000 number usually shows up when people add up different pieces of help. For example, the Arkansas Housing Finance Agency (AHFA) offers the Homeownership Program, which includes a down payment assistance grant of up to $5,000. That’s not a loan - you don’t pay it back. Then there’s the Homebuyer Education Requirement, which is mandatory. You have to complete a HUD-approved course, usually online and costing around $100, before you qualify. After that, you can apply for a low-interest mortgage through AHFA, often at rates below 4%.

Some counties, like Pulaski (Little Rock) and Jefferson (Little Rock metro), offer their own grants on top of the state program. In Pulaski County, eligible buyers can get up to $3,000 more in grant funds, as long as the home is in a targeted neighborhood and you live in it for at least five years. Add that to the $5,000 state grant, and you’re at $8,000. Then there’s the federal Homebuyer Tax Credit - though it expired in 2010, some local nonprofits still reference it by mistake. What’s active now is the Mortgage Credit Certificate (MCC), which lets you claim 15-20% of your mortgage interest as a federal tax credit each year. Over five years, that can save you another $1,500-$2,500.

Put it all together: $5,000 state grant + $3,000 county grant + $2,000 in tax savings over five years = roughly $10,000 in total support. But it’s not cash in your pocket on closing day. It’s spread out, conditional, and tied to your income, credit, and the home’s location.

Who Qualifies

You’re not eligible just because you’ve never owned a home. You have to meet income limits. In most Arkansas counties, the max household income is $95,000 for a family of four. In more expensive areas like Bentonville, it’s $110,000. Your credit score needs to be at least 640. You must use a AHFA-approved lender. And you can’t buy a home over $350,000 - even if you have the money.

There’s also a residency rule: you must live in the home as your primary residence for at least five years. If you sell or move out before then, you may have to repay part of the grant. The repayment isn’t automatic - it’s calculated based on how long you lived there. If you stay five years, you keep it all. If you leave after two, you might owe back 60%.

First-time buyers aren’t the only ones who qualify. If you haven’t owned a home in the last three years, you’re still considered a first-time buyer under Arkansas rules. That helps people who divorced, lost a home to foreclosure, or lived abroad.

What You Can’t Use the Grant For

It’s not a magic wand. The grant money can only be used for:

• Down payment
• Closing costs
• Prepaid expenses like property taxes or insurance

You can’t use it for:

• Renovations or repairs
• Land purchase without a home
• Investment properties
• Mobile homes unless they’re permanently affixed to a foundation and meet FHA standards

Some people try to use the grant to buy a fixer-upper. That won’t work unless the home passes a basic inspection and is deemed safe and livable. The state won’t fund homes with mold, lead paint, or structural damage unless you’re also using a separate rehab loan - which is rare and hard to combine with the grant.

How to Apply

Applying isn’t something you do online in 10 minutes. It’s a process that takes 6-12 weeks. Here’s the real step-by-step:

1. Take a HUD-approved homebuyer education course. Find one through AHFA’s website. Save your certificate.
2. Get pre-approved for a mortgage with an AHFA-approved lender. Ask them if they handle the grant program - not all do.
3. Find a home within the price limit and in an eligible area. Check AHFA’s map of targeted neighborhoods - they change yearly.
4. Submit your grant application with your certificate, proof of income (pay stubs, tax returns), and the purchase contract.
5. Wait for approval. This can take 2-4 weeks. If approved, the grant funds go directly to your closing agent, not to you.

There’s no waiting list, but funds are limited. Each year, AHFA allocates about $20 million statewide. In 2025, they approved 1,842 grants. That’s about 150 per county on average. If you wait until December, you might miss out.

Alternatives If You Don’t Qualify

If your income is too high, your credit too low, or you’re buying outside an eligible area, you still have options.

• VA Loans: For veterans and active military. No down payment required, no PMI. You can use this with the AHFA grant.
• FHA Loans: Allow 3.5% down payments. Lower credit score requirements. You can still stack this with the state grant.
• Local Nonprofits: Organizations like Arkansas Homeownership Initiative offer small grants ($1,000-$2,000) for specific ZIP codes in Little Rock and Fort Smith.
• Employer Programs: Some large employers in Arkansas - like Walmart, Tyson Foods, or University of Arkansas - offer home buying assistance to employees. Check with HR.

Don’t ignore credit repair. If your score is under 640, spend 3-6 months paying down debt, disputing errors on your report, and avoiding new credit applications. Even a 50-point jump can make you eligible.

Common Mistakes

People mess this up in predictable ways:

• Thinking the grant covers the whole down payment. Most homes in Arkansas cost $200,000-$275,000. A 3.5% down payment is $7,000-$9,600. The $5,000 grant covers most of it - but you still need to bring $2,000-$3,000 in savings.
• Not getting pre-approved before house hunting. If you fall in love with a house, then find out you don’t qualify, you’ve wasted time.
• Choosing the wrong lender. Some lenders don’t know how to file the grant paperwork. Ask: "Do you handle AHFA Homeownership Program applications?" If they say "I think so," move on.
• Ignoring the five-year rule. If you get a job offer out of state after three years, you might owe back thousands.

Is It Worth It?

Yes - if you’re ready to commit. The average Arkansas homebuyer who uses this program saves $12,000-$18,000 over the first five years compared to someone who pays full price with a conventional loan. That’s because of the lower interest rate, the grant, and the tax credit. You’re not getting rich. But you’re getting a home you couldn’t afford otherwise.

It’s not a handout. It’s a tool. And like any tool, it works best when you know how to use it.