ADFA ANNOUNCES THE STARTSMART LOAN PROGRAM: BELOW-MARKET RATE MORTGAGES FOR FIRST-TIME HOMEBUYERS
[LITTLE ROCK, MARCH 5, 2024] – Seeking to offer relief from rising interest rates, the Arkansas Development Finance Authority (ADFA) has announced a new StartSmart Loan Program, designed to help first-time homebuyers in Arkansas by providing access to affordable mortgage financing.
“This is an opportunity to help build communities through the State of Arkansas,” said ADFA President Mark Conine. “Homeownership builds a path toward strong, sustainable communities one family at a time, and we are proud to support new homebuyers by making home loans more affordable.”
Through the StartSmart Mortgage program, ADFA will make use of IRS rules that allow it to issue tax-exempt mortgage revenue bonds. The savings, generated from the tax-exemption, are passed along to homebuyers who receive below-market interest rate mortgage loans and lower monthly payments. This will make purchasing a home more affordable and accessible for first-time buyers.
The SmartStart Mortgage loan offers the additional benefit of being compatible with ADFA's popular Down Payment Assistance (DPA) Loan Program. The DPA Program offers a second mortgage, with a 10-year term, featuring the same low interest rate as the first mortgage, allowing homebuyers to access up to $15,000 for down payment and closing cost expenses.
“Cash for a down payment is the number one obstacle for aspiring homebuyers,” said ADFA President Mark Conine. “ADFA’s DPA Program is designed to move families past that obstacle.”
To be eligible for a StartSmart Mortgage, an applicant must be a first-time homebuyer (must not have owned his/her principal residence for three (3) years prior to closing the loan). However, applicants purchasing a home in one of the following thirty (30) federally-targeted counties need not meet the first-time homebuyer requirement: Bradley, Calhoun, Chicot, Clark, Cleburne, Columbia, Conway, Crawford, Crittenden, Cross, Dallas, Desha, Drew, Jefferson, Lafayette, Lee, Lincoln, Madison, Mississippi, Monroe, Nevada, Ouachita, Perry, Phillips, Prairie, St. Francis, Scott, Searcy, White, and Woodruff.
Also, a borrower’s income cannot exceed specified limits, which varies depending on the number of family members and the county where the property is located. The maximum total annual income for a family of three or more ranges from $88,760 to $113,400, depending upon the county where the property is located.
The Arkansas Development Finance Authority is the state's largest provider of mortgage down payment assistance. Approximately 77 mortgage lending institutions, with over 400 loan officers, participate in ADFA’s homeownership loan programs. Interested first-time homebuyers can find details and participating lenders online at https://homeloans.arkansas.gov .
“In higher interest rate markets like we have experienced over the past couple of years, a tax-exempt mortgage revenue bond program makes sense because the spread between the interest rates offered by these programs and the market can be substantial,” said Ro Arrington, ADFA VP of Public Finance Homeownership. “This makes homeownership more affordable for low-to-moderate income families in Arkansas.”
The program began accepting applications on March 4, 2024.
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About ADFA
ADFA is the state’s largest source of low-cost financing for low-to-moderate income housing development, small industries, government, education, and healthcare. Through the issuance of taxable and tax-exempt bonds and notes, the administration of private and public grants, and partnerships with state and federal agencies, ADFA gives Arkansans the most cost-effective financing choices possible.