New Dream Down Payment Initiative Introduced in Arkansas

The Arkansas Development Finance Authority (ADFA) recognizes that the down payment is a significant barrier to homeownership for many individuals. While numerous people are capable of managing monthly mortgage payments, the challenge often lies in accumulating enough savings to cover the substantial upfront costs. To address this issue, ADFA has introduced the Arkansas Dream Downpayment Initiative (ADDI), a program specifically designed to assist individuals in overcoming this financial hurdle.

Available Assistance: The ADDI Program offers substantial financial support to qualifying low-income applicants. It provides a forgivable, soft second mortgage up to 10% of the sale price, with a maximum amount of $10,000. This assistance can be applied towards covering some or all of the down payment and closing costs. The loan is structured to be forgiven over a five-year affordability period, provided in equal annual installments. To qualify for forgiveness, the homebuyer must continue to own, occupy, maintain, insure, and pay all taxes on the home throughout this period.

Eligibility Requirements: To be eligible for the ADDI Program, applicants must meet several criteria:

• The program is exclusively available to first-time homebuyers.
• Applicants’ annual household income must fall within the limits set by the program, which vary based on the county of the property and the number of people in each household.
• Applicants are required to complete a minimum of eight hours of homebuyer counseling. This educational component is crucial as it prepares applicants for the responsibilities and financial aspects of owning a home.

Purpose of the Program: The primary goal of the ADDI Program is to provide financial assistance to eligible applicants who are eager to purchase a home but are hindered by the significant upfront costs. These costs include the down payment, closing costs, and prepaid items necessary for obtaining homeownership. Without this assistance, many individuals might remain in a cycle of renting, unable to accumulate the capital needed for these initial expenses.

In summary, the Arkansas Dream Downpayment Initiative by the ADFA is a vital resource for individuals in Arkansas looking to transition from renting to homeownership. By offering financial assistance for down payments and closing costs, the program addresses one of the major barriers to homeownership. Its focus on low-income, first-time homebuyers and the requirement for a homebuyer education course ensure that the program supports responsible and sustainable homeownership in the Arkansas community.