Compare Current Mortgage Rates in Arkansas

Your mortgage interest rate has a major impact on how much you pay each month for your mortgage. After all, mortgage loans are large loans, usually for hundreds of thousands of dollars, and most borrowers repay them over 30 years. As a result, even a small difference in rates makes a big difference in your payment amount.

Arkansas home buyers borrow an average of $228,000 for a home purchase, according to the latest data from the Federal Housing Finance Agency. With an interest rate of 7.25%, the monthly payment (principal and interest) on a loan of that size would be $1,555. Increase the rate to 7.75%, and the payment jumps to $1,633.

A mortgage rate is the price a lender charges for its mortgage products. Lenders, like other businesses, base pricing decisions on many considerations:

Federal interest rates

Two federal interest rates factor heavily into the rates lenders set for mortgage loans.

The first is the federal funds rate, which the Federal Reserve uses to grow or slow the economy as needed to maintain maximum employment, stable prices, and moderate long-term interest rates. 

As the Fed increases or decreases its target federal funds rate, mortgage lenders increase or decrease their rates in response.

The second federal rate is called the prime rate, which is the lowest rate a lender offers its best-qualified borrowers. The Wall Street Journal and the Federal Reserve each survey America’s largest banks for their prime rates and then publish the aggregate. Lenders use the aggregate as a base rate for adjustable-rate mortgages and other loan products.

The economy

Economic conditions such as inflation or recession, employment rates, the housing market, and the financial markets affect rates in part by influencing demand for mortgage loans.

When consumers have more money and higher confidence in the economy, they’re more likely to want to buy a home. That increased demand drives up rates. Conversely, a weak economy slows demand, which results in lower rates. 

Marketing considerations

Lenders use rates to influence borrowers’ loan decisions, often by reducing rates to promote certain loans. However, some promotional rates are only temporary, or the lender might charge higher loan fees to make up for them. 

Buyer qualifications

Your credit score and credit history impact your interest rate, as does the size of your down payment. A down payment of at least 20% and a credit score of 760 or more typically qualify you for the best rates.

Home and location

Lenders consider the type of mortgage, as well as the size and location of the home you purchase when calculating your interest rate. Buying in a rural or urban area can also impact your rate. 

Arkansas’ only statewide program exclusively for first-time homebuyers is the Arkansas Development Finance Authority (ADFA) mortgage credit certificate program. When available, the program provides low-income first-time homebuyers with a tax credit for 35%, up to $2,000, of the mortgage interest they pay each year.

The program is currently unfunded, but the ADFA has other programs that can help first-time buyers purchase a home.

The ADFA Move-Up loan is a 30-year fixed-rate first mortgage for conventional, FHA, VA, and USDA financing. You can use it with other incentives, including the ADFA down payment assistance program.

ADFA’s down payment assistance program provides up to $15,000 toward down payment and closing costs for borrowers who use a Move-Up loan. The down payment assistance is provided as a second mortgage. The loan is repayable over 10 years, and you can get up to $1,000 of the proceeds as cash back for allowable expenses paid outside of closing.

The ADFA website has current information about homebuyer programs as well as a directory of approved lenders.

Local first-time buyer programs in Arkansas

Assistance is also available locally for residents of a handful of municipalities. The programs typically have income limits:

• Jacksonville: Jacksonville offers a homebuyers assistance grant that pays half of the buyer’s out-of-pocket closing costs, up to $3,000.
• Jonesboro: Jonesboro’s homeowner assistance grants are available to first-time homebuyers with low and moderate income who purchase within the Jonesboro city limits. You can use the grant for down payment and closing costs paid out of pocket directly to the title company.
• Little Rock: Little Rock’s down payment assistance program provides first-time homebuyers who have low or moderate income with down payment assistance amounting to up to 6%, not to exceed $10,000, of the purchase price.
• Pine Bluff: Pine Bluff’s homebuyer assistance program helps low- and moderate-income first-time homebuyers purchase a HUD-repossessed or for-sale-by-owner property in Pine Bluff. You can get up to $2,000 for the down payment and $3,000 toward closing costs, but you must make at least a $500 down payment from your own funds to qualify.

To get Arkansas’ best mortgage rate, it helps to shore up your finances and research your loan options: 

• Improve your credit: Lenders usually require at least a 620 credit score for conventional loans, but you’ll need a higher score to qualify for a low rate. An increase from 620 to 640 can save you tens of thousands of dollars in interest on your Arkansas home mortgage. 
• Make a bigger down payment: Larger down payments can help you qualify for lower mortgage rates. By purchasing with at least 20% down, you’ll also eliminate the need for mortgage insurance and minimize your annual percentage rate, too.
• Shop for the best rate: Getting rate quotes or no-credit-check prequalifications from several different lenders lets you see which offers the lowest rates. Just be sure to plug in the same loan type, loan term, and loan amount for each quote you request. Also, pay attention to lender fees — some will vary from lender to lender.
• Opt for a 15-year mortgage: If you can afford the higher payments, a 15-year loan might qualify you for a lower rate. If that’s too aggressive, consider a 20-year term instead. 
• Buy down your interest rate: If you plan to be in your home for several years, consider buying down your interest rate by paying discount points. A point, which equals 1% of your loan amount, is the interest you prepay at closing in exchange for a lower interest rate. However, beware of temporary buydowns that only reduce your rate for a limited time.
• Decide whether to lock in your rate: Locking in your rate can protect you when rates are climbing. But when they’re falling, locking in might commit you to paying more than you need to.

Arkansas residents have access to the full range of mortgage loans. However, each loan type and lender has its own eligibility criteria, so you might not qualify for every type of loan your Arkansas mortgage lender offers.  

Conventional

• Standard loan type eligible for purchase by Fannie Mae and Freddie Mac
• Available with fixed or adjustable rate
• 620 minimum credit score
• 3% minimum down payment
• Terms: 10 to 30 years

FHA

• Federal Housing Administration-insured loan for credit-worthy borrowers who don’t qualify for conventional loan
• Available with fixed or adjustable rates
• 500 minimum credit score
• 3.5% minimum downpayment for a credit score of 580 or higher; 10% for a credit score of 500 to 579
• Terms: 15 to 30 years
   

VA

• Department of Veterans Affairs-guaranteed loan for veterans and active-duty military and their eligible family members
• Available with fixed or adjustable rates
• Minimum credit score varies by lender but typically 620
• Down payment not required
• Terms: 15 to 30 years
   

USDA

• United States Department of Agriculture-guaranteed loan for low- and moderate-income borrowers purchasing in a rural-designated area
• Fixed rates only
• 640 minimum credit score for streamlined credit analysis
• Down payment not required
• Terms: 30 years

Jumbo

• Large loan that exceeds the conforming limit for conventional loans
• Available with fixed or adjustable rates
• Minimum credit score varies by lender, but typically at least 700
• Minimum downpayment varies by lender, but typically 20% or more
• Terms: up to 30 years