The Arkansas USDA loan (also called a 502 Guarantee or Rural Development Loan) is a government-insured mortgage program that allows eligible home buyers to purchase a house with NO Money Down.
In fact, USDA is one of the last 100% financing home loan available to qualified buyers and allow for all closing costs to be either paid for by the seller or financed into the loan. Furthermore, USDA offers some of the lowest fixed interest rates of any mortgage program in the market today.
To be eligible for the program, the homebuyer must purchase a home within an eligible USDA rural areas. The good news is, many suburban locations that may not seem “rural” can be eligible. These include many locations on the outskirts of Little Rock, Conway, Fort Smith, Fayetteville, Springdale, and Jonesboro that are still approved.
Loan applicants will also need to have a household income that does not exceed the established limits where the home is located. Let’s take a look at the highlights and lender requirements of the USDA program.
- 100% – ZERO down loans. Unlike conventional loans and even FHA, USDA mortgages do not require any down payment. This is especially beneficial for first-time homebuyers that are having a hard time saving up for a large down payment. Utilizing a USDA loan means that is no longer an issue.
- Seller contributions up to 6% towards home buyer’s closing costs.
- Must be a primary owner-occupied residence – not a working income-producing farm, investment home, or vacant land.
- Rural areas are generally those with less than 25,000 or less per capita – this includes MOST of Arkansas and its small towns/cities. Contact us by submitting the Info Request Form on this page to discuss your location in detail.
- Income limits for the USDA 502 Guaranteed program are set per County. For example, in Pulaski County, a household with 1-4 family members is allowed an annual income of up to $119,850 (through 2026) with some allowable deductions for reducing the income if needed. Higher income limits up to $158,250 for households with 5 or more members.
- The loan is a “means-tested” program, which states that you or your household can’t make too much money. This includes the income of any adults in the household even if they are not listed on the loan application. USDA also permits allowable income deductions for minor children (family size), childcare expenses, borrowers with disabilities, and elderly family members. Most moderate to middle-income families WILL be eligible. You can easily check income limits for your family size, state, and county on the USDA income eligibility website. Please contact us for assistance.
- Credit does not need to be perfect – but there are minimum credit score requirements of 640 for an automated GUS underwriting approval. However, some applicants with lower credit scores can possibly qualify via manual underwriting.
- A USDA approved appraisal will be required for a purchase home loan, but not USDA refinance. Plumbing, HVAC, roof, and electric must be adequate and in general “good repair” for home occupancy. The dwelling should also be free from termites, WDO, and dry rot.
- You do not need to be a first-time homebuyer to apply. But if you own another residence, the purchase of a second home would need to be approved. USDA typically will only allow a second residence if the other home is inhabitable or the commute time to work is much farther than that of the home owned currently.
- USDA loans have very competitive interest rates – 30-year fixed mortgages.
- Conforming Loan amounts – up to $832,750. Buyers qualify based on their debt to income.
- Very Low upfront and monthly mortgage insurance, the PMI is half the cost of FHA loans.
- Streamline USDA refinance options available if interest rates should decrease in the future.
Please reach out to us with questions or to learn more about the application process. Home buyers can connect with us 7 days a week by calling, or just submit the USDA Info Request Form on this page for quick service.
Happy to serve home buyers nationwide including AR: Little Rock, Fort Smith, Fayetteville, Springdale, Jonesboro, North Little Rock, Conway, Rogers, Pine Bluff, Bentonville, Hot Springs, Benton, Sherwood, Texarkana, Jacksonville, Russellville