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First-Time Home Buyers Guide For Northwest Arkansas

Are you ready to buy your first home in Holiday Island, Huntsville, Harrison, Eureka Springs or Berryville, Arkansas? It’s a happy milestone and our area is a great place to live, with options for everyone whether you prefer city living, the suburbs, or a more rural setting.

Once you know where you want to live, you’ll need to learn how to get a mortgage and complete the home-buying process. In this guide for first time home buyers in Arkansas, we’ll cover all of that and more so you have everything you need to start your journey to home ownership.

Determine how much you can afford

This is the first step in the mortgage application process. Before you begin the application itself, review your finances to get clear about how much you can afford to put down and spend on monthly mortgage costs.

Take stock of your financial situation.

As you answer the following questions, get your documents ready to submit with your mortgage application. You can collect physical copies or scan them and create a digital folder on your computer.

  • What is your monthly take-home income? You’ll need recent paystubs and/or other documents as proof. Any other income streams, such as alimony, child support, investments, or rental properties should also be documented.
  • How much house can you afford? A good rule of thumb is to limit your monthly housing payment (mortgage payment, taxes, and insurance) to no more than 30% of your monthly take-home pay. For example, if you bring home $2,000/month, you’d want to limit your housing costs to $600/month, which is 30%. Of course, only you can define affordable in the context of your life and other expenses. Someone with student loan and/or credit card debt might want to keep their housing payment even lower than 30%, as opposed to someone with no or very little debt. Use our mortgage calculators to examine different options for your situation.
  • How much do you have saved for a down payment? Add copies of your most recent savings and investment/retirement account balances to your documents folder. Don’t have 20% saved for a down payment? Not to worry. Depending on the type of mortgage loan you choose, you may be able to make a lower down payment and use gift money or grants for some of your down payment.
  • What are your other monthly expenses? Take a look at your current monthly budget. You can expect certain expenses to rise when you become a new homeowner. For example, utility bills may increase if you move into a larger space. It’s also a good idea to set aside extra money each month to save for repairs and/or discretionary decorating purchases. Learn more about the new expenses you will incur as a new homeowner. 

Check your credit score and history.

The three-digit number that comprises your credit score is an important factor in qualifying for a mortgage loan and determining your interest rate. In short, the higher your score, the easier time you’ll have qualifying for a mortgage and the better your chances of getting a lower interest rate.

That’s why it’s a good idea to check your credit score now, in case you want to take a few extra months to improve it before applying for a mortgage. Certain bad credit events may require you to wait before applying for a mortgage. 

There are several options for checking and monitoring your score:

  • Use free apps like Credit Karma and Credit Sesame to see an estimate of your current score and review steps you can take to improve it.
  • Check your existing credit card accounts to see if free access to your credit score is a benefit.
  • Pay for access to your score through one of the major credit reporting bureaus.
While you’re checking out your credit score, snag a free copy of your credit report from Check the report to make sure there are no errors or signs of fraud, such as open accounts you don’t remember opening.

Understand the different types of home loans

Today’s Arkansas first-time homebuyers have many loan options to choose from. If you have questions about a specific loan, contact one of our mortgage lenders.

Conventional Mortgages

Conventional mortgages are the most common type of home loan. They are not insured by a federal government agency, as with
FHA and VA loans.

Fixed-Rate Mortgages

If you plan to stay in your home long-term and want to have a predictable monthly mortgage payment, a fixed-rate loan maintains the same interest rate for the life of the loan. You can choose a fixed-rate on any type of mortgage, including conventional and government-backed loans. Even once you've determined that you want a fixed-rate mortgage, you will need to decide between a short-term fixed-rate mortgage vs. a long-term fixed rate mortgage. 

Adjustable-Rate Mortgage (ARM Loan)

Unlike with a fixed-rate loan, adjustable mortgages can have a fluctuating interest rate over the life of the loan. They may come with a lower introductory rate that stays stable for a predetermined period of a few years. After that, your rate may adjust each year up or down depending on the benchmark rate. Loan terms will dictate how much the rate can change each year and over the life of the loan. Read more about when to consider a an adjustable-mortgage. 

FHA Loans

Insured by the Federal Housing Administration (FHA), these mortgages are a favorite of first-time buyers because they offer lower down payment requirements and more relaxed credit score criteria. Compare FHA vs. conventional mortgage loans.

VA Loans

If you are a qualified servicemember, veteran, or family member, you may be able to borrow up to 100% of your home’s value without a mortgage insurance requirement.

USDA Rural Development Loans

Specifically designed to help certain homebuyers and homeowners access mortgage financing. Must meet requirements for income and property location. Read more about Rural Development Loans and how to get one. 

Mutual Self Help Housing

Arkansas’s Northwest Regional Housing Authority operates this USDA Rural Development Program in 12 Northwest Arkansas counties: Benton, Baxter, Boone, Carroll, Fulton, Izard, Madison, Marion, Newton, Searcy, Stone, and Washington. Prospective home buyers in Arkansas can read more on the NWRHA’s website.

Read more about the different types of home loans in our Guide to Choosing a Mortgage. 

Get pre-approved and start house hunting

Now that you have your financial ducks in a row and understand the home loan options available to you, it’s time to embark on the application and home buying process. Here’s what you can expect:

  •  Choosing a lender: May we recommend a local mortgage lender with a long, rich history of service to your Arkansas community?
  • Applying for a mortgage: Apply online from the comfort of your home or office. You can also meet with one of our mortgage lenders at the Berryville, Harrison, Holiday Island and Huntsville branches or at the Eureka Springs Financial Center.
  • Getting pre-approved or pre-qualified: Many real estate agents and sellers will want to see this to know you’re a serious buyer. You can get a pre-approval letter from your lender after providing basic information, before completing the entire mortgage application.
  • Making an offer: Once your offer is accepted and the agents finish negotiating a price, your mortgage application will advance toward completion. You’ll also need to put down “a good faith deposit” when you go under contract. The seller only keeps it if you back out of the contract; otherwise it’ll count toward what you owe at closing.
  • Closing: This is the big day when you sign all the mortgage paperwork, provide a cashier’s check for the money due at signing, and receive the keys to your new home.

Contact a CS Bank Mortgage Lender Today!

Looking for a mortgage lender in Eureka Springs, Harrison, Huntsville, Holiday Island, or Berryville Arkansas? The experienced loan officers at CS Bank can help first-time home buyers in Northwest Arkansas find the right mortgage loan.  From start to finish, we’ll guide you through the mortgage application process. In fact, our customer service is what we’re known for, with past borrowers telling us we made them feel like a priority regardless of the size of their loan. Let us help you with the exciting milestone of buying your first home! Contact one of our experienced mortgage lenders to get started today! New to the area? Check out our Eureka Springs Relocation Guide. 

Determine how much you can afford. Choose the right type of mortgage loan. Get preapproved by a mortgage lender. Find your dream home.