First-Time Home Buyer Programs in Alabama

Alabama Housing Finance Authority (AHFA) Programs:

Step Up Program:

Eligibility: Designed for moderate-income homebuyers who can afford a mortgage but need help with down payments.
Offerings: Provides a 30-year fixed-rate mortgage with down payment assistance up to 4% of the home's sale price or $10,000, whichever is less. This assistance comes in the form of a 10-year second mortgage.
Requirements:

• Household income must not exceed $159,200 or 80% of the area median income (AMI), depending on the loan type.
• Credit score must be at least 640 (or 680 if income exceeds 80% AMI).
• Debt-to-income ratio should be 45% or lower.
• Completion of a homebuyer education course is mandatory.

Mortgage Credit Certificate (MCC):

Benefits: Offers a tax credit of up to 50% of your annual mortgage interest, with a maximum of $2,000 per year. This can be combined with other AHFA programs or other fixed-rate mortgages.
Eligibility: Must be a first-time homebuyer (not having owned a home in the last three years) or buying in a targeted area.

HFA Advantage:

Description: Provides an affordable income subsidy grant that can be used for closing costs alongside the Step Up Program.

Local Programs:

Birmingham

NeighborhoodLIFT: Offers up to $7,500 in down payment assistance for homes in Jefferson and Shelby counties. Not strictly for first-time buyers but has income limits.

Huntsville

Down Payment Assistance Program (DAP): Provides $7,500 for existing homes and $10,000 for new constructions, with requirements including income thresholds and homebuyer education.

Mobile

Mobile's First Time Home Buyers’ Program: Assistance of up to $10,000 for down payments and closing costs, with higher assistance for "blighted" properties. Requires a 5-year stay to avoid repayment.

Montgomery

Montgomery Housing Authority Homeownership Program: Offers monthly mortgage subsidies for up to 15 years if the mortgage term is 20 years or more, or 10 years for shorter mortgage terms.

Additional Information:

• First-Time Homebuyer Savings Account Program: Allows Alabamians to save for down payments and closing costs in a tax-free account if they haven't owned a home in the last 10 years.
• USDA and VA Loans: Both offer zero-down payment options for eligible buyers, particularly in rural areas (USDA) or for veterans (VA).
• FHA Loans: With a minimum down payment of 3.5%, these are accessible for buyers with lower credit scores.