Quick Guide: Funding a Home Downpayment in Alabama

If you’re a first-time home buyer in Alabama, you’re in luck. Since 1980, Alabama Housing Finance Authority has helped more than 70,000 families — many of them first-time home buyers — afford a home through its loan programs.

Here’s what to know about state programs available to Alabamians and what you need to qualify.

AHFA offers first-time and repeat home buyers affordable home loans for buying a new or existing home, but not for refinancing. Down payment assistance programs eliminate the need to save for a big cash down payment. Reduced mortgage insurance payments may also be possible. And Mortgage Credit Certificates cut your federal income tax, leaving you more income to apply toward qualifying for a mortgage.

Alabama Step Up State Program
Step Up helps eligible low- to moderate-income home buyers purchase a new or existing home with a 30-year, fixed-rate conventional or FHA mortgage and 3% down payment assistance. Your income must be under $97,300, regardless of household size or where in Alabama you buy the home.

Alabama Mortgage Credit Certificates
Mortgage Credit Certificates (MCCs), dollar-for-dollar federal income tax credits of 20% to 50% of their mortgage interest, up to $2,000, are for first-time home buyers with conventional, FHA, VA or USDA fixed-rate mortgages. The credit can be used as long as you keep the original first mortgage.

If one of these state programs seems right for you, get started by reaching out to a participating lender. They can answer questions, identify target areas, calculate the assistance you can get and help you apply. After that, it’s time to get ready for your home buying education course, a Step Up requirement, before the mortgage closes.

Adapted from NerdWallet “Alabama First-Time Home Buyer Programs of 2018”.