Alabama Housing Finance Authority (AHFA) Programs:

Step Up Program:

Eligibility: Designed for moderate-income homebuyers (first-time or repeat) who can afford a mortgage but need down payment assistance.
Offerings: 30-year fixed-rate mortgage with up to 4% of the home's sale price (maximum $10,000) as a 10‑year second mortgage.
Requirements:

• Household income must not exceed $172,800 (updated 2025 limit).
• Minimum credit score of 640.
• Debt-to-income ratio capped at 45%.
• Homebuyer education required.

Mortgage Credit Certificate (MCC):

Benefits: Offers a federal tax credit of 20%–50% of annual mortgage interest paid (capped at $2,000/year), depending on loan size:
   • 50% credit for loans ≤ $100,000 (max $2,000/year)
   • 30% for $100,001–$150,000 (max $2,000/year)
   • 20% for loans > $150,000 (no cap)
Can be combined with Step Up or other 30-year fixed-rate mortgages.
Eligibility: Must meet income/sales price limits and have credit ≥ 640.

HFA Advantage (Affordable Income Subsidy Grant):

Description: Provides a small grant toward closing costs for borrowers earning ≤ 80% AMI, used alongside the Step Up Program.

Local Programs:

Birmingham

NeighborhoodLIFT: Up to $7,500 in down payment assistance for buyers in Jefferson & Shelby Counties. Income-based eligibility; not limited to first-time buyers.

Huntsville

Down Payment Assistance Program (DAP): Offers $7,500 for existing homes and $10,000 for new construction. Assistance forgivable after 5 years; income limits apply and homebuyer education required.

Mobile

Mobile's First-Time Home Buyers’ Program: Up to $10,000 for down payment and closing costs (up to $15,000 on blighted properties). Forgivable after 5 years of occupancy.

Montgomery

Montgomery Housing Authority Homeownership Program: Monthly mortgage subsidy available for up to 15 years (for 20-year mortgages) or 10 years (for shorter-term loans).

Additional Information:

• First‑Time Homebuyer Savings Account: Tax-free savings for buying a home (no homeownership in past 10 years).
• USDA & VA Loans: Zero-down payment options for rural buyers and eligible veterans/active-duty military.
• FHA Loans: Minimum 3.5% down payment; credit scores as low as 580 qualify.