Alabama Housing Finance Authority (AHFA) Programs:

AHFA offers multiple programs including Step Up (market-rate for moderate-income buyers) and First Step (MRB for first-time/repeat in targeted areas), both providing 30-year fixed-rate mortgages, down payment assistance (up to $10,000 or 4%), and optional grants. All require homebuyer education and participation through AHFA-approved lenders. Check current rates, income/purchase limits, and availability at ahfa.com (limits vary by program, location, and AMI).

Step Up Program:

Eligibility: Moderate-income homebuyers (first-time or repeat) who can afford a mortgage but need down payment help.
Offerings: 30-year fixed-rate mortgage (FHA, VA, USDA, or HFA Advantage conventional) + up to 4% of sales price (max $10,000) as a second mortgage (typically 10-year term; deferred/repayable upon sale/refinance).
Requirements:

• Household income ≤ $172,800 (statewide, regardless of size or location).
• Minimum credit score: 640.
• Debt-to-income ratio ≤ 45%.
• Homebuyer education required.

First Step Program:

Description: Below-market 30-year fixed-rate mortgage + up to $10,000 down payment assistance (similar to Step Up but MRB-financed).
Eligibility: Primarily first-time buyers (or repeat in targeted areas); income/purchase limits apply by location (higher in targeted areas; e.g., up to ~$161,700+ in some HMFAs).
Notes: Often compared to Step Up; check AHFA for current availability and target/non-target distinctions.

Mortgage Credit Certificate (MCC):

Benefits: Federal tax credit of 20%–50% of annual mortgage interest (capped at $2,000/year for most tiers):
   • 50% 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 on credit amount)
Combinable with Step Up/First Step or standalone.
Eligibility: Meet income/sales price limits; credit ≥640; first-time or targeted-area buyers prioritized.

HFA Advantage (Affordable Income Subsidy Grant):

Description: Closing cost grant for borrowers ≤80% AMI (1% of loan amount if ≤50% AMI; 0.5% if 50.01–80% AMI). Pairs with Step Up/First Step.

Local Programs (Examples):

City/county programs offer additional forgivable assistance—often income-based with education/residency requirements. Verify current funding via local housing authorities.

Birmingham

NeighborhoodLIFT: Up to $7,500+ in down payment assistance for buyers in Jefferson & Shelby Counties (and surrounding areas). Income-based; open to first-time and repeat buyers.

Huntsville

Down Payment Assistance Program (DAP): Up to $7,500 (existing homes) or $10,000 (new construction) forgivable after 5 years. Income limits apply; homebuyer education required.

Mobile

Mobile's First-Time Home Buyers’ Program: Up to $10,000 (or $15,000 on blighted properties) for down payment/closing costs. Forgivable after 5 years; income-eligible first-time buyers.

Montgomery

Montgomery Housing Authority Homeownership Program: Monthly mortgage subsidy for up to 15 years (20-year mortgages) or 10 years (shorter terms); targets voucher holders transitioning to ownership.

Additional Information:

• Alabama First-Time and Second-Chance Homebuyer Savings Account: State tax deductions on contributions ($5,000 single/$10,000 joint per year) + tax-free earnings if used for down payment/closing costs (no ownership in past 10 years for first-time qualification).
• USDA Loans: 0% down in eligible rural Alabama areas; income limits apply.
• VA Loans: 0% down for eligible veterans/active-duty military.
• FHA Loans: 3.5% minimum down (580+ credit; 10% if below 580).

Programs evolve—always verify with an AHFA-approved lender or ahfa.com. Seeking Agents® connects you with Alabama agents familiar with these programs who compete to offer reduced commissions or extra support—free for buyers!