Alabama Down Payment Assistance
Alabama Down Payment Assistance Programs
A guide to current down payment assistance options in Alabama, including the state Housing Finance Agency, well-known city and county programs, and live DPA mortgage pricing for Alabama homebuyers.
Alabama Housing Finance Agency
Alabama Housing Finance Authority (AHFA)
AHFA administers the primary DPA programs for Alabama. Program details below are current as of April 23, 2026 - confirm current terms directly with AHFA before applying.
Statewide DPA Programs in Alabama
Step Up
AHFA
Down payment assistance up to 4% of the sales price, capped at $10,000, as a 10-year second mortgage paired with a 30-year fixed first.
Paired with: Conventional (HFA Advantage), FHA, VA, USDA
- Primary residence only
- Minimum FICO: 640
- Income: Qualifying income up to $172,800 regardless of household size or location.
- Homebuyer education required
FICO minimum is 680 for HFA Advantage conventional when qualifying income is above 80% AMI. Delivered through AHFA-approved lenders; AHFA does not lend directly.
Source: www.ahfa.com
Affordable Income Subsidy Grant
AHFA
Grant of 0.5% to 1% of the first mortgage amount toward down payment or closing costs.
Paired with: Conventional (HFA Advantage)
- Primary residence only
- Minimum FICO: 640
- Maximum DTI: 45%
- Income: Qualifying income at or below 80% of area median income (AMI); see HFA schedule.
- Homebuyer education required
Used only with HFA Advantage conventional loans and can be combined with Step Up and MCC.
Source: www.ahfa.com
Mortgage Credit Certificate (MCC)
AHFA
Federal tax credit on a percentage of mortgage interest paid each year, up to $2,000 annually for the life of the loan. Credit rate is 50% for loans $100,000 or less, 30% for $100,001 to $150,000, and 20% for loans of $150,001 or more.
- Primary residence only
- Homebuyer education required
Subject to IRS recapture rules. Issued alongside an AHFA first mortgage through a participating lender.
Source: www.ahfa.com
Alabama Notes for Homebuyers
- Alabama is a title-state; closings are typically handled by title or escrow companies rather than attorneys.
2026 Loan Limits in Alabama
Conforming (Conventional)
$806,500 baseline
FHA
$524,225 floor
Most Alabama counties use the FHA floor limit.
Live DPA Pricing for Alabama
Pricing below is sourced live from hundreds of wholesale lenders for a Alabama scenario. Edit the inputs to match your situation.
FHA Down Payment Assistance
Up to 5% assistance; repayable second at first rate + 2% over 10 years
▸Program details
- ✓Minimum credit score: 580
- ✓Non-traditional credit also possible
- ✓Assistance up to 2.5%, 3.5%, or 5% of the lesser of purchase price or appraised value
- ✓Assistance can be used for down payment, closing costs, or both
- ✓Second lien: 10-year fixed, repayable
- ✓Second lien rate is 2% higher than the first mortgage rate
- ✓No first-time homebuyer requirement
- ✓No income cap
- ✓Purchase of primary residence only
- ✓Eligible properties: 1-unit residences, PUD, 2-4 units, FHA-approved condos, manufactured (single/double-wide)
- ✓DTI per AUS and FHA manual underwriting guidelines
- ✓First lien: FHA 30-year fixed
Assistance amount
Compare DPA options for Alabama with live pricing
Rate Direct pairs down payment assistance with live first-lien pricing so you see the combined monthly payment up front.