Down Payment Path

Down Payment Assistance Programs in Alabama

Alabama provides a range of programs designed to help buyers with down payments and closing costs. These initiatives are open to a broad audience, making homeownership more achievable for both first-time and repeat buyers.

Step Up Program

The Step Up Program, offered by the Alabama Housing Finance Authority (AHFA), supports buyers with a second mortgage to cover their down payment.

  • Available to all homebuyers who meet income and credit score requirements.
  • Provides up to 4% of the purchase price as a 10-year second mortgage at the same interest rate as the primary loan.
  • Pairs with 30-year fixed-rate FHA, VA, or conventional loans.

Affordable Income Subsidy Grant

The Affordable Income Subsidy Grant offers financial support for buyers with moderate incomes to help with upfront costs.

  • Provides grants up to 3% of the loan amount for down payment or closing costs.
  • No repayment required.
  • Compatible with specific loan products, such as Home Possible or HomeReady mortgages.

Mortgage Credit Certificate (MCC)

The Mortgage Credit Certificate program helps homebuyers reduce their annual tax burden, making homeownership more affordable in the long term.

  • Offers a federal tax credit for a portion of the mortgage interest paid each year.
  • Can be combined with other down payment assistance programs.
  • Income and purchase price limits apply.

County and Local Programs

In addition to statewide programs, many counties and cities across Alabama provide specific assistance for homebuyers. These programs often include grants or low-interest loans to cover down payments and closing costs.

  • Programs are commonly available in major areas such as Birmingham, Huntsville, Mobile, and Montgomery.
  • Eligibility requirements vary by location and program.

Alabama's down payment assistance programs are designed to make purchasing a home a reality for more people, whether you're buying your first home or upgrading to a new one. Explore these programs to find the best fit for your financial needs and take a step closer to owning your dream home in the Heart of Dixie.