Alabama First Time Home Buyer Down Payment Assistance

Alabama First Time Home Buyer Down Payment Assistance – Written by Ruben Cazinolp Ruben Cazinolp AeroRight Associate Writer, Home Lending Ruben Cazinolp is an Associate Writer with the Home Lending team. After graduating from Fordham University, he started his professional career in 2022. In January, he now works in housing, real estate and mortgages. Contact Ruben Cazinolp on LinkedIn LinkedIn Email Contact Ruben Cazinolp by Email Contact Ruben Cazinolp by Mail

Edited by Troy Segal Troy Segal Arrow Right Senior Editor Troy Segal is a senior editor at Home Landing. He edits home ownership stories along with stories on the finer points of mortgages and home loans. Contact Troy Segal on Twitter Email Contact Troy Segal on Email Mail

Alabama First Time Home Buyer Down Payment Assistance

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First Time Homebuyer Loans And Programs

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What Is The Average Down Payment On A House In 2023?

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Alabama is home to Gulf Coast beaches, scenic mountains, historic cities, and a NASA research center. Home prices in this southern state are steady, with the median sales price in January in 2023. was $254,600, according to real estate broker Redfin.

For first-time home buyers, programs are available to make home ownership more affordable by offering lower mortgage rates, more relaxed credit requirements, down payment assistance and tax breaks. These programs are administered by the Alabama Housing Finance Authority.

First-time home buyers can take advantage of the Alabama Housing Finance Authority’s (AHFA) Step Up Program to get a fixed-rate mortgage. Through the program, qualified homebuyers (first-time or repeat buyers) can qualify for a competitive 30-year conventional (HFA Advantage), FHA or VA loan with down payment assistance. Following are the requirements to participate in the program:

Should I Put A Large Down Payment On A House? Is It Better?

With a 30-year mortgage, AHFA’s Step Up program includes down payment assistance of up to 4 percent or $10,000, whichever is less. Financing available on a 10-year second mortgage. You can make one payment every month for both loans. To qualify, you must be eligible for (and participating in) the Step Up First mortgage program.

The AHFA Affordable Income Subsidy Grant provides 0.5 or 1 percent of your mortgage, based on your income. The grant is only available to HFA Advantage conventional loan recipients. You can combine the grant with enhanced down payment assistance and a mortgage credit certificate to boost your savings.

Grant requirements are similar to the Step Up Program criteria, but there are different income limits depending on where your home is located.

In addition to competitive mortgage rates and down payment assistance, AHFA offers a Mortgage Credit Certificate (MCC) to first-time home buyers.

How Much Down Payment Is Required For A House?

The MCC is a tax credit, and in Alabama it’s equal to 30 percent or 50 percent of your mortgage interest, depending on the size of your loan, up to $2,000 a year, or up to 20 percent of your mortgage interest if your loan is over $150,001. You can get an immediate tax break by itemizing withholding on your W-4 or once a year on your federal income tax return.

You can combine the tax credit with AHFA’s Step Up Program or another 30-year fixed-rate mortgage offered by a participating lender.

In addition to state-level mortgage programs, first-time home buyers in Alabama can take advantage of government-backed loans such as FHA, VA and USDA mortgages for more favorable rates and terms. You can also ask your mortgage lender about other home loan and assistance options. For a comprehensive list of loans to consider, visit the Guide to Loans and Programs for First Home Buyers.

If you’re ready to begin your home buying journey, an Alabama Home Finance Service approved mortgage lender is a great starting point. Note that while AHFA does not directly issue mortgages, the agency works with more than 50 lending institutions across the state. It’s smart to shop around and compare loan offers from multiple lenders to find the most competitive option for your situation.

First Time Homebuyers Toolkit

Ruben Çağınalp is a contributing writer for the Home Landings team. After graduating from Fordham University, he started his professional career in 2022. In January, he now works in housing, real estate and mortgages.

Edited by Troy Segal Troy Segal Arrow Right Senior Editor Troy Segal is a senior editor at Home Landing. He edits home ownership stories along with stories on the finer points of mortgages and home loans. Contact Troy Segal on Twitter Email Troy Segal Email Troy Segal by Mail Troy Segal Senior Editor, Home Landing Below is a list of down payment assistance programs in Alabama. We divide them into two categories: state and county/city. If you don’t see a DPA program in your county, don’t despair. New grants and services are available every day. Also, the best program for you may not be advertised online. Before applying for a statewide or national down payment assistance program, check with your county’s local housing authority, as they may have a program that fits your needs.

Also: Cities are statistically more likely to have DPA programs than suburban counties. As it were. But even if you don’t think your buying area is “rural,” the USDA disagrees.

The Department of Agriculture issues loans called USDA (abbreviated to, you guessed it, United States Department of Agriculture). A USDA loan isn’t technically a DPA, it’s a 0% loan, so it’s essentially the same. You still have to factor in closing costs, but if you’re smart, you’ll ask the seller to pay them.

Apply For A First Time Home Buyer Loan

Although USDA programs are only listed in certain counties, that doesn’t mean you can’t get a USDA loan elsewhere. It just means it’s not common in your favorite county. Find a home you love

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