Alabama First-Time Home Buyer Programs and Assistance
Alabama Housing Finance Authority (AHFA) currently lists 3 programs for Alabama buyers, with down payment help up to $10,000 through Step Up. Figures below were read from the agency's own pages on September 11, 2026.
Alabama first-time buyer programs open now
Alabama Housing Finance Authority (AHFA) is the state's housing finance agency (homebuyer programs page). It runs 2 down payment or closing-cost assistance programs alongside 1 below-market first mortgage. AHFA's Step Up and Affordable Income Subsidy Grant programs are open to first-time and repeat buyers alike;
| Program | Type | Amount | First-time only | Min. credit | Income limit |
|---|---|---|---|---|---|
| First Step Mortgage Revenue Bonds source | First mortgage | Down payment assistance up to $10,000 or 4% of the sales price, whichever is lower, paired with a below-market 30-year fixed first mortgage | No | n/a | $89,500 (non-target, family 1-2, all other counties) to $161,140 (target area, family 3+, Huntsville MSA), effective 6/24/2026; |
| Step Up source | Second mortgage | 4% of the sales price up to $10,000 | No | 640 | $172,800 or less, regardless of household size or location |
| Affordable Income Subsidy Grant source | Grant (no repayment) | 1% of the loan amount for borrowers at or below 50% AMI; 0.5% of the loan amount for borrowers at 50.01-80% AMI | No | 640 | Cannot exceed 80% of Area Median Income (AMI) for the property's county |
- First Step Mortgage Revenue Bonds. Terms: DPA secured by a 10-year second mortgage combined with a 30-year fixed-rate First Step first mortgage; loans serviced by ServiSolutions Purchase price limit: $566,355 (non-target) to $692,211 (target area), effective 6/24/2026, statewide (single limit, not county-tiered) Homebuyer education: required Program page
- Step Up. Terms: 10-year second mortgage combined with a 30-year fixed-rate first mortgage; loans serviced by ServiSolutions Must pair with: HFA Advantage conventional, FHA, VA, or USDA first mortgage Homebuyer education: required Program page
- Affordable Income Subsidy Grant. Terms: Grant toward closing costs paired with an HFA Advantage conventional first mortgage Must pair with: HFA Advantage conventional first mortgage Homebuyer education: required Program page
City and county programs in Alabama
Local governments run their own down payment funds on top of the state programs. These can be combined with a state loan in most cases; each has its own income limit and area.
- City of Birmingham: Ready to Own Program (Down Payment Assistance Program). Up to $10,000. Forgivable second loan. Income limit: Household income must not exceed 80% of Area Median Income (HUD limit). Official page
- City of Mobile: First Time Home Buyers' Program (Downpayment Assistance Program). Forgivable second loan. Income limit: Income-eligible households (limit not stated on the official program page). First-time buyers only. Official page
How little you can put down
You do not need 20% down. Conventional loans go as low as 3% (through programs like Fannie Mae HomeReady and Freddie Mac Home Possible), FHA loans start at 3.5%, and VA and USDA loans can require nothing down. On Alabama's median-priced home (about $299,000), 3% down is roughly $8,970. Putting 20% down lets you skip private mortgage insurance, but most first-time buyers put down far less.
Who counts as a first-time buyer
For most programs, a first-time buyer is anyone who has not owned a primary residence in the last three years, so many repeat buyers qualify again. Alabama programs often add income and purchase-price limits, which is another reason to confirm the details with Alabama Housing Finance Authority.
Other ways to save in Alabama
Buyer commission rebates are not available to most buyers in Alabama, so beyond Alabama Housing Finance Authority assistance, your best levers are comparing lenders on rate and fees, shopping title and settlement services, and asking the seller for a closing-cost concession. See our Alabama closing-costs guide for the full picture.
Frequently asked questions
What first-time home buyer programs are available in Alabama?
Alabama Housing Finance Authority (AHFA) lists 3 programs: First Step Mortgage Revenue Bonds, Step Up, Affordable Income Subsidy Grant. Down payment help runs up to $10,000. City of Birmingham, City of Mobile also run local down payment programs.
How much down payment assistance can you get in Alabama?
Up to $10,000 through Step Up (second mortgage). Other Alabama programs offer different amounts; see the table on this page for each one.
Do you have to be a first-time buyer to qualify in Alabama?
Not for every program. 3 of 3 Alabama programs are open to repeat buyers. AHFA's Step Up and Affordable Income Subsidy Grant programs are open to first-time and repeat buyers alike; First Step is also open to first-time or repeat homebuyers who meet income/price limits (no 3-year non-ownership rule stated on the AHFA program pages)
How much down payment do you need in Alabama?
As little as 3% on a conventional loan, 3.5% on an FHA loan, and 0% on VA or USDA loans. On Alabama's median-priced home (about $299,000), 3% is roughly $8,970. You do not need 20% down, though 20% lets you avoid mortgage insurance.
Who counts as a first-time home buyer?
For most programs, a first-time buyer is anyone who has not owned a primary residence in the last three years. Some Alabama programs also have income and purchase-price limits, so check with Alabama Housing Finance Authority.
Can I combine assistance with a buyer rebate in Alabama?
Alabama does not permit buyer commission rebates, so first-time buyers here should focus on Alabama Housing Finance Authority assistance programs and negotiating the buyer's-agent commission instead.
Official sources
- Alabama Housing Finance Authority (AHFA)
- First Step Mortgage Revenue Bonds | AHFA
- Step Up | AHFA
- Affordable Income Subsidy Grant | AHFA
- Available Programs | AHFA
- Income Limits | AHFA
- Sales Price Limits | AHFA
- Down Payment Assistance Program | City of Birmingham, Alabama
- Downpayment Assistance Program | City of Mobile, Alabama
- Consumer Financial Protection Bureau: down payment options and how to prepare
Alabama program details last verified against Alabama Housing Finance Authority on September 11, 2026.
Read the full guide to the cash you need to buy →
This is general information, not financial advice. Program details, limits, and loan terms change; confirm the current rules with Alabama Housing Finance Authority and your lender before you rely on them.
See first-time buyer programs in all states