First-Time Home Buyer Alabama 2026
Your complete guide to buying your first home in Alabama. 2+ down payment assistance programs, FHA loans from 5.95%, and step-by-step guidance.
What First-Time Buyer Programs Are Available in Alabama?
Alabama offers 2 major first-time home buyer assistance programs. These include AHFA Step Up Program, Alabama Mortgage Credit Certificate. Programs provide up to $10,000 in down payment assistance through grants, forgivable loans, and below-market interest rates.
How Much Do I Need to Buy in Alabama?
You can buy a home in Alabama with as little as $0 down. VA and USDA loans require zero down payment. FHA loans need just 3.5% ($$7,525), and conventional loans start at 3% ($$6,450) on the median price of $215,000.
| Loan Type | Down Payment | $ Amount | Monthly P&I | Min Credit |
|---|---|---|---|---|
| VA Loan | 0% | $0 | $1,271 | 620 |
| USDA Loan | 0% | $0 | $1,306 | 640 |
| Conventional 3% | 3% | $6,450 | $1,266 | 620 |
| FHA Loan | 3.5% | $7,525 | $1,237 | 580 |
| Conventional 20% | 20% | $43,000 | $1,045 | 620 |
Alabama Down Payment Assistance Programs
AHFA Step Up Program
Down payment assistance for first-time and repeat buyers
Alabama Mortgage Credit Certificate
Federal tax credit reducing annual tax liability
5 Steps to Buy Your First Home in Alabama
To buy your first home in Alabama, start by checking your credit score, getting pre-approved, and researching DPA programs. The entire process typically takes 30-60 days from pre-approval to closing. Here's your step-by-step roadmap.
Check Your Credit & Finances
Review your credit score (aim for 620+), calculate your debt-to-income ratio, and save for closing costs. In Alabama, you may need as little as $7,525 for an FHA down payment.
Get Pre-Approved
Compare rates from at least 3 lenders. Current Alabama rates: 6.12% (30-year), 5.95% (FHA). Pre-approval shows sellers you're serious and locks your rate.
Apply for Alabama DPA Programs
Alabama has 2+ DPA programs. The AHFA Step Up Program offers up to $10,000. Apply early—funding can be limited.
House Hunt & Make an Offer
Popular cities in Alabama: Birmingham, Montgomery, Mobile, Huntsville, Tuscaloosa. Median price is $215,000 (+6.8% YoY). Work with a local real estate agent who knows the market.
Close on Your New Home
Closing costs in Alabama typically run 2-5% of the purchase price ($6,450-$10,750). Some DPA programs also cover closing costs.
Start Your Alabama Home Buying Journey
Get pre-approved in minutes and see what you qualify for.
Get Pre-Approved NowAlabama First-Time Buyer FAQ
What first-time home buyer programs are available in Alabama?
Alabama offers 2 major programs: AHFA Step Up Program, Alabama Mortgage Credit Certificate. These provide grants, forgivable loans, and below-market rates for down payment and closing cost assistance.
How much down payment do I need in Alabama?
As little as $0 (VA/USDA), $$6,450 (3% conventional), or $$7,525 (3.5% FHA) on the median price of $215,000.
What income do I need to buy in Alabama?
Using the 28% rule, you'd need approximately $$53,025/year. The median household income in Alabama is $56,200.
What is the FHA loan limit in Alabama?
The 2026 FHA loan limit in Alabama is $472,030. The conforming loan limit is $766,550.