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AHFA Step Up
First-time homebuyers can take advantage of the Alabama Housing Finance Authority’s (AHFA) Step Up program to obtain a fixed-rate mortgage. Through the program, eligible homebuyers (first-time or repeat buyers) can get a 30-year conventional (HFA Advantage), FHA loan or VA loan at a competitive rate, along with down payment assistance. The requirements to participate in the program include: Property must be in Alabama Income can’t exceed the lesser of $130,600 or 80 percent of the area median income, depending on loan type Credit score must be 640 or higher, depending on loan type Debt-to-income (DTI) ratio must be 45 percent or lower Must complete a homeownership education course Alabama down payment assistance
AHFA Step Up down payment assistance
Along with the 30-year mortgage, AHFA’s Step Up program includes the option for down payment assistance of up to 4 percent or $10,000, whichever is less. The assistance funds are available through a 10-year second mortgage. You’ll be able to pay for both loans with a single payment each month. To qualify, you must be eligible for (and participating in) the Step Up first mortgage program. AHFA Affordable Income Subsidy Grant
AHFA’s Affordable Income Subsidy Grant provides a grant of up to 1 percent of your mortgage to help you pay for closing costs. The grant is only available to those obtaining an HFA Advantage conventional loan, not an FHA loan. You can combine the grant with the Step Up down payment assistance, as well as a to maximize your savings. The requirements for the grant are the same as the Step Up program’s standards, but there are different based on county where your home is located. Other Alabama homebuyer assistance programs
Mortgage credit certificate MCC
In addition to a competitive mortgage rate and down payment assistance, AHFA also offers a mortgage credit certificate (MCC) to first-time homebuyers. An MCC is a tax credit, and in Alabama equals as much as 30 percent or 50 percent of your mortgage interest, depending on the size of your loan, up to a $2,000 each year — or, up to 20 percent of your mortgage interest if your loan is higher than $150,001. You can get the tax break immediately by revising your withholding on your W-4, or get it once a year through your federal income tax return. You can combine the tax credit with AHFA’s Step Up program or any other 30-year, fixed-rate mortgage available through a participating lender. To qualify: You must be a first-time homebuyer, meaning you haven’t owned a home in the last three years. The property must be in Alabama. You must meet and . Other first-time homebuyer loan programs
Along with state-level mortgage programs, first-time homebuyers in Alabama can leverage government-backed loans, such as FHA, VA and USDA mortgages, to get more favorable rates and terms. You can also ask your mortgage lender about other home loan and assistance options that might be available. For a comprehensive list of loans to consider, visit Bankrate’s guide. For other Alabama homeownership programs, visit . Get started
If you’re ready to begin your homebuying journey, an approved Alabama Housing Finance Authority can be a good starting point. Keep in mind that while AHFA doesn’t offer mortgages directly, the agency works with over 50 lending institutions across the state. It’s smart to shop around and compare from several lenders to find the most competitive option for your situation. First-time homebuyer programs in nearby states
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SHARE: Autumn Cafiero Giusti is an award-winning journalist with over two decades of professional experience. She writes about mortgages, real estate and banking. Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters. Related Articles