Mortgage in Alabama

Alabama has plenty of amazing things to see and do, including going to the mountains, eating fantastic food, and going to some of the best football games in the entire country. The best part of moving to Alabama is that homes are cheap in Roll Tide country. Just a couple of years ago, the average home price in Alabama was a mere $141,300. However, as with all real estate in the United States, prices in this state trend in an upwards direction. With our Alabama mortgage calculator, you'll be able to see exactly how much home you can afford.

Here's everything you need to know about getting a mortgage in Alabama.

Alabama Mortgage Calculator: What Are My Options?

There are several mortgages to choose from if you're trying to buy a home within the state.

Alabama conventional mortgage: With this mortgage option, you'll typically need a minimum credit score of 620, a down payment of 20%, and a maximum debt-to-income ratio of 43% (on average - some lenders can go higher). If you have a down payment of less than 20%, you'll need to pay for private mortgage insurance.
Alabama FHA mortgage: Backed by the Federal Housing Administration, FHA mortgages can have as little as 3.5% down, as long as your credit score is greater than or equal to 580. If your credit score is between 500-580, your down payment must be at least 10%. These mortgages must pay PMI for the life of the loan.
Alabama VA mortgage: Qualified veterans can obtain a mortgage at some of the country's best terms. VA mortgages require as little as 0% down and no private mortgage insurance. While the VA does not have a minimum credit score, loans typically require 660 or higher to receive approval.

No matter which loan option you choose, our Alabama mortgage calculator can let you see what you'll be paying per month!

First-Time Homebuyers in Alabama

If you're a first-time homebuyer, you should know that there are a couple of programs offered by the AHFA ( Alabama Housing Finance Authority).

Step Up Program

This program provides 3% down payment assistance, secured by a 30-year fixed-rate mortgage. The borrower has to repay the 3% loan as part of a 10-year second mortgage alongside the first mortgage. A division of AHFA services both loans, so there's only one payment to make each month.

Eligibility Criteria: Participants who earn $130,600 or less are eligible for this program if the loan is from the FHA. Participants who earn 80% or less of the area median income or $130,600 (whichever is less) are eligible for conventional Step Up. Participants making between 80% of the median income and $130,600 can get the Freddie Mac Advantage Loan product instead.

Affordable Income Subsidy Grant

This grant provides between 0.5% and 1% of the loan amount to help with closing costs. You don't need to repay this back, unlike the Step Up program.

Eligibility Criteria: You must be taking out a conventional loan and have an income below 80% of the area median income. Borrowers must have a credit score of 640 or higher and have a debt-to-income ratio of 45% or lower.