Mortgage in Alabama

Alabama offers plenty to see and do, from mountain getaways and fantastic food to some of the best football games in the country. The best part of moving to Alabama? Homes are cheap in Roll Tide country. Just a couple of years ago, the average home price in Alabama was a mere $141,300. As with real estate across the United States, prices in this state trend upward. With our Alabama mortgage calculator, you can see exactly how much home you can afford.

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

Mortgage Options in Alabama

You can choose from several mortgage types when buying a home in 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 loans require 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 shows what you'll pay each month!

First-Time Home Buyer Programs in Alabama

If you're a first-time homebuyer, you can take advantage of two 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. Unlike the Step Up program, you don't need to repay it.

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.

Alabama Mortgage Calculator: See Your Monthly Cost

With this information in mind, try our Alabama mortgage calculator to see how much the loan you want will cost!