If you’re a first time home buyer in Alabama there are several State administered programs that you should consider as part of your financial planning. Even if you plan on selling your current home and stepping up to a new home, you should investigate what is available through the Alabama Home Financing Authority (AHFA) and local financial institutions.
American Dream Down-payment Initiative
The AHFA administers this Federal Program whose purpose is to increase homeownership among lower income households. AHAF in conjunction with this program offers 0% down-payment loans up to $10,000. Qualifying income limits are applied by County and family size. E.g., for a family of 4 in Madison or Limestone County the income limit is $51, 850.
This program offers lower-than-market fixed rates for FHA or Rural Development mortgages to first-time lower-income buyers. In addition to the lower rate, the AHFA also provides up to $10,000 for down-payment and closing cost assistance, financed over 20 years. Participant family income is limited to $77,550 and below for the Huntsville area.
This is an interesting program as it is not limited to first time home buyers and participants may earn up to $97,300 regardless of family size or location. Utilizing this program the AHFA provides different 100% financing options through local FHA and Rural Development mortgage providers.
Mortgage Credit Certificates
These credits are not mortgages but reduce the amount of federal income tax homeowners pay giving them more available income to quality for a mortgage loan. Income limits are the same as the First Step program but are also applicable to the Step Up program. Payment savings can be as high as 20% with this program.