Residents of Alabama looking to buy their first home may encounter a difficult lending market, just as in most other states, but there are a handful of first time home buyer programs to help make it easier. Some of these programs help with downpayment assistance, others with low-interest financing options.
Before you begin looking for a home in Alabama, many real estate professionals recommend home buyers acquire some sort of pre-approval from a lender. This not only eases some of the pressure in buying a home, but it also gives potential buyers a good idea of how much house they'll be able to buy. Fortunately, lenders will have all the information necessary regarding the first time home buyer programs available to you.
AHFA Programs
The Alabama Housing Finance Authority (AHFA) is a state entity created in 1980 to help serve the financial needs of home buyers. The organization focuses primarily on low and moderate-income buyers who can be helped with down payment assistance or affordable financing. Their two primary programs, known as First Step and Step Up, have so far helped more than 120,000 families.
These programs provide low interest rates, and assistance for closing costs and other entry costs, based on 30-year, fixed-rate loans. In addition, AHFA has a special program in partnership with Habitat for Humanity to purchase mortgages from the Habitat lenders in Alabama. By purchasing more than 400 loans since 1992, Habitat lenders are more willing to help first time home buyers get into a house through the Habitat for Humanity program.
Local Programs
Like most states, there are a limited number of first time home buyer programs in various local areas in Alabama. For example, the Huntsville Downpayment Assistance Program (DAP) provides assistance with both downpayments and closing costs for residents of Huntsville. To be eligible home buyers must:
- be first time buyers according to program criteria
- complete an 8-hour home buyer course
- have at least $500 in personal savings prior to closing
- purchase a home within the city limits
- meet other requirements as stipulated by the program
Birmingham offers two programs for its local residents similar to what is available in Huntsville. The Birmingham Down Payment Assistance Program (DPAP) provides up to $4,999 of assistance for downpayments or closing costs, as does the Birmingham NHS Inc Down Payment Assistance Program (DPAP).
Residents in Decatur can receive up to $25,000 of assistance through the Decatur H.O.M.E. Program (HOME), while the Tuscaloosa Home Purchase Assistance Program (HPAP) can provide as much as $5,000.
State Grants and Other Local Programs
From time to time Alabama may offer state grants as a means to boost housing in a particular region or among a specific demographic group. The best place to find information about such grants is to go directly to the state government's website. It will have a section devoted to housing which will cover anything that's available at the time. Your real estate agent or lender should also have access to the information.
Where local governments are concerned, many major cities offer low-interest mortgages or buyer incentive programs as a means of ending city blight by encouraging home ownership. You'll need to check with your particular city for the details, but often times these programs sell abandoned houses for next to nothing, if the buyers will agree to rehab them and live in them for a certain period of time.
If you're a first time home buyer in Alabama, there are options for assistance out there. If you're willing to take the time to do your homework, you should be able to find some sort of assistance, especially if you qualify as low or moderate-income buyer.