Last Updated on August 23, 2023 by Hannah Stevens
Mortgage Assistance for Homebuyers in Alabama
Montgomery Housing Authority Home Ownership Program
The Montgomery Housing Authority created the Home Ownership Program to help Housing Choice Voucher (HCV) participants buy their first home. It is an effort to help them invest in wealth building through homeownership.
Available Assistance
The applicants must fulfill certain conditions in order to receive safe and affordable options to buy their first home.
Eligibility Requirements
Every applicant needs to be current MHA HCV Program participants and first-time homebuyers. These are people who have never owned a home in the last three years. They must work full-time (not less than 30 hours per week) for a minimum of a year, and have an annual income of at least one member of the household must not be less than $14,500. The annual income of the head of household and elderly/disabled must equal the Supplemental Security Income or Federal Social Security of $9,000 every year. Every Home Ownership Program applicant must also complete a HUD approved, first-time homebuyer’s education course. Moreover, applicants must not break their existing lease in order to enroll in the program.
Neighborhood Housing Services
Neighborhood Housing Services acknowledged that a lot of first-time homeowners would benefit from education and counseling regarding home buying and the mortgage process. Thus, they offer classes for low- and moderate-income borrowers online and at their Birmingham office.
Available Assistance
There are a lot of questions raised during the mortgage process. How do I begin shopping for a mortgage? What credit score do I need? What are the hidden costs of a mortgage loan? The Neighborhood Housing Services of Birmingham offers homebuyer education courses. These courses aim to empower borrowers to answer these questions and help them find the best way to buy a home.
The Birmingham office offers homebuyer education classes on the first Saturday of every month. They also partnered with eHome America in order to offer a web-based education program for homebuyers that combines in-person and online housing counseling. This makes it easier for potential homebuyers to learn when and where they are most convenient.
It can be stressful to buy a house. However, the more informed you are, the better you will be able to make decisions. It has been proven that first-time homebuyers benefit from homebuyer education courses. This makes it 67% easier to stay current with the mortgage. A lot of these borrowers are also eligible for special financing programs or down payment assistance, which will help increase homeownership affordability.
City of Opelika First Time Home Buyer Loan Program
Opelika believes that homeownership is beneficial for the homeowner and the surrounding neighborhood. However, it is important to understand and manage all associated costs, including mortgage, property taxes, insurance, maintenance and repairs. Thus, the City of Opelika created the First Time Homebuyer Loan Program to help first-time homeowners tackle the daunting task of homeownership.
Available Assistance
The First Time Home Buyer Loan Program, a city-wide program, offers down payment assistance and closing cost assistance for low- to moderate income individuals. However, there is a preference towards homebuyers who live in the Jeter Avenue Target Area. The target area is in the confines of 6th St., Samford Avenue, Fox Fun Parkway, and Torbert Boulevard. Opelika offers a 50% of the required down payment from lenders as a 5-year, zero-interest loan. This loan is also in conjunction with the Alabama Council of Human Relations education and homebuyer training.
Eligibility Requirements
The First Time Home Buyer Loan Program is only available to first-time homebuyers. Anyone who has owned a house in the last three years is not eligible. The applicant must also complete and attend the homebuyer training, and their combined household income cannot exceed 80% of HUD’s median income. Furthermore, the applicant must live in the property purchased as their primary residence. It must be located within Opelika as well. Mobile or modular homes, however, do not qualify.
City of Huntsville Homeownership Programs
The Community Development Department in Huntsville, Alabama offers a variety of programs to help first-time homebuyers realize their goal of homeownership. The City offers two programs to help first-time homebuyers: the Single Family HOME Ownership Program, and the Down Payment Assistance Program. These programs are designed to create more inclusive and stable neighborhoods.
Available Assistance
The Single Family HOME Ownership Program offers qualified applicants with recently built 3 Bedroom/2 Bathhouses in Terry Heights and Edmonton Heights Neighborhoods. However, in order to qualify, applicants must be first-time buyers and meet certain income requirements (shown below).
The Down Payment Assistance Program offers eligible first-time homebuyers up to $7,500 to offset expensive, upfront costs associated with the mortgage process, such as closing costs and down payments. However, the funds are given according to the needs of an individual. All applicants must also meet eligibility requirements, and live in the property primarily for at least five years.
Income Limits
Every applicant must within the limit of 80% of the Area Median Income
- 1-person household: $47,550
- 2-person household: $54,350
- 3-person household: $61,150
- 4-person household: $67,900
- 5-person household: $73,350
- 6-person household: $78,800
- 7-person household: $84,200
- 8-person household: $89,650
Tuscaloosa Housing Authority Homeownership Program
Tuscaloosa Housing Authority Homeownership Program provides assistance to first-time homebuyers through the THA Homeownership Program. This program provides affordable housing options for new homebuyers to encourage homeownership.
Available Assistance
THA Homeownership Program homes are often sold at $99,500. Homebuyers need a first mortgage obtained from a lender of your choice, and pay a down payment of $1,000. Then, a second mortgage can come from any city funds. The second mortgage is usually forgiven after a prorated 15-year period. Moreover, the THA holds a third mortgage. It is forgiven on a similar, prorated basis in a 5-year period.
Eligibility Requirements
The THA Homeownership Program is only available for first-time homebuyers. Thus, applicants who have owned a home for the last three years are not eligible. Every applicant must show proof of employment or other forms of income. They need to complete the City of Tuscaloosa’s Homeownership Counseling program as well. Furthermore, applicants are required to pass a criminal background screening, and their household income must be within 80% of the set HUD area median income. In addition, they must be eligible to obtain a first mortgage, and they must be able to pay $1,000 down payment.
Property Guidelines
THA Program properties have a minimum of 1,150 square feet, with a 3 bedroom/2 bath configuration. Exteriors will feature a mixture of brick and siding, then furnished with new stoves, refrigerators, and dishwashers. Each property also comes with a fenced in backyard and an enclosed, one-car garage.
Affordable Income Subsidy Grant
A down payment is not the sole upfront cost which homebuyers need to think about with a mortgage. They will also need to pay the closing costs prior to moving into their new house. The Alabama Housing Finance Authority offers eligible borrowers assistance in closing costs assistance with a grant, known as the Affordable Income Subsidy Grant, and an assistance for down payments through Step Up.
Available Assistance
The Affordable Income Subsidy grant is available to applicants who meet the income limit of the program. Borrowers who are at or below 50% of the AMI limits as published by Freddie Mac can receive a grant of 1% on the loan amount. Meanwhile, others who are at or below 80% of the AMI may be eligible to receive a 1.5% grant.
Eligibility Requirements
The Affordable Income Subsidy grant has additional requirements that all applicants must meet. These include income requirements. The program funds may be used to buy new or existing property types, but they must be paired only with HFA Advantage conventional loans. Moreover, credit scores of 640 and higher are required, as well as a debt-to-ratio of must be less than or equal to 45%. They must also complete a homeownership education program, and apply for a loan through an approved lender.
This closing cost assistance, like Step Up, can be combined with a Mortgage Credit Certificate to make it even more affordable to buy a home.
Alabama Housing Finance Authority Step Up Program
The Alabama Housing Finance Authority (AHFA) is designed to make the mortgage process less expensive for qualified applicants who want to purchase a home, but need financial assistance to do so. The Step Up Program of the Alabama Housing Finance Authority (AHFA) provides funds to applicants to pay for the initial costs associated with a mortgage transaction such as the down payment, closing costs, and prepaid items.
Available Assistance
The Alabama Housing Finance Authority’s Step Up program assists low- to moderate-income applicants to obtain their goals of homeownership. It provides down payment assistance of up 3% of the purchase price. Moreover, these funds are available as a 10-year second mortgage, and are combined with a 30-year primary, fixed-year primary mortgage.
Eligibility Requirements
Homebuyers must meet specific requirements in order to apply for the Step Up program. Applicants must have a minimum credit score of 620, and a household income of at least $97,300. This is regardless of family size or property location. Furthermore, a participating lender must provide an AHFA-approved conventional loan to finance the property. The applicant must also complete a homeownership education course.
Property Guidelines
The properties purchased must be new or existing homes in Alabama, and it must be used as the applicant’s primary residence within 60 days.
Homeownership Down Payment Assistance Program
Mobile, Homeownership Down Payment Assistance Program (HOME DPA) is a flexible gap financing program, which provides assistance to first-time homebuyers to purchase safe, decent, affordable homes. This program also promotes sustainable housing, growth in personal wealth and equity for Mobile residents with low- to moderate-incomes.
Available Assistance
Qualified applicants of the HOME DPA can receive up to $10,000 used for down payment and eligible closing costs. However, for properties that were formerly “blighted,” they can receive up to $15,000. Then, once the borrower has lived in the home for five years, assistance funds can be forgiven.
Eligibility Requirements
The program is available only to U.S citizens or legal residents who have a valid green card. Moreover, you can only apply if you meet the income requirements, and plan to use the home as your primary residence. The HUD also requires all applicants to attend eight hours of approved, pre-purchase homeowner counseling and education courses.
Property Guidelines
The funds given through this program allows you to buy a single-family home, condominium, or manufactured home within the limits of Mobile City. Furthermore, existing homes must be purchased at a price of less than $141,000, and new constructions should not exceed $238,000. To ensure the property meets HUD’s minimum safety and health standards, all properties must also pass a Housing Quality Standards inspection (HQS).
Income Limits
- 1-person household: $34,400
- 2-person household: $39,300
- 3-person household: $44,200
- 4-person household: $49,100
- 5-person household: $53,050
- 6-person household: $57,000
- 7-person household: $60,900
- 8-person household: $64,850
This is similar to one of the First-Time Homebuyer Assistance Programs in Alaska.
Mobile County Down Payment Assistance Program
Mobile County, Alabama acknowledges that even those who can afford monthly mortgage payments don’t always have the money to pay a down payment on a new home. Therefore, Mobile County Down Payment Assistance Program was created to help people out of this renter’s trap.
Available Assistance
Income-eligible applicants can receive assistance funds in the form of a grant, which ranges from $1,000 to $10,000. Then, the money is for the closing costs and down payment for the mortgage transaction. The U.S. Department of Housing and Urban Development (HUD) grants funds for both programs.
Eligibility Requirements
All applicants must meet the specific requirements to qualify for the Mobile County Down Payment Assistance Program. Except for those who are part of the New Construction of Affordable Homes Program, all applicants must also be first-time buyers. Moreover, the applicants must have a gross annual household income that must not exceed 80% of Mobile County’s current, median family income (shown below).
Property Guidelines
The properties purchased using program funds must be the applicant’s primary residence for at least five years. Furthermore, the property must be in the following areas: Bayou la Batre, Chickasaw, Citronelle, Creola, Mount Vernon, Prichard, Saraland, Satsuma, Semmes, or other independent areas of Mobile County (other areas could be added in the future). The program does not apply to mobile homes, condominiums, townhouses, and duplexes or multiplex units.
Income Limits
Household income means all income earned by household members (18 years and older) who will be living at the house, regardless if they are not on the mortgage.
- 1 person household: $18,901 to $30,200
- 2 person household: $21,601 to $34,500
- 3 person household: $24,301 to $38,800
- 4 person household: $26,951 to $43,100
- 5 person household: $29,151 to $46,550
- 6 person household: $31,301 to $50,000
- 7 person household: $33,451 to $53,450
- 8 person household: $35,601 to $56,900
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