Alabama's Homeownership Program
$10,000
About the Program
Alabama offers several different low and moderate-income resident incentives towards home purchase. These programs include:
First Step Mortgage Revenue Bonds
Nearly 50,000 Alabama households have benefitted from AHFA’s First Step program, which offers below-market, 30-year fixed mortgage interest rates to first-time or repeat homebuyers.
How it Works:
All participating borrowers will benefit from special low mortgage interest rates offered through First Step on FHA, VA, USDA, and Freddie Mac’s HFA Advantage conventional loans.
All borrowers are eligible for down payment assistance up to $10,000 or 4% of the sales price, whichever is lower.
The down payment funds are secured by a 10-year second mortgage combined with the borrower’s 30-year, fixed-rate First Step mortgage.
Since the loans are serviced by ServiSolutions, a division of AHFA, homeowners have only one check to write each month.
Current Income Limits
These limits (effective on applications taken as of June 2, 2025) are set by the U.S. Department of Housing and Urban Development to be used with the First Step/Mortgage Revenue Bond loans offered by AHFA. When you find a home you’re interested in buying, simply contact one of your local participating lenders to learn whether the address is located in a “target” or “non-target” area, so you'll know which column to use.
Income limits for these grants are determined by the county location of the home and range from a low of $86,400 to a high of $161,700, depending on the size of your family and the area you are seeking ownership.
Affordable Income Subsidy Grant
What is an Affordable Income Subsidy Grant?
In addition to the down payment assistance currently offered through First Step & Step Up, the HFA Advantage product provides eligible borrowers a grant to help with closing costs. Borrower(s) qualifying income converted to an annual basis cannot exceed 80% of the Area Median Income (AMI) for the property’s location.
- Borrowers at or below 50% of the AMI limits as published by Freddie Mac are eligible for a grant of one percent of the loan amount.
- Borrowers at 50.01-80% of the AMI limits as published by Freddie Mac are eligible for a grant of one-half percent of the loan amount.
Income limits for these grants are determined by the county location of the home and range from a low of $86,400 to a high of $161,700, depending on the size of your family and the area you are seeking ownership.
Step Up
What is Step Up?
Step Up is a homeownership program designed specifically for moderate-income home buyers who can afford a mortgage but need help with the down payment.
The down payment funds are secured by a 10-year second mortgage and are combined with a 30-year, fixed-rate first mortgage. Since the loans are serviced by ServiSolutions, a division of AHFA, homeowners have only one check to write each month. Program participants must complete a homebuyer education course to qualify.
Watch AHFA Board Member Joshua Dean share his family’s experience with the Step Up program.
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