Down payment assistance in Alabama
Alabama's primary statewide down payment assistance program, run by Alabama Housing Finance Authority. Numbers and eligibility reflect the program's published 2025 guidelines.
Step Up
Second mortgage- Maximum assistance
- Up to 4% of sale price as a 10-year second mortgage
- Income limit
- Up to $145,460 (2025 limit)
- Home price limit
- Up to $452,490 (2025 limit)
- First-time buyer
- Not required
- Eligible loan types
- FHA, VA, USDA, Conventional
- •DPA is structured as a 10-year amortizing second lien at the same rate as the first.
- •Funded by the AHFA Mortgage Revenue Bond program; income limits are published annually.
How Alabama DPA fits into your purchase
Down payment assistance reduces the cash you need at the closing table. Alabama's Step Up pairs with the standard FHA, VA, USDA, or conventional first mortgage from a participating lender; the DPA flows through the same closing.
Two things to budget for: most state DPA requires a homebuyer-education course (typically online, 6-8 hours, ~$75) and you usually have to use a lender on the agency's approved list. The agency keeps the list public on its website.
Common questions
Alabama's primary statewide DPA is Step Up from Alabama Housing Finance Authority. Up to 4% of sale price as a 10-year second mortgage. Many Alabama cities and counties also run additional DPA layered on top.
No. The Step Up is open to both first-time and repeat buyers, subject to income and home-price limits.
Yes. Step Up works with these loan types: FHA, VA, USDA, Conventional. The DPA is layered behind your first mortgage as a separate lien (or grant), and both close together.
Yes. A second-mortgage DPA has a monthly payment, and that payment is included in your debt-to-income ratio when the lender qualifies you.
Deferred and second-mortgage DPAs are generally repaid in full when you sell, refinance, or pay off the first mortgage.