The one AHFA programme you never pay back
Program and regulatory figures verified October 5, 2026. Details change; confirm your scenario with us.
Every other dollar AHFA puts into your deal comes back with a payment attached. This one does not, and it is the one most often left out of the conversation.
What the grant actually is
Money toward your closing costs that is never repaid. No second mortgage, no note, no monthly payment, no forgiveness period to survive. AHFA describes it as a grant and means it literally.
That makes it structurally different from everything else on this site. First Step and Step Up assistance is a 10-year amortizing second mortgage at your first mortgage's rate. The Affordable Income Subsidy Grant is simply a subsidy.
How much is it?
A percentage of your loan amount, set by where your income falls against the area median for the property's location.
| Your income vs. area median | Grant | On a $200,000 loan | On a $250,000 loan |
|---|---|---|---|
| At or below 50% of AMI | 1% of the loan amount | $2,000 | $2,500 |
| 50.01% – 80% of AMI | 0.5% of the loan amount | $1,000 | $1,250 |
| Above 80% of AMI | Not eligible | — | — |
AHFA's wording on the ceiling is precise: "Borrower(s) qualifying income converted to an annual basis cannot exceed 80% of the Area Median Income (AMI) for the property's location."
Whose AMI limits?
Freddie Mac's, not HUD's, and not the same table First Step uses. AHFA points at Freddie Mac's published limits and its Home Possible eligibility map, and says income limits for these grants "are determined by the county location of the home."
That is worth saying clearly because Alabama now has three different income tests in play, and they do not line up:
| Programme | Income test | Source |
|---|---|---|
| Step Up | $172,800 flat | AHFA |
| First Step | Area table, $89,500–$161,140 | HUD |
| This grant | 80% of AMI by county | Freddie Mac |
So a household can clear Step Up comfortably, clear or fail First Step depending on the county, and still be well above the grant's ceiling. They are three separate questions. The first two in detail.
The catch: HFA Advantage only
The grant attaches to Freddie Mac's HFA Advantage conventional product and nothing else. If your file is going FHA, VA or USDA, the grant is not available on it — which is a real decision point, because a lower-income borrower is often steered toward FHA by default.
Whether HFA Advantage is the better route depends on your credit score and how the mortgage insurance compares on your actual numbers. It is worth running both rather than assuming. Send us the scenario and we will run it.
Stacking it
AHFA is explicit that the grant sits on top rather than instead: it is offered "in addition to the down payment assistance currently offered through the First Step and Step Up programs," and both "can be used on the purchase of new or existing homes to multiply the savings opportunities."
So the strongest combination available in Alabama is First Step's below-market rate, plus 4% / $10,000 of assistance, plus a grant of 1% of the loan amount toward closing — for a first-time buyer, in a targeted area, at or under 50% of AMI, going HFA Advantage conventional. Few files hit all of those at once, but it is worth knowing what the ceiling looks like before you settle for less.
What else applies
- Credit score 640 or higher.
- Debt-to-income 45% or lower.
- Homebuyer education required. What counts.
- New or existing homes in Alabama.
- Through a participating lender.
- Serviced by ServiSolutions, a division of AHFA.
Frequently asked questions
What is the Affordable Income Subsidy Grant in Alabama?
A closing-cost grant from AHFA on Freddie Mac HFA Advantage conventional loans, which is never repaid. Borrowers at or below 50% of area median income receive 1% of the loan amount; borrowers between 50.01% and 80% of AMI receive 0.5% of the loan amount.Do I have to repay the Affordable Income Subsidy Grant?
No. It is a grant rather than a loan, so there is no note, no monthly payment and no forgiveness period. That makes it structurally different from AHFA's First Step and Step Up down payment assistance, which is a 10-year amortizing second mortgage with a monthly payment.Can I use the Affordable Income Subsidy Grant with FHA?
No. The grant is available on Freddie Mac HFA Advantage conventional loans only. First Step and Step Up themselves are available with FHA, VA, USDA and HFA Advantage conventional.Can the grant be combined with First Step or Step Up?
Yes. AHFA offers the grant in addition to the down payment assistance provided through First Step and Step Up, and states both can be used on the purchase of new or existing homes.Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal or tax advice. AHFA program terms, income limits and sales price limits are set by the Alabama Housing Finance Authority and change; figures here carry the date we verified them against AHFA's published documents. AHFA down payment assistance is an amortizing second mortgage with a monthly payment, not a grant. Federal recapture tax may apply on First Step bond loans; consult a tax advisor. Loans are subject to borrower and property qualification.