Alabama's price limits: two numbers, and one programme with none
Program and regulatory figures verified October 5, 2026. Details change; confirm your scenario with us.
The price cap stops very few Alabama buyers. Where it does bite, there is a programme that simply does not have one.
The limits
These apply to First Step only, are set by the Internal Revenue Service rather than by AHFA, and took effect 6/24/2026.
| New & existing homes | Target areas | Non-target areas |
|---|---|---|
| All areas of Alabama | $692,211 | $566,355 |
Note the structure: a single pair covering the entire state. First Step's income limits vary by metro area and household size across seven rows, but its price limits do not vary at all. The income table.
If you are curious why those exact figures: they are federal mortgage revenue bond limits derived from a national formula, which is why other states publish identical numbers for their own bond programmes. They are not an Alabama valuation judgment.
Does the cap actually stop anyone?
Rarely, in this market. Set the non-targeted limit of $566,355 against what Alabama homes actually cost:
| Metro | Typical value, Aug 2026 | Headroom under the cap |
|---|---|---|
| Daphne | $372,137 | $194,218 |
| Auburn | $349,795 | $216,560 |
| Huntsville | $315,402 | $250,953 |
| Birmingham | $262,563 | $303,792 |
| Tuscaloosa | $241,271 | $325,084 |
Every Alabama metro sits comfortably below it. The cap becomes a live question on larger or newer homes in the stronger markets — Baldwin County's coastal properties, parts of Huntsville and Auburn — rather than on a typical purchase.
And Step Up has no cap at all
AHFA publishes no sales price limit for Step Up. So if the price is the only thing putting you outside First Step, the answer is not that Alabama assistance is unavailable — it is that you use the other programme and collect the same 4% / $10,000.
What you give up is the below-market bond rate, which is a real cost over thirty years. But a buyer above $566,355 is usually also above First Step's income limits, so in practice the two constraints tend to arrive together and Step Up releases both. The comparison.
What counts toward the price
AHFA's own framing is the sales price of the home. Two related rules worth knowing:
- The programmes cover new or existing homes in Alabama alike.
- They are purchase only. Refinancing an existing mortgage does not qualify for First Step or Step Up.
Separately, the federal conforming loan limit binds the loan rather than the price. Every one of Alabama's 67 counties sits at the 2026 baseline of $832,750 for a one-unit property, with no county designated high cost.
Targeted areas lift the cap by $125,856
From $566,355 to $692,211, and the same targeted status simultaneously raises the income limits and lets repeat buyers use First Step at all. That last point is usually worth far more than the extra price headroom. How targeting works.
Frequently asked questions
What is the purchase price limit for Alabama down payment assistance?
For First Step, $566,355 in non-targeted areas and $692,211 in targeted areas, both set by the IRS and effective 6/24/2026. The limits apply statewide and do not vary by county. AHFA publishes no sales price limit for Step Up.Do Alabama sales price limits vary by county?
No. Unlike the First Step income limits, which vary across seven area rows and by household size, the sales price limits are a single pair covering all areas of Alabama.Can I buy a more expensive home with Step Up?
Yes. AHFA publishes no sales price limit for Step Up, so a purchase above First Step's $566,355 non-targeted cap can still use Step Up's 4% up to $10,000 assistance. The trade is that Step Up's first mortgage is priced at market rather than at First Step's below-market bond rate.What is the conforming loan limit in Alabama?
$832,750 for a one-unit property in 2026. All 67 Alabama counties sit at the national baseline with none designated high cost. That limit binds the loan amount, separately from AHFA's sales price limits.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.