640 and 45%, on every programme — and the assistance counts against you
Program and regulatory figures verified October 5, 2026. Details change; confirm your scenario with us.
Two numbers, applied flat across every programme. The interesting part is not the numbers; it is that the assistance itself pushes against one of them.
The requirements
| Programme | Minimum credit score | Maximum DTI |
|---|---|---|
| First Step | 640 | 45% |
| Step Up | 640 | 45% |
| Affordable Income Subsidy Grant | 640 | 45% |
AHFA states Step Up's as "minimum credit requirements: 640 for all programs." There is no tiering — no lower bar for FHA, no higher one for conventional, no sliding scale where a stronger score buys ratio room. One pair of numbers, applied the same way everywhere.
That is simpler than most state agencies and simpler than the agencies' own underwriting. Indiana, for comparison, sets 660 and moves it to 680 above a 45% ratio. Alabama holds one line.
★ The assistance counts against your ratio
This is the part worth thinking about before you accept the money.
AHFA's down payment assistance is a 10-year amortizing second mortgage with a monthly payment at the same rate as your first. A monthly payment is a debt. A debt sits inside the debt-to-income ratio. So the $10,000 that solves your cash problem simultaneously consumes part of the 45% you need for the first mortgage.
Two borrowers, same income, same score:
- One brings their own down payment. Their whole ratio is available for the first mortgage.
- One takes the assistance. A slice of their ratio now belongs to a ten-year second, and the first mortgage the file supports is smaller.
Neither is wrong. They are different problems. If your constraint is cash at closing, the second is the answer. If your constraint is ratio, the second makes the binding constraint worse.
You are not obliged to take it
Two AHFA facts settle this. There is no minimum required investment from the borrower on any AHFA programme, and the second mortgage is optional — "they can bring their own downpayment to closing."
So the choice is genuinely yours, including partial: there is no rule requiring you to take the full 4% if a smaller amount closes the gap. Worth asking your lender to run the file both ways before reserving.
If your score is near 640
640 is the floor and it is a real one. A 639 does not get waived at the agency level, and AHFA's programmes sit on top of agency and servicer requirements rather than replacing them.
Two practical notes. First, AHFA reviews a tri-merge credit report, so the usual middle-score convention applies rather than a single bureau. Second, the 45% ratio is a programme overlay — your file still has to satisfy FHA, VA, USDA or Freddie Mac HFA Advantage underwriting on its own terms, and those can be tighter than 45% in a weak file.
If you are sitting at 620 or 630, the honest answer is that no AHFA programme reaches you today. That is worth a conversation about what moves the score in ninety days rather than an application that will not clear. Send us the scenario.
What AHFA does not publish
Reserve requirements, maximum LTV by product, and the detailed overlay set all live in AHFA's programme manuals on AllRegs, which is a lender-side library rather than a public document. We are not going to describe figures from a source we cannot cite.
What we can say is what AHFA publishes: 640, 45%, on all three programmes, with homebuyer education on top. The full checklist.
Frequently asked questions
What credit score do I need for Alabama down payment assistance?
640 or higher, on every AHFA program. AHFA states the minimum credit requirement as 640 for all programs, with no variation between FHA, VA, USDA and HFA Advantage conventional.What is the maximum DTI for AHFA programs?
45%. The ratio cap is the same across First Step, Step Up and the Affordable Income Subsidy Grant. The assistance second mortgage carries a monthly payment that counts inside that ratio.Does AHFA down payment assistance affect my debt-to-income ratio?
Yes. The assistance is a 10-year amortizing second mortgage with a monthly payment at the same interest rate as the first mortgage, so that payment counts within AHFA's 45% maximum ratio and reduces the first mortgage the file will support.Is there a minimum down payment required by AHFA?
No. AHFA states it does not have a minimum required investment from the borrower for any of its programs, and the down payment assistance second mortgage is itself optional.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.