The three AHFA programmes, as they stand today
Program and regulatory figures verified October 5, 2026. Details change; confirm your scenario with us.
Three programmes, two of which are the same assistance behind different gates, and one that is the only money here you keep.
First Step (Mortgage Revenue Bonds)
AHFA's bond programme, and the reason to go through the extra eligibility work: it prices the first mortgage below market. Nearly 50,000 Alabama households have used it.
- Below-market 30-year fixed on FHA, VA, USDA or Freddie Mac HFA Advantage conventional.
- Assistance of 4% of the sales price up to $10,000, as a 10-year amortizing second.
- Income limits from HUD, by area and household size. The table.
- Sales price limits from the IRS: $566,355 non-targeted, $692,211 targeted.
- First-time buyer required unless buying in a targeted area or using the veterans exemption.
- Subject to federal recapture tax. How it works.
- Commitment fee of 0.50% or 0.75%, wired within 72 hours of reservation. Detail.
- Tax-Exempt Riders recorded with the first lien mortgage.
Step Up
The same assistance behind a far wider gate, at a market first-mortgage rate.
- Assistance of 4% of the sales price up to $10,000, as the same 10-year amortizing second.
- Income limit $172,800, "regardless of household size or location."
- ★ No published sales price limit.
- ★ No first-time buyer requirement.
- ★ No recapture tax.
- FHA, VA, USDA or HFA Advantage conventional, 30-year fixed.
Why that single income figure matters so much.
Affordable Income Subsidy Grant
The only AHFA money that is never repaid. A closing-cost grant on HFA Advantage conventional only, stacked on top of First Step or Step Up.
- At or below 50% of area median income: 1% of the loan amount.
- 50.01–80% of AMI: 0.5% of the loan amount.
- Income limits set by Freddie Mac, by the county the home is in.
- No note, no second mortgage, no payment.
What applies to all three
| Rule | Detail |
|---|---|
| Credit score | 640 or higher |
| Debt-to-income | 45% or lower |
| Homebuyer education | Required on every programme |
| Purchase only | Refinancing an existing mortgage does not qualify |
| Occupancy | Primary residence within 60 days of closing |
| Property | New or existing homes in Alabama |
| Minimum borrower investment | None on any AHFA programme |
| Income counted | Borrowers only, not the household |
| Title | Only those who sign both the note and the mortgage |
| Servicer | ServiSolutions, a division of AHFA |
| How to apply | Through a participating lender |
What the property cannot be
AHFA is blunt about this, and the restriction runs for the life of the loan rather than just at closing. The property "cannot be rented, leased, quit claimed or interest transferred at any time," and cannot be investment, seasonal, recreational or vacation property. Business use is prohibited.
So an AHFA loan is not a route into a future rental. If there is any chance the home becomes an income property, that belongs in the conversation before you reserve. Everything AHFA checks.
The assistance is optional on all of it
Worth repeating because it is the least-known thing AHFA publishes: the second mortgage is not compulsory. "They can bring their own downpayment to closing." You can take First Step's below-market rate with no second at all. When the second is and is not worth it.
Frequently asked questions
What down payment assistance programs does Alabama offer?
AHFA offers three: First Step, a mortgage revenue bond program with a below-market 30-year fixed rate; Step Up, for moderate-income buyers at a market rate; and the Affordable Income Subsidy Grant, a closing-cost grant on HFA Advantage conventional loans. First Step and Step Up both provide 4% of the sales price up to $10,000.Can an AHFA home be rented out later?
No. AHFA states the property cannot be rented, leased, quit claimed or its interest transferred at any time, and cannot be investment, seasonal, recreational or vacation property. Business use is also prohibited.Who services AHFA loans?
ServiSolutions, a division of AHFA. Because the first and second mortgages are both serviced there, the borrower makes a single monthly payment covering both loans.Is there a minimum down payment for AHFA programs?
AHFA states it does not have a minimum required investment from the borrower for any of its programs. The down payment assistance second mortgage is also optional; a borrower can bring their own down payment to closing.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.