The Down Payment Help Nobody Mentions

Every week somebody tells our team at Perch & Oak they're "waiting until we have more saved up." Most of the time, they don't know Alabama has already built a shortcut. It isn't a secret, it's just not advertised very loudly.

Two programs, stacked together

The Alabama Housing Finance Authority runs its down payment help through the Step Up mortgage program, and most first-time buyers who qualify for Step Up qualify for both pieces below.

Step Up DPA

• Amount: up to 4% or $10,000
• Structure: a second mortgage, repaid
• Term: 10 years

Income Subsidy Grant

• Amount: 1% or 0.5% of the loan
• Structure: a grant, not repaid
• Who it's for: lower-income buyers

Stack both and a qualifying buyer can be looking at close to 5% of the purchase price in help: real money toward a down payment that didn't have to come out of savings alone.

You don't need 20% down. You need the right loan officer and twenty minutes of homework.

The fine print that actually matters

Step Up isn't for every situation, so it's worth knowing the basics before you fall in love with a house:

• Household income capped around $130,600 a year, or 80% of area median income depending on the loan type
• Credit score of 640 or higher
• Debt-to-income ratio of 45% or lower
• A homeownership education course (usually a short online class)
• First-time buyer status, purchasing in Alabama, and occupying the home within 60 days of closing

One more thing worth asking about: the AHFA Mortgage Credit Certificate isn't down payment help, but it can cut up to $2,000 a year off your federal tax bill for as long as you hold the mortgage. It's a separate conversation worth having with your lender at the same time.

Our team at Perch & Oak doesn't originate loans, but we work alongside lenders who walk this exact program every week. Before you assume the math doesn't work, let's make an introduction and actually run your numbers.

Be Home.
Leslie Davis, AL License #72650
Perch & Oak Property Group

Program terms are set by the Alabama Housing Finance Authority and participating lenders and are subject to change. Confirm current terms and eligibility with a lender.