The Down Low on Down Payment Solutions
How Birmingham, AL Home Buyers Are Turning Hurdles Into Homeownership Success Stories
Last week, I had this delightful couple in my backseat (I’m a Birmingham, Alabama, Realtor®), and we had just finished looking at a house they absolutely loved. As we were driving back, I noticed them whispering to each other. Curious, I turned around (at a stop-light) and said, “Hey guys, what’s up?”
That’s when they dropped the bombshell:
“We probably should have told you this upfront, but we don’t have all our down payment money together yet. We really like the house, but we need to wait.”
I smiled and said, “Heck yeah, that’s exactly the type of thing you need to tell your buyer’s agent. This little speed bump doesn’t have to derail your plans. I’ve got solutions!”
Their eyes lit up as they leaned in, “Seriously? Tell us more!”
After safely putting the car in park, here are the solutions I shared:
- Down Payment Gifts
“You can receive your down payment as a gift,” I explained. They looked at me, slightly confused, and said, “A gift? We don’t have any rich relatives.”
“Yeah. Me either. But that’s okay! It doesn’t have to come from a wealthy family member. Sometimes, gifts come from friends, employers, or organizations. But no worries if that’s not an option — I’ve got more ideas.”
2. Rural Housing Loans
“Let’s explore areas that qualify for Rural Housing Loans. These loans allow you to finance your down payment up to 98.5%.”
They exchanged nervous glances and said, “We don’t want to live in the sticks. We prefer to stay near the city.”
“Got it. Moving on!”
3. Redevelopment Area Grants
“In certain redevelopment areas in Birmingham, Al, you can qualify for grants that provide up to $35,000 in down payment assistance in the form of a 0% interest loan.”
“That’s really great,” they said, “but what if we just wanted to buy the house we just looked at?”
4. VA Loans for Veterans or Service & Professional Loans
“If either of you are a military veteran, you could qualify for a VA Loan, which offers 100% financing with no down payment required.
Alternatively, if you’re in the service industry or specific professional jobs (think fireman, police officer, or medical care), you could look into loans for those occupations, which lets you finance your down payment.”
Unfortunately, neither of them were veterans or worked in the service industry, so this option wasn’t the right fit either.
The Fifth Option (And the Winner!)
Then, I shared the ultimate game-changer: The Alabama Housing Finance Authority’s Step-Up Program.
They were intrigued, so I broke it down:
How It Works: Borrowers can receive up to $10,000 or 4% of the sales price (whichever is lower) to use toward their down payment and closing costs.
The funds are secured by a 10-year second mortgage that’s combined with your 30-year fixed-rate mortgage.
Borrowers must meet income limits and creditworthiness standards.
You’ll need to apply through an AHFA-participating lender and complete a homeownership education course (either online or in-person).
I also told them about the Affordable Income Subsidy Grant, which can help with closing costs. The two programs can even be combined to maximize their benefits!
They Were Sold
“We had no idea there were so many options for down payment assistance available!”
By the end of our conversation, they were excited, hopeful, and ready to take the next steps. They loved the idea of the Step-Up Program and felt empowered knowing there were real, tangible solutions to help them achieve their dream of homeownership.
Your Turn!
If you’ve been holding off on buying a home because you’re worried about the down payment, let’s talk. The Alabama Housing Finance Authority’s Step Up Program and other options can make homeownership more accessible than you think. Whether you’re buying in 2025 or sooner, don’t let a downpayment be the hurdle that stops you.
Ready to Apply? Contact Weber Mortgage Home — Weber Mortgage
