Affordable Income Subsidy Grant

Making a down payment is not the only upfront cost that homebuyers need to consider with a mortgage. They also need to pay closing costs before moving into their new home. In addition to the down payment assistance offered through Step Up, the Alabama Housing Finance Authority provides eligible borrowers closing cost assistance with a grant, called the Affordable Income Subsidy Grant.  

Available Assistance 
The Affordable Income Subsidy Grant is available to applicants that fall within the program’s income limits. Borrowers at or below 50% of the AMI limits as published by Freddie Mac are eligible for a grant of 1% of the loan amount. Others who are at or below 80% of the AMI can receive a grant of 1.5%. 

Eligibility Requirements 
In addition to the program’s income requirements, the Affordable Income Subsidy Grant has other guidelines that must be satisfied by all applicants. While the program funds can be used to purchase new or existing property types, they must be paired with HFA Advantage conventional loans only. Applicants must have a credit score of 640 or higher, and their debt-to-income ratio must be 45% or lower. They are also required to complete a homeownership education course and apply for a loan through a participating lender  

As with Step Up, this closing cost assistance can be combined with a Mortgage Credit Certificate to make buying a home even more affordable. 

 

*Seller-funded down payment programs were eliminated in the Housing and Economic Recovery Act of 2008, but states and local government agencies are still permitted to help borrowers finance their homes with second mortgages and grants. These agencies set different requirements that a borrower needs to meet in order to qualify for the grant programs, such as property location, and purchase price, and income limits. 

 
Note: All figures mentioned above were accurate at the time of publication and may no longer be current. Visit the program website for updated information.