Secure financing for your new home in the Yellowhammer State.
To find the best mortgage loan option in Alabama, thoroughly compare rates, terms and closing costs. But first see if you qualify for any government-backed programs.
Government-backed financing in Alabama
Keep an eye on interest rates, closing costs and the availability of government-backed products through FHA or USDA programs. These agencies may help you get stronger terms if you’re a first-time homebuyer or applying for an eligible rural or suburban home.
If you’re a first-time homebuyer, check out the Alabama Finance Housing Authority. The AFHA can help you with your down payment if your annual income is less than $97,300. It may also lend support with your closing costs or a credit certificate to reduce your federal taxes on the mortgage interest you pay every year.
Mortgage lenders for veterans in Alabama
If you’re a veteran, an active service member or an eligible spouse, look into the Veterans Affairs home loan program. The VA program lets you borrow directly from the US Department of Veterans Affairs, which typically offers stronger loan terms compared with private lenders. Note that select private lenders may offer VA-backed home loans with the same or better terms.
How to find the best lenders and rates in Alabama
Local credit unions in Alabama may offer stronger loan terms than your local bank if you’re already a member. Beyond the rate, factors that can affect how much you pay monthly and over the life of your loan include:
- Rates. You aren’t guaranteed the advertised rates. Preapproval is a way to get a more accurate idea of what you’re eligible for.
- Fees. Depending on the lender, you could end up paying more in application, maintenance, insurance, prepayment and other fees, not to mention PMI.
- Terms. A traditional 30-year mortgage offers lower payments over the long term, while a 15-year loan mortgage costs more up front but saves you significant interest over the life of your loan.
- Type. Fixed rates offer reliability that can keep a budget on track, while adjustable rates can be a way to keep interest at a minimum in the first few years of your loan.
- Discounts. Loan programs through the VA, USDA and Alabama Finance Housing Authority can help eligible homeowners save even more.
Closing costs in Alabama
Expect to pay closing costs of $2,653 after taxes on average for a home sale price of $100,000 to $200,000. This puts Alabama below the national average. For comparison, average closing costs in neighboring Florida are $5,585 for houses valued at $200,000 to $300,000.
To find the best mortgage lender in Alabama for your needs, start by comparing interest rates, down payment options, closing costs and whether a lender offers government or VA-backed home loans.
Look to a range mortgage lenders — including banks, credit unions and newer digital options — to narrow down the best fit for your long-term financial goals.