Homebuyer Programs in Montgomery, AL (2026)
Montgomery is Alabama's capital city, home to Maxwell Air Force Base and a growing healthcare and government sector in Montgomery County. With a median home price around $190,000, it is one of the more affordable state capitals in the Southeast. While Montgomery does not currently offer a city-funded down payment assistance grant for the general public, buyers here can take advantage of several state and federal programs. AHFA's Step Up program provides up to $10,000 in DPA, and the First Step program combines below-market interest rates with up to $10,000 in assistance. The Montgomery Housing Authority offers a homeownership program for current Section 8 voucher holders, and Montgomery Habitat for Humanity provides 0% interest mortgage homes for qualifying families. By combining state programs, eligible Montgomery buyers could access over $10,000 in down payment assistance.
Top Homebuyer Programs in Montgomery
| Program Name | Type | Amount | First-Time Only | Details |
|---|---|---|---|---|
| Montgomery Housing Authority Homeownership Program | Grant | Monthly mortgage assistance via Housing Choice Voucher for up to 15 years | Yes | View → |
| FHA Loans | Government-Insured Mortgage | Up to FHA county loan limits ($541,287 floor to $1,249,125 ceiling for single-family in 2026) | No | View → |
| FHLBA Community Partners Product | Forgivable Loan | Up to $20,000 in home purchase assistance for down payment and closing costs | No | View → |
| FHLBA First Time Homebuyer Product | Forgivable Loan | Up to $17,500 in home purchase assistance for down payment and closing costs | Yes | View → |
| FHLBA Workforce Housing Plus+ | Forgivable Loan | Up to $15,000 in home purchase assistance for down payment and closing costs | No | View → |
| Good Neighbor Next Door (HUD) | Government Property Sale Program | 50% discount off the list price of HUD-owned homes | Yes | View → |
| Home Possible Mortgage (Freddie Mac) | Government-Guaranteed Mortgage | Up to conforming loan limits ($832,750 standard / $1,249,125 high-cost in 2026); 3% minimum down payment | No | View → |
| HomeReady Mortgage (Fannie Mae) | Government-Guaranteed Mortgage | Up to conforming loan limits ($832,750 standard / $1,249,125 high-cost in 2026); 3% minimum down payment | No | View → |
| HUD $100 Down Program | FHA-Financed HUD REO Purchase | Only $100 down payment required (vs. standard 3.5% FHA down payment). HUD may also pay up to 3% of buyer's closing costs. | No | View → |
| USDA Rural Development Loans | Government-Guaranteed Mortgage | 100% financing (no down payment required); loan amount up to appraised value | No | View → |
| VA Loans | Government-Guaranteed Mortgage | No loan limit for veterans with full entitlement (0% down at any price); partial entitlement subject to conforming limits ($832,750 standard in 2026) | No | View → |
| Montgomery Habitat for Humanity Homeownership Program | Zero-Interest Loan | Affordable home purchase with 0% interest 20-year mortgage; monthly payments average $400-$500 | No | View → |
| AHFA Affordable Income Subsidy Grant | Grant | 0.50% to 1% of total loan amount | No | View → |
| AHFA First Step Program | Deferred Loan | Up to $10,000 or 4% of sales price, whichever is less | Yes | View → |
| AHFA Step Up Program | Deferred Loan | Up to $10,000 or 4% of purchase price, whichever is less | No | View → |
| Alabama Mortgage Credit Certificate (MCC) | Tax Credit | Up to $2,000 per year in federal tax credits | Yes | View → |
- Type:
- Grant
- Amount:
- Monthly mortgage assistance via Housing Choice Voucher for up to 15 years
- First-time only:
- Yes
- Type:
- Government-Insured Mortgage
- Amount:
- Up to FHA county loan limits ($541,287 floor to $1,249,125 ceiling for single-family in 2026)
- First-time only:
- No
- Type:
- Forgivable Loan
- Amount:
- Up to $20,000 in home purchase assistance for down payment and closing costs
- First-time only:
- No
- Type:
- Forgivable Loan
- Amount:
- Up to $17,500 in home purchase assistance for down payment and closing costs
- First-time only:
- Yes
- Type:
- Forgivable Loan
- Amount:
- Up to $15,000 in home purchase assistance for down payment and closing costs
- First-time only:
- No
- Type:
- Government Property Sale Program
- Amount:
- 50% discount off the list price of HUD-owned homes
- First-time only:
- Yes
- Type:
- Government-Guaranteed Mortgage
- Amount:
- Up to conforming loan limits ($832,750 standard / $1,249,125 high-cost in 2026); 3% minimum down payment
- First-time only:
- No
- Type:
- Government-Guaranteed Mortgage
- Amount:
- Up to conforming loan limits ($832,750 standard / $1,249,125 high-cost in 2026); 3% minimum down payment
- First-time only:
- No
- Type:
- FHA-Financed HUD REO Purchase
- Amount:
- Only $100 down payment required (vs. standard 3.5% FHA down payment). HUD may also pay up to 3% of buyer's closing costs.
- First-time only:
- No
- Type:
- Government-Guaranteed Mortgage
- Amount:
- 100% financing (no down payment required); loan amount up to appraised value
- First-time only:
- No
- Type:
- Government-Guaranteed Mortgage
- Amount:
- No loan limit for veterans with full entitlement (0% down at any price); partial entitlement subject to conforming limits ($832,750 standard in 2026)
- First-time only:
- No
- Type:
- Zero-Interest Loan
- Amount:
- Affordable home purchase with 0% interest 20-year mortgage; monthly payments average $400-$500
- First-time only:
- No
- Type:
- Grant
- Amount:
- 0.50% to 1% of total loan amount
- First-time only:
- No
- Type:
- Deferred Loan
- Amount:
- Up to $10,000 or 4% of sales price, whichever is less
- First-time only:
- Yes
- Type:
- Deferred Loan
- Amount:
- Up to $10,000 or 4% of purchase price, whichever is less
- First-time only:
- No
- Type:
- Tax Credit
- Amount:
- Up to $2,000 per year in federal tax credits
- First-time only:
- Yes
How to Apply
- Step 1:
Check your eligibility. AHFA state programs are the primary source of down payment assistance for most Montgomery buyers. The Step Up program allows income up to $159,200, and First Step allows income up to $172,800.
- Step 2:
Complete homebuyer education. The City of Montgomery Community Development Division at (334) 625-2735 can connect you with local HUD-approved housing counseling resources. United Way of Central Alabama's Housing Alliance also oversees HUD-approved counseling agencies in the region.
- Step 3:
Get pre-approved for a mortgage through an AHFA-approved lender. This allows you to apply for the Step Up or First Step state programs, which provide up to $10,000 in down payment assistance.
- Step 4:
If you are a current Montgomery Housing Authority Section 8 voucher holder, contact MHA at (334) 206-7200 to learn about their Homeownership Program, which provides monthly mortgage assistance for up to 15 years.
- Step 5:
Find a home within your budget. With Montgomery's median price around $190,000, many homes fall well within AHFA program guidelines.
- Step 6:
Submit your application and close on your home. Your AHFA-approved lender will coordinate the state assistance programs with your mortgage.