The biggest obstacle most people face on the road to homeownership is saving enough money for the required downpayment.

Even with good credit scores and steady employment, it can be very difficult to set aside money each month to build the cash reserves necessary for all the expenses associated with buying a home.

The good news is that states and the cities and counties within them have programs for people in this situation. Many of these programs come in the form of forgivable second mortgages with little or no interest. In some cases the programs are specific to certain areas of a particular state. In other cases programs are open to residents living anywhere within the boundaries of the state.

The listings below offer people who want to become homeowners sooner rather than later a broad overview of what is available in each of the 50 states.

ALABAMA

STATEWIDE PROGRAM
Step Up Program

Assistance Available:
The Alabama Housing Finance Authority manages this down payment assistance program which is available to residents of Alabama who earn less than $97,300 a year regardless of where in Alabama they live or their household size. The Step Up Program offers 3% down payment assistance in the form of a 10 year second mortgage that is combined with a 30 year, fixed rate, first mortgage. Loans must be either HFA Advantage conventional or FHA and must be made through participating lenders.

Qualifications:
To qualify you must have a credit score of 620 or higher. Your debt to income ratio cannot be higher than 45%. The home you are purchasing can be new or existing. You must complete a homeownership education course. You must occupy the home you are purchasing as a primary residence. You have to close within 60 days. You will not qualify for this program if you are refinancing an existing mortgage.

Closing Cost Assistance:
If you are getting an HFA Advantage conventional loan you may qualify for a grant to help pay your closing costs. Your qualifying income must be 50% of or below the area median income limit set by Freddie Mac. The Affordable Income Subsidy Grant allowed is $2500. If your income is between 50.01% and 80% of the area median income limit you may qualify for a $1500 subsidy grant.

CITY AND COUNTY PROGRAMS

Birmingham
NeighborhoodLIFT Program

Assistance Available:
Neighborhood Housing Services of Birmingham is part of the NeighborhoodLIFT program that matches funds up to $7500 for downpayment assistance on qualified homes in Jefferson and Shelby Counties.

Qualifications:
Your combined annual household income must not exceed the income limits set by the Shelby/Jefferson County NeighborhoodLIFT program. You must occupy your home as the primary residence. You do not have to be a first time homebuyer. Qualifying homes include detached houses, townhomes, condominiums, 1-4 unit properties, and planned unit development properties.

Huntsville
The Huntsville Community Development Department offers qualifying homebuyers up to $7500 in downpayment and closing cost assistance. The actual amount of assistance is based on need. Applicants must commit to living in the home they are buying as their primary residence for a minimum of 5 years. The Family Services Center offers first time homebuyers training and counseling to help them with the buying process.

Mobile County
Downpayment Assistance Grant

Assistance Available:
Applicants can qualify for up to a $10,000 downpayment assistance grant for downpayment and closing costs. The minimum granted is $1000.

Qualifications:
You must be a first time home buyer. The only exception to this is individuals participating in the New Construction of Affordable Homes Program. (You are considered a first time home buyer if you haven’t owned a home in 3 years. There is an exception for divorced single parents.)

You have to meet the eligibility income limits. Your credit score must be high enough for you to be approved for a first mortgage. You must meet the residency requirements. You must live in the home as your primary residence for a minimum of five years. If you don’t meet this requirement, the grant must be repaid in full. You must be able to put down $500 in cash for your home purchase.

Only single family homes located in certain geographic areas are eligible. Mobile homes, townhomes, condominiums, duplexes, and multiple unit properties are not eligible. Homes that are subject to Alabama’s right of redemption provision, such as foreclosed properties, properties with tax liens, are not eligible.