alabama fha lenders

Alabama FHA Loans –  Alabama FHA Lenders

Alabama is a wonderful state to live in with such diversity in people and landscape. There are miles of beautiful beaches along the Gulf of Mexico and also mountains to visit if you want to escape to a cooler climate. The people are inviting and you will really enjoy the southern hospitality from your welcoming neighbors as a new homeowner.

Alabama Housing and Living Statistics

Population 4.9 Million
Median Age 39.3
Median Household Income $49,861
Median Property Value $147,900
Number of Employees 2 Million
Average Commute Time 24.3 minutes

Alabama home buyers who need a small down payment or have poor credit scores may be able to purchase a home with an Alabama FHA loan. There are many FHA lenders in Alabama who offer FHA loans for people with credit scores as low as 500.

We will take you through the Alabama FHA loan requirements, detail what is needed to qualify, then help you to get pre-qualified. If you already know that an FHA loan is right for you, then click to connect with an Alabama FHA lender whether you live in Birmingham, Huntsville, Mobile, Montgomery, or anywhere else.

Alabama FHA Down Payment Requirements

The down payment requirements for an FHA loan is the same in every state. The minimum requirement for an FHA loan is 3.5% of the purchase price. However, if your credit score is below 580, then the down payment requirement will be 10%.

If you do not have the down payment needed, you can also use gift funds from a relative.

Alabama FHA Down Payment Assistance

There are various down payment assistance programs in every state. Below is a list of just a few down payment assistance programs that may be available to you in Alabama. Home buyers will need to contact, and arrange for these programs independently. Lenders will accept the funds from these programs for your down payment but they will not arrange for down payment assistance.

Alabama Step Up Program

Mobile County Down Payment Assistance

Alabama FHA Loan Requirements for 2022

These are the basic FHA loan requirements for this year. All of these must be met to be approved for an FHA loan. If you are not positive on whether you meet these standards or have questions, an FHA lender can help.

  • Down payment of 3.5% or 10% if your credit score is below 580
  • 2-year employment history with some exceptions allowed
  • Fully document your income for the past two years
  • Minimum FICO score requirement of 500 – down payment will vary
  • Mortgage Insurance Premium (MIP) is required for every FHA loan
  • Maximum debt to income ratio of 43% with exceptions up to 56%
  • The home must be your primary residence
  • No bankruptcies or foreclosures in the past two years

Alabama FHA Loan Benefits

These are the benefits of an FHA loan versus a conventional loan:

  • Lower credit scores permitted
  • Lower down payment requirement
  • FHA interest rates are lower than conventional rates
  • Gift funds allowed
  • Seller closing cost contributions are allowed
  • FHA loans are assumable
  • Co-signers allowed
  • Higher debt to income ratios permitted

Top Alabama FHA lenders

These lenders are just a few options for you to consider. Please note that each lender is different and it is possible that none of these options are best for you depending upon your scenario.

  1. Carrington Mortgage Services
  2. Bank of England Alabama
  3. Flagstar Bank
  4. Quicken Loans
  5. Home Point Financial
  6. Assurance Financial

Let us help you to find the best FHA lender in your area by completing this FHA loan scenario form with some basic loan scenario information. No credit report will be pulled and we can connect you with the best option.

Alabama FHA Loan Limits

Every county in the United States has specific maximum loan limits that are set for single family homes, as well as 2-4 unit properties. The limits are set based upon the average home sales value in that county. The base FHA loan limit for single family residences in Alabama for most counties is $420,680. Use this FHA loan limit lookup tool to see what the FHA loan limits are in your county.

County Name Single Family 2 Units 3 Units 4 Units
AUTAUGA $420,680 $538,650 $651,050 $809,150
BALDWIN $420,680 $538,650 $651,050 $809,150
BARBOUR $420,680 $538,650 $651,050 $809,150
BIBB $420,680 $538,650 $651,050 $809,150
BLOUNT $420,680 $538,650 $651,050 $809,150
BULLOCK $420,680 $538,650 $651,050 $809,150
BUTLER $420,680 $538,650 $651,050 $809,150
CALHOUN $420,680 $538,650 $651,050 $809,150
CHAMBERS $420,680 $538,650 $651,050 $809,150
CHEROKEE $420,680 $538,650 $651,050 $809,150
CHILTON $420,680 $538,650 $651,050 $809,150
CHOCTAW $420,680 $538,650 $651,050 $809,150
CLARKE $420,680 $538,650 $651,050 $809,150
CLAY $420,680 $538,650 $651,050 $809,150
CLEBURNE $420,680 $538,650 $651,050 $809,150
COFFEE $420,680 $538,650 $651,050 $809,150
COLBERT $420,680 $538,650 $651,050 $809,150
CONECUH $420,680 $538,650 $651,050 $809,150
COOSA $420,680 $538,650 $651,050 $809,150
COVINGTON $420,680 $538,650 $651,050 $809,150
CRENSHAW $420,680 $538,650 $651,050 $809,150
CULLMAN $420,680 $538,650 $651,050 $809,150
DALE $420,680 $538,650 $651,050 $809,150
DALLAS $420,680 $538,650 $651,050 $809,150
DEKALB $420,680 $538,650 $651,050 $809,150
ELMORE $420,680 $538,650 $651,050 $809,150
ESCAMBIA $420,680 $538,650 $651,050 $809,150
ETOWAH $420,680 $538,650 $651,050 $809,150
FAYETTE $420,680 $538,650 $651,050 $809,150
FRANKLIN $420,680 $538,650 $651,050 $809,150
GENEVA $420,680 $538,650 $651,050 $809,150
GREENE $420,680 $538,650 $651,050 $809,150
HALE $420,680 $538,650 $651,050 $809,150
HENRY $420,680 $538,650 $651,050 $809,150
HOUSTON $420,680 $538,650 $651,050 $809,150
JACKSON $420,680 $538,650 $651,050 $809,150
JEFFERSON $420,680 $538,650 $651,050 $809,150
LAMAR $420,680 $538,650 $651,050 $809,150
LAUDERDALE $420,680 $538,650 $651,050 $809,150
LAWRENCE $420,680 $538,650 $651,050 $809,150
LEE $420,680 $538,650 $651,050 $809,150
LIMESTONE $420,680 $538,650 $651,050 $809,150
LOWNDES $420,680 $538,650 $651,050 $809,150
MACON $420,680 $538,650 $651,050 $809,150
MADISON $420,680 $538,650 $651,050 $809,150
MARENGO $420,680 $538,650 $651,050 $809,150
MARION $420,680 $538,650 $651,050 $809,150
MARSHALL $420,680 $538,650 $651,050 $809,150
MOBILE $420,680 $538,650 $651,050 $809,150
MONROE $420,680 $538,650 $651,050 $809,150
MONTGOMERY $420,680 $538,650 $651,050 $809,150
MORGAN $420,680 $538,650 $651,050 $809,150
PERRY $420,680 $538,650 $651,050 $809,150
PICKENS $420,680 $538,650 $651,050 $809,150
PIKE $420,680 $538,650 $651,050 $809,150
RANDOLPH $420,680 $538,650 $651,050 $809,150
RUSSELL $420,680 $538,650 $651,050 $809,150
SHELBY $420,680 $538,650 $651,050 $809,150
ST. CLAIR $420,680 $538,650 $651,050 $809,150
SUMTER $420,680 $538,650 $651,050 $809,150
TALLADEGA $420,680 $538,650 $651,050 $809,150
TALLAPOOSA $420,680 $538,650 $651,050 $809,150
TUSCALOOSA $420,680 $538,650 $651,050 $809,150
WALKER $420,680 $538,650 $651,050 $809,150
WASHINGTON $420,680 $538,650 $651,050 $809,150
WILCOX $420,680 $538,650 $651,050 $809,150
WINSTON $420,680 $538,650 $651,050 $809,150

FHA 203k Loans in Alabama

FHA 203k loans are a great program which will allow you to borrow the money needed to purchase the home plus additional funds needed to rehabilitate or remodel the home. This program is also available in your state and we work with lenders that help with your FHA 203k loan.

If you would like to fully understand how this program works, we suggest reading our article on FHA 203k loans.

FHA Streamline Refinance in Alabama

The FHA streamline refinance program is available to existing homeowners who would like to refinance for a lower rate while eliminating some of the refinance costs such as an appraisal. You may also get a discount on the mortgage insurance premium which is another advantage.

For more information, please read our article on the FHA streamline refinance.

Alabama FHA Loan Pre-Approval Process

If you are looking for an FHA loan, there is an optimal process you should follow to get pre-approved.

  1. The first step is to make sure you have the minimum down payment needed to qualify
  2. check your credit and try to cleanup anything that is pulling down your scores
  3. Get a copy of your tax returns for the past two years
  4. Get copies of your pay stubs for the past month
  5. Get copies of your last two months’ bank statements
  6. Speak to an FHA lender about your loan scenario

Speak to a lender early in the process because they can identify opportunities to help with your FHA approval. This should be done months before you start looking for a home. Read more about how to get pre-approved for an FHA loan.

What to Look for in an Alabama FHA Lender

We take a few things into consideration when looking at which lenders we work with. Some of these also may be, or should be very important to you as you continue shopping for an Alabama FHA loan.

A good FHA lender will:

  • Allow for credit scores as low as 500
  • Provide FHA 203k loans
  • Offer competitive rates and fees
  • Have a great processing and underwriting team
  • Work closely with you throughout the loan process
  • Communicate well and will provide you with updates along the way

Alabama FHA Loan Calculator

FHA Calculator
Purchase Price
Interest Rate
Annual Property Taxes
Annual Homeowner's
Credit Score Above 580
Term of Loan
FHA Payment Amount
Monthly Principal &
FHA Monthly Mortgage
Monthly Taxes and
Down Payment
Upfront FHA Mortgage

Frequently Asked FHA Questions

Can I get an FHA loan with a bankruptcy?
In general, you will need to wait two years before applying for an FHA loan after a bankruptcy. However, there are some exceptions which may allow you to apply sooner. Read our article on the bankruptcy waiting period.

Are all FHA lenders the same?
Not all lenders who offer FHA loans are the same. They all do not offer all of the FHA programs and their rates and fees may also vary. Most importantly, the individuals who help to process and underwrite your loan will have a huge impact on your FHA loan experience.

Can I use gift funds for an FHA loan?
FHA loans do allow for gift funds to cover your down payment as well as your closing costs. The gift funds must come from a relative or a close friend as approved by the lender. You will need to provide the lender with a gift letter that is signed by the donor.

Do I need an appraisal for an FHA loan?
The FHA does require an appraisal and inspection before your loan can be approved. The FHA inspection has clear guidelines on what needs to be repaired before your loan can close. They want to make sure home buyers are moving into a home that is safe and operational.

Can I get an FHA loan for an investment property?
FHA loans are for primary residences only and if your goal is to purchase an investment property, you cannot use FHA insured financing for that purchase. However, if you are currently living in a home that is financed with an FHA loan, you can move to a new home and keep the current home as an investment.