Alabama Grants There are many grants available in this State to assist a home buyer purchase a home. By using these grants it makes it possible to purchase a home with little or no money down.  Below is a list of some of the grants available, as well as contact information for each. Some are State sponsored grants. Some are sponsored on the county or municipality level.  Understand that many of these grants have limited funding, and most have income restrictions, so it is important to work with your mortgage lender and the non profit administering the grant program to ensure availability of funds.  State Sponsored Bank Sponsored Matching Funds Programs Community/local Sponsored Grants Seller Funded Down Payment Assistance Programs State Sponsored  First Step Program - The First Step program offers 30-year, lower-than-market interest rates to first-time and low- to moderate-income home buyers.  The First Step Mortgage Revenue Bond (First Step) program is funded by the sale of tax-exempt mortgage revenue bonds to investors by AHFA. The revenue is then used to purchase mortgages from AHFA’s participating lenders, providing them with the funds to loan home buyers. AHFA provides entry cost assistance in conjunction with the First Step program since down payments are typically the greatest barrier to homeownership. AHFA combines low-interest loan funds with 30-year, FHA, VA, Rural Development or conventional mortgages. Program participants must complete a homebuyer education course to qualify. Below is a link to the State web site: http://www.ahfa.com/homebuyers.aspx?id=130 Step Up Program - Step Up is a homeownership program designed specifically for moderate-income home buyers that can sustain a market-rate mortgage, but need help with the down payment. AHFA offers down payment assistance with no sales price limits and higher income limits than the First Step program.  In addition, AHFA offers a 30-year, fixed-rate first mortgage with an interest rate slightly higher than current market rate. The down payment funds are secured by a 20-year second mortgage. Since the loans are blended together, homeowners have only one check to write each month. Program participants must complete a homebuyer education course to qualify. Below is a link to the State web site: http://www.ahfa.com/homebuyers.aspx?id=144 Bank Sponsored Matching Funds Programs  Banks that are members of the Federal Home Loan Banking system also offer IDA savings accounts. Visit the Regional Federal Home Loan Bank web site for more information. Community/local Sponsored Grants Birmingham Down Payment Assistance Program (DPAP) (205) 254-2863  Birmingham NHS Inc Down Payment Assistance Program (DPAP) (205) 328-4292 Decatur H.O.M.E. Program (HOME) (256) 351-7755  Tuscaloosa Home Purchase Assistance Program (HPAP) (205) 349-0160  Seller Funded Down Payment Assistance Programs There are several non profit organizations that allow a seller to “donate” funds to them at closing, which is then given to the buyer as a down payment assistance grant. Presently, the federal government is reviewing these programs to determine whether this practice is an acceptable lending practice. By using one of these programs it is possible to purchase a home with little or no money. The seller needs to be a motivated seller, and the home needs to be priced correctly. Usually the sales price is inflated to cover the “donation”. The home must be able to appraise at the inflated price. These programs are initiated by the lender, so it is important to work with a local lender before you start looking for a home. The lender will also know how present legislation is affecting the program. The two most commonly used programs are The American Dream DAP and The Nehemiah DAP. Below are links to their web site. American Dream:  http://www.americandreamdownpaymentassistance.com/dpa_app.cfm Nehemiah Corp:    http://www.nehemiahcorp.org/