Alabama Mortgage and Refinance Rates

Current mortgage rates in Alabama

As of Tuesday, July 2, 2024, current interest rates in Alabama are 0.00% for a 30-year fixed mortgage and 0.00% for a 15-year fixed mortgage. Refinance rates are typically slightly higher than purchase rates. 

Refinance rates in Alabama

Currently, refinancing in Alabama is not as popular as it was when rates were low just a few years ago. Refinance rates in Alabama are slightly lower than rates in bordering Georgia and Mississippi. While refinancing may not be as common as it was a few years ago, a cash-out refinance is still a viable option to turn home equity into cash.

Alabama rate trends

Until the end of 2023, rates in Alabama followed a steep upward trajectory. For 2024, national rates have stayed around 7 percent, with some fluctuation. Rates in Alabama have trended above the national average according to Bankrate’s overnight averages.

National mortgage rates by loan type

Mortgage statistics in Alabama

Alabama has over 5.1 million residents and continues to grow, according to the U.S. Census Bureau. Here are some other Alabama mortgage and real estate statistics:

• Average home value (as of June 2024): $230,383 (Zillow)
• Homeownership rate (as of 2023): 73.8% (U.S. Census Bureau)
• Average mortgage loan size in 2023: $233,460  (Home Mortgage Disclosure Act)
• Median days to pending sale (as of June 2024): 17 (Zillow)

Mortgage options in Alabama

There’s a variety of mortgage options available to homebuyers in Alabama:

• Alabama conventional mortgages: To qualify for a conventional mortgage, you’ll need a minimum credit score of 620 and a debt-to-income (DTI) ratio of no more than 45 percent. With a down payment of less than 20 percent, you’ll need to pay private mortgage insurance (PMI), as well.
• Alabama FHA loans: If your credit history disqualifies you from a conventional mortgage, you might be able to obtain a loan insured by the Federal Housing Administration (FHA). If you have a down payment of at least 3.5 percent, you could qualify for this type of loan with a credit score as low as 580. 
• Alabama VA loans: If you’re a veteran or active-duty member of the military, you might qualify for a mortgage guaranteed by the Department of Veterans Affairs (VA). A VA loan doesn’t require a down payment or mortgage insurance, but you do need to pay a funding fee, which ranges from 1.25 percent to 3.3 percent.
• Alabama USDA loans: If you’re buying a rural property in Alabama, you might be eligible for a mortgage guaranteed by the U.S. Department of Agriculture (USDA). These loans don’t require a down payment, but you’ll need to purchase in a designated rural area and meet the area’s income limits.

First-time homebuyer programs in Alabama

Through the Alabama Housing Finance Authority (AHFA), there are several first-time homebuyer programs in Alabama, including:

• Step Up program: AHFA’s Step Up program provides 4 percent down payment assistance, up to $10,000, packaged as a conventional or FHA 30-year fixed-rate first mortgage along with a 10-year second mortgage. To qualify for, your income can’t exceed $159,200 and you’ll be required to complete a homebuyer education course. In addition, you must have a minimum credit score of 640 and a debt-to-income (DTI) ratio no higher than 45 percent.
• Affordable Income Subsidy Grant: AHFA’s Affordable Income Subsidy Grant helps with financing closing costs. To qualify for a 1 percent grant, your income must not exceed 50 percent of the area median income where you’re buying; for a half-percent grant, your income must not exceed 80 percent.

How to find the best mortgage rate in Alabama

1. Strengthen your credit score - Before looking for a lender and applying for a loan, review your credit history and take steps to improve your score, if needed.
2. Determine your budget - Have a good understanding of how much house you can afford before you go shopping.
3. Know your mortgage options - There are a few different types of mortgages.
4. Compare rates and terms from several lenders - Rate-shop with at least three different lenders to get the best deal on rates, fees and terms. Also, be sure to read reviews on different lenders in Alabama to see what others have to say.
5. Get preapproved for a mortgage - Getting a mortgage preapproval is the only way to get accurate loan pricing for your specific situation. Plus, it will show sellers you’re serious when you make an offer.

Additional Alabama mortgage resources 

• Alabama loan limits by county: Learn the conforming loan limit for your city or town.
• Alabama mortgage lenders: Explore mortgage lenders in your state.
• Homeowners insurance in Alabama: Compare policies from a variety of providers.

Meet our Bankrate experts

Written by: Jeff Ostrowski, Principal Reporter, Mortgages

I cover mortgages and the housing market. Before joining Bankrate in 2020, I spent more than 20 years writing about real estate and the economy for the Palm Beach Post and the South Florida Business Journal. I’ve had a front-row seat for two housing booms and a housing bust. I’ve twice won gold awards from the National Association of Real Estate Editors, and since 2017 I’ve served on the nonprofit’s board of directors.

Read more from Jeff Ostrowski

Edited by: Laurie Richards, Editor, Home Lending

I’ve spent five years in writing and editing roles, and I now focus on mortgage, mortgage relief, homebuying and mortgage refinancing topics. I’m most interested in providing resources for aspiring first-time homeowners to help demystify the homebuying process. In 2021, I earned a Poynter ACES Certificate in Editing. I have an MA in English. 

Read more from Laurie Richards