Down Payment Assistance Program

What is Down Payment Assistance Program?

Down Payment Assistance Program is a forgivable loan for homebuyers in Birmingham, Alabama.

• The Ready to Own Program (City of Birmingham Down Payment Assistance Program) makes homeownership more affordable for qualified families purchasing a home within the city limits of Birmingham. Eligible buyers receive up to $10,000 in homebuyer assistance, structured as a 5-year forgivable loan at 0% interest with a restrictive covenant. Funds may be applied to down payment, closing costs, or interest rate buydowns. The program is delivered as a partnership between the City of Birmingham Department of Community Development, Neighborhood Housing Services of Birmingham (NHS), and participating lenders (SouthState, Regions, SouthPoint, FirstHorizon, BMO) who provide $7,000-$10,000 in additional matching funds.
• Up to $10,000 in homebuyer assistance as a 5-year forgivable loan at 0% interest with restrictive covenant. Funds can be applied to down payment, closing costs, and/or interest rate buydowns. Participating lenders provide additional matching funds of $7,000-$10,000.
• Funding comes from HOME, CDBG, and Local Government.

Do you have to pay it back?

Down Payment Assistance Program is forgiven after 5 years, so a buyer who stays that long does not repay it.

• Repayment is triggered by Sale, transfer, refinance, or loss of owner-occupancy within 5-year forgiveness period.
• The assistance is recorded in Subordinate (typically 2nd lien) position.
• Forgiveness and repayment terms are set by the program and can change — confirm them on the official program page before applying.

Who qualifies?

Down Payment Assistance Program is open to buyers who will live in the home as their primary residence.

What are the income limits?

Down Payment Assistance Program limits household income to 80% of the area median income, which varies by county and household size.

• Household income must not exceed the current HUD income limit at 80% of AMI for the Birmingham-Hoover MSA. Limits adjust by household size and are updated annually by HUD.
• The limit applies to total household income, not only the borrower’s.
• Area median income figures are published by HUD and updated annually, so check the current table for the county before relying on a number.

What kind of home can it be used for?

Down Payment Assistance Program can be used for Single-Family, Townhome, and Condo.

• New construction is eligible.

Where does it apply?

Down Payment Assistance Program serves buyers purchasing in Birmingham, Alabama.

• The program targets specific areas: Properties must be purchased within the Birmingham city limits.

How do you apply?

Applications for Down Payment Assistance Program go through the administering agency, which publishes the current terms and the application steps on its own site.

1. 1

   Take a homebuyer education course

   Required by the program, through Neighborhood Housing Services of Birmingham.

2. 2

   Contact the administering agency to reserve funds

   Funds are reserved through Online application through City of Birmingham Housing portal (birminghamhousing.seinterminal.com); funds reserved after a signed purchase agreement is in place, and are subject to availability.

3. 3

   Work with a lender who handles the program

   Hey Prescott is not a lender and does not accept applications; this page describes the program so a buyer can take it to a lender or housing counselor.