Alabama mortgage and refinance rates for May 2026

As of Wednesday, May 20, 2026, current interest rates in Alabama are 6.75% for a 30-year fixed mortgage and 5.94% for a 15-year fixed mortgage. 

Mortgage rates in Alabama — and nationally — began the year near 7%, and stayed stubbornly above 6% due to concerns about inflation and geopolitical tensions.

While rates are difficult to predict, many experts agree they’ll continue to decrease, but modestly, remaining above 6% for the rest of the year and into 2026. It's unlikely that rates will drop into the 4 or 5% range in the near future. 

Refinance rates in Alabama, and across the country, have increased from their COVID-era lows and are currently, like mortgage rates, in the mid-6% range. If you took out your mortgage within the last few years and have a rate above 7%, it may make sense to refinance now. However, if you have one of the approximately three-quarters of outstanding mortgages with a rate below 5%, you probably won’t want to refinance anytime soon.

That said, while refinance rates are still relatively high, average property values have risen across the country, including in Alabama. Homeowners who bought in 2020 have taken part in a 36% statewide increase in home values, according to AL.com. Refinancing may not get you a lower rate, but a cash-out refinance could help you fund larger expenses more cheaply than other forms of borrowing.

There are 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 credit score of at least 580, you can qualify for a down payment as low as 3.5 percent. 
• Alabama VA loans: If you’re a veteran or an active-duty member of the military, you might qualify for a mortgage guaranteed by the Department of Veterans Affairs (VA). VA loans don’t typically require a down payment, and you won’t have to pay for mortgage insurance, but you will need to pay a funding fee, which ranges from 1.25 percent to 3.3 percent of the loan amount.
• 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.

The Alabama Housing Finance Authority (AHFA) offers several first-time homebuyer programs in Alabama, including:

• Step Up: Step Up packages a 30-year, fixed-rate first mortgage with a second mortgage for up to $10,000, which can be used toward a down payment. To qualify, you must earn $172,800 or less, 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 finance closing costs. To qualify for a grant that equals 1 percent of your mortgage, 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 for you