Alabama Mortgage and Refinance Rates

Written by
Jeff Ostrowski
Edited by
Suzanne De Vita

On Monday, December 04, 2023, the national average 30-year fixed mortgage APR is 7.50%. The national average 30-year fixed refinance APR is 7.59%, according to Bankrate's latest survey of the nation's largest mortgage lenders.

Bankrate has offers for Alabama mortgage and refinance loans from top partners that are well below the national average. Compare, apply, and start saving today.

On Monday, December 04, 2023, the national average 30-year fixed mortgage APR is 7.50%. The national average 30-year fixed refinance APR is 7.59%, according to Bankrate's latest survey of the nation's largest mortgage lenders.

Bankrate has offers for Alabama mortgage and refinance loans from top partners that are well below the national average. Compare, apply, and start saving today.

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money.

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Current mortgage rates in Alabama

As of Monday, December 4, 2023, current interest rates in Alabama are 7.49% for a 30-year fixed mortgage and 6.69% for a 15-year fixed mortgage.

While mortgage rates have leveled off some since jumping in 2022, today’s higher rate environment still makes housing affordability a challenge for Alabama homebuyers, and refinances less desirable for homeowners. While mortgage rates are difficult to predict, many housing economists expect them to remain well above their historical lows for the foreseeable future.

 

Refinance rates in Alabama

 

Alabama borrowers who saw their home equity rise during the pandemic might be interested in refinancing their mortgage as a way to tap those funds. Check out Bankrate’s guide to cash-out refinancing to learn more.

 

How to find the best mortgage rate in Alabama for you

When shopping for a mortgage, compare at least three loan offers — research shows this exercise can save you thousands of dollars over the life of a loan.

Bankrate can help you find the best mortgage deal. Here are some basic steps to securing a loan on favorable terms:

Step 1: Strengthen your credit score

Long before you start looking for a mortgage lender or applying for a loan, give your finances a checkup, and improve your standing if needed. This means pulling your credit score and credit reports. You’re entitled to a free credit report from each of the three main reporting bureaus (Experian, Equifax and TransUnion), which you can get through AnnualCreditReport.com.
 

Step 2: Determine your budget

To find the right mortgage, you’ll need a good handle on how much house you can afford. That’s because a lender could qualify you for more mortgage than you need, or one that would max out your budget and leave no room for unexpected expenses.
 

Step 3: Know your mortgage options

There are a few different types of mortgages. Many lenders offer conventional loans that require as little as 3 percent down. FHA loans also have a low down payment threshold, while VA loans (for veterans) and USDA loans (for borrowers in rural areas) have no down payment requirement. If you’re in the market for a jumbo loan, check Alabama’s county-by-county loan limits.
 

Step 4: Compare rates and terms from several lenders

Don’t settle on the first lender you talk to — rate-shop with at least three different banks or mortgage companies. You can look to your bank or other banks, credit unions, online lenders and local independents to ensure you’re getting the best deal on rates, fees and terms.
 

Step 5: Get preapproved for a mortgage

As you comparison-shop, keep in mind that getting a mortgage preapproval is the only way to get accurate loan pricing for your specific situation.

Mortgage options in Alabama

If you’re looking to get a mortgage in Alabama, there are several options:

  • 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 no more than 45 percent. If you make a down payment of less than 20 percent, you’ll need to pay private mortgage insurance (PMI) premiums, 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 backed 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 starts at 2.15 percent for homebuyers.

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, secured by a conventional or FHA 30-year fixed-rate first mortgage along with a 10-year second mortgage. To qualify for the assistance program, your income can’t exceed $130,600 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, in addition to the down payment assistance through Step Up. To qualify for a 1 percent grant, your income must not exceed 50 percent of the area median income; for a half-percent grant, your income must not exceed 80 percent.

Additional Alabama mortgage resources