Alabama Mortgage Calculator

Mortgage is next to the only affordable option for low to average income home buyers in many parts of Alabama and the rest of the United States. On this page we offer a convenient Alabama home loan calculator to gauge your potential expenses, and up-to-date answers to several frequently asked questions concerning buying a house in Alabama.

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Interest rate
%
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Interest
$
Principal
$
Total principal & interest$0
Monthly payment$0
Total interest paid$0
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Today's Mortgage Rates Trends in Alabama

Alabama Mortgage Calculator

A mortgage is often the most feasible option for many prospective homeowners in Alabama with low to average income. This page provides a comprehensive Alabama Mortgage Calculator to help you estimate your potential expenses. We also offer current and relevant answers to frequently asked questions about purchasing a house in Alabama using our Mortgage Calculator.

Best mortgage lenders in Alabama

The most sought-after mortgage lenders in Alabama have a nationwide presence. These include such recognizable names as Advanced Mortgage and Investment Co, Rocket Mortgage, and Paddio®. These lenders offer a variety of loan options, including fixed-rate mortgages, which you can calculate using our Alabama Mortgage Calculator.

How to Use Our Mortgage Calculator

Our Mortgage Calculator is a valuable tool for detailed planning of your future expenditures. Let's delve into each field to gain a better understanding of the mortgage in Alabama.

  • The first factor to consider is the home price and the amount you plan to spend on your future property. The down payment is a portion of this price that you need to pay upfront. To avoid expensive insurance, a down payment of at least 20% is recommended for a conventional loan. The remaining amount constitutes the principal (e.g., 80% of the home price given a 20% down payment).
  • The loan term is the duration over which you will repay your mortgage through scheduled payments. Fixed-rate conforming loans can last up to 30 years, while adjustable-rate options typically have shorter terms.
  • The interest rate is a fixed or variable percentage of the principal that you must pay throughout the loan. It's important to note that you are charged an annual percentage rate (commonly abbreviated as APR), which is not the same as the interest rate. Although the interest rate constitutes most of the APR value, the latter also includes various fees (e.g., origination fee, closing costs, insurance payments, etc). For a more accurate assessment, the interest rate used for these calculations is based on the current mortgage rates in Alabama, given a $400,000 home price and a 10% down payment.

Alabama Housing Market 2023

The previous year has witnessed a significant surge in the market value of housing in Alabama. This trend, amplified by the COVID pandemic, continues a longstanding pattern. However, the pace of growth has slowed slightly compared to the previous year. Both purchase and refinance rates have been steadily increasing and are projected to rise further shortly. Use our Mortgage Calculator to plan your finances accordingly.

Median property taxes in Alabama counties

The property tax is another important thing to consider when selecting your future house. Many lenders insist on setting up a mortgage escrow account to ensure the borrower’s keeping up with the tax and insurance costs.

County Avg. property tax rate Avg. home value
Barbour County $298 $89,300
Bibb County $210 $105,500
Blount County $352 $122,200
Bullock County $308 $66,800
Butler County $306 $88,800
Calhoun County $399 $117,700
Chambers County $259 $86,400
Cherokee County $360 $116,300
Chilton County $385 $98,600
Clarke County $279 $93,500
Clay County $210 $89,300
Cleburne County $337 $111,800
Coffee County $415 $147,800
Colbert County $355 $108,500
Conecuh County $314 $76,100
Coosa County $212 $87,300
Covington County $265 $96,200
Crenshaw County $206 $76,800
Cullman County $291 $123,700
Dale County $300 $108,000
Dallas County $288 $80,800
DeKalb County $269 $114,500
Elmore County $367 $158,500
Escambia County $336 $94,500
Etowah County $372 $115,200
Franklin County $282 $87,600
Geneva County $224 $87,800
Greene County $242 $67,700
Hale County $217 $88,800
Henry County $334 $112,600
Houston County $359 $138,800
Jackson County $269 $105,000
Jefferson County $802 $160,200
Lauderdale County $456 $144,800
Lawrence County $281 $98,700
Lee County $693 $160,700
Limestone County $378 $158,500
Lowndes County $279 $63,000
Macon County $336 $77,100
Madison County $667 $182,400
Marengo County $265 $88,100
Marshall County $388 $121,600
Mobile County $601 $131,200
Monroe County $244 $88,000
Montgomery County $435 $128,200
Morgan County $427 $143,000
Pickens County $250 $91,800
Pike County $320 $109,200
Randolph County $301 $85,200
Russell County $407 $114,700
Shelby County $905 $207,300
St. Clair County $391 $145,300
Sumter County $250 $69,500
Talladega County $340 $103,200
Tallapoosa County $292 $107,000
Tuscaloosa County $479 $167,400
Walker County $232 $104,100
Washington County $235 $83,900
Wilcox County $246 $81,600
Winston County $241 $82,900

Source: American Communities Survey 2016, U.S. Census

How do I calculate my mortgage payment?

Our Mortgage Payment Calculator is a comprehensive tool for meticulous planning of your future expenditures. Let’s delve into each field to gain a better understanding of the mortgage parameters in Alabama. The most convenient way to do this is by using our calculator. It's powered by a simple formula, which you can also use to calculate the amount to be paid manually:

M = P*i(1 + i)^n / (1 + i)^n – 1

M – estimated monthly mortgage payment;

P – principal;

I – monthly interest rate (to determine it, divide your annual mortgage rate by 12);

N – the loan term expressed in months (in other words, the overall number of monthly payments)

Suppose you are applying for a 15-year mortgage loan with a fixed 6.99% APR (which is .0699 as a unit fraction). The house costs $500k, with 10% ($50,000) to be paid down. The principal amount (P) will be equal to 90% of the initial home cost ($500,000 – $50,000 = $450,000).

I = .0699 % / 12 = .005825%.

Finally, let’s convert the loan length from years to months: N = 15 * 12 = 180.

M ($) = 450,000*.005825(1 + .005825)^180 / (1 + .005825)^180 – 1 ≈ 4042.

So, you are going to pay about $4042 a month.

It is important to note that the calculated M value is approximate, as no extra fees are taken into account. Use our Alabama Mortgage Tax Calculator to get a more accurate estimate.

Tips for first-time home buyers in Alabama

Firstly, several federal agencies such as USDA, FHA, and VA guarantee loans for selected borrowers. Many first-time homebuyers can find options that most fit their budget using the Alabama Mortgage Calculator.

In addition to these government-guaranteed programs, it's worth considering some offers from UHC (Alabama Housing Corporation) available to Alabamans. Specifically, first-time home buyers can apply for FirstHome – a down payment and closing costs assistance program, if they qualify for an FHA loan and their FICO score is at least 660. This option, which can be calculated using the Alabama Mortgage Payment Calculator, covers up to 6% of the loan amount toward the down payment and/or the closing costs. It's important to note that this option comes in the form of a 30-year fixed-rate second loan only.

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If you do not qualify for the FirstHome program, do not despair. Alabama Housing Score Loan is an alternative program that covers up to 4%. The minimum satisfactory credit score is 620.

For first-time homebuyers, here are some valuable tips:

  1. Prioritize pre-approval. This step enhances your creditworthiness in the eyes of home sellers. It's advisable to secure pre-approval letters from not just one, but at least two or three different lenders. This step will give you a broader perspective on your borrowing capacity.
  2. Make a thorough comparison of different mortgage rates. Opt for at least three lenders for a comprehensive comparison. Remember, the more options you explore, the better your chances of finding the best rate.
  3. Utilize tools like the Alabama Mortgage Calculator to do preliminary calculations based on the amount you have been pre-approved for. This will help you plan your future expenses effectively.
  4. Start setting aside funds for a down payment as early and as much as possible. A substantial down payment will decrease the principal amount, which, in turn, can reduce your potential expenses. Therefore, it's crucial to start saving in advance.
  5. If you're eligible for a VA loan, consider this option as your first choice. VA loans often offer favorable terms to eligible borrowers.
  6. Don't overlook government-backed plans and local assistance programs. There can be attractive offers available – make sure you're not missing out.
  7. If possible, pay off previous debts. This step will improve your debt-to-income ratio and potentially increase your borrowing capacity.

FAQ

How much house can I afford in Alabama?

To understand if a given property fits within your budget, you need to know its value and preliminary loan terms. Enter them into the Alabama mortgage calculator on the current page. Don't forget to account for your other debts, as well. Most advisers suggest keeping your mortgage payment at less than 28% of your monthly income, with total debt under 36%. This can be easily calculated using our Mortgage Calculator.

What credit rating do I need to qualify for a mortgage loan in Alabama?

When it comes to conventional loans in Alabama, there isn't a one-size-fits-all answer. Credit scores starting from 620 are generally considered satisfactory. However, the exact conditions can vary widely and include other essential criteria, such as your income and current debt amount. For government-backed FHA plans, there isn't a predefined threshold. Each lender, whether they're using the Alabama mortgage calculator or not, has the right to set their requirements. Typically, a credit score of 500 or better may qualify.

What is the average mortgage rate in Alabama?

At the time of writing, the average rates for conventional fixed-rate mortgages are 7.3030% and 6.5330% for a 30-year and a 15-year loan term, respectively. These rates can be easily calculated using a mortgage calculator Alabama. Remember, these rates can fluctuate, so it's always a good idea to use our mortgage calculator for the most accurate estimates.