Alabama households with modest incomes will soon benefit from new below-market mortgage interest rates offered by the Alabama Housing Finance Authority’s First Step Mortgage Revenue Bond program.

Homebuyers who earn less than the median income for their area can apply for two special 30-year fixed mortgage interest rates: either 5.5% on FHA, VA, or USDA loans, or 6% on Freddie Mac HFA Advantage conventional loans.

Available to Alabama homebuyers only through AHFA, applications are accepted on a first-come, first-served basis by a statewide network of participating lenders. Both rates include up to $10,000 in down payment assistance.

Financed by the sale of tax-exempt Mortgage Revenue Bonds, the First Step program was hugely popular several years ago. Market conditions are again right for reopening the program, said AHFA Executive Director Robert Strickland.

“The 50,000 Alabama homebuyers who took advantage of this program from 1980 to 2010 know what a difference it makes,” said Strickland. “These lower-than-market interest rates result in real savings over the life of a loan. Combined with AHFA’s down payment assistance, we can stretch borrowers’ savings and reach the next generation of potential homebuyers.”

Income and sales price limits for participation are set by the U.S. Department of Housing and Urban Development and based on each area’s median income. Limits vary based on family size and the home’s location.

In some areas of the state, qualifying households can earn up to $119,400 annually and purchase homes with a sales price up to $588,104 in “target” areas and $481,176 in “non-target” areas. These areas are also set by the federal government to encourage economic development.

Program details are available through the Alabama Housing Finance Authority.

This story was originally published on 256 Today.