Local Lending 101: What First-Time Buyers Need to Know Now

If you are buying your first home in Alabama, understanding your financing options is just as important as choosing the right floor plan. Loan programs, interest rates, and pre-approval timelines all impact your buying power. Here is what first-time buyers need to know now.

What Programs Are Available in Alabama?

Several loan programs are designed to support first-time buyers, each with different benefits and qualifications.

FHA Loans allow a down payment as low as 3.5 percent of the purchase price. Down payment assistance programs may be used, along with gifts from relatives. In some cases, employers may also contribute if the benefit is available to all eligible employees.

VA Loans are available to buyers with VA eligibility. These loans can offer up to 100 percent financing depending on the Certificate of Eligibility. VA loans also do not require monthly mortgage insurance, which can mean meaningful savings over time.

USDA Loans provide 100 percent financing for eligible properties. Homes must meet USDA address eligibility guidelines. Rural areas are most common, and many Legacy Homes communities fall within eligible zones.

Conventional Loans backed by Fannie Mae and Freddie Mac offer down payment options as low as 3 percent. Area Median Income limits apply and vary by census tract. Programs exist for borrowers at or below 50 percent, 80 percent, or up to 100 percent of the area median income, depending on location.

Qualifications vary, so speaking with a Mortgage Loan Officer is the best way to determine which option fits your situation.

What Is a Good Interest Rate in 2026?

Interest rates shift daily and are influenced by U.S. and global markets, bond activity, investor risk analysis, and economic policy. Rates also depend on credit score, loan-to-value ratio, and debt-to-income ratio.

In today’s market, competitive 30-year fixed rates may look like:

• Conventional: 6.125 percent to 5.875 percent
• FHA: 6.00 percent to 5.75 percent
• VA: 6.00 percent to 5.75 percent
• USDA: 6.00 percent to 5.75 percent
  
  

Your exact rate will depend on your financial profile.

Can Closing Costs Be Financed?

Technically, yes. However, each loan program has maximum loan-to-value limits. The home must appraise at or above the sales price. Buyers typically need to bring more than the minimum down payment, often 3 to 6 percent above the minimum, to create room to finance closing costs. 

Sellers may also contribute up to program limits, and family gifts are another option. A Mortgage Loan Officer can explain what applies to you.

How Long Does Pre-Approval Take?

Once your application is complete and credit authorization is provided, pre-approval can take as little as one to two hours. This step helps define your budget and strengthens your offer.

Can You Refinance Later?

Yes. Most programs require the loan to be in place for at least six months before refinancing. If rates drop, refinancing may reduce your monthly payment or adjust your loan terms.

Final Thoughts on Local Lending

Financing is a key part of the homebuying journey. For personalized guidance on loan options or refinancing, contact our lending partner, Silverton Mortgage, and speak with one of their Mortgage Loan Officers. 

When you are ready to find a home that fits your budget and lifestyle, connect with Legacy Homes and start your path to homeownership today.