# Alabama mortgages: low property taxes, recording taxes and AHFA help

> Alabama mortgage numbers: a 0.38% effective property tax rate, the deed and mortgage recording taxes, and AHFA Step Up help of up to $10,000.

URL: https://mortgage-math-us.com/location/alabama/  
Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team

## Quick answer

The median Alabama home is worth $233,300, and with 10% down at the 7.24% national average rate it costs about **$1,705 a month** — property tax adds only $74 of that, because Alabama’s effective rate of 0.38% is the 2nd-lowest in the country. What you pay instead comes at closing: a deed tax of 0.1% of the price and a mortgage tax of 0.15% of the loan. AHFA’s Step Up program adds up to $10,000 toward the down payment.

## Key facts

| Fact | Value | Source | As of |
|---|---|---|---|
| Median home value in Alabama | $233,300 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US01) | 2024 ACS 1-year |
| Effective property tax rate | 0.38% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US01) | 2024 ACS 1-year |
| Median property tax bill | $890/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US01) | 2024 ACS 1-year |
| Median household income | $66,659/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US01) | 2024 ACS 1-year |
| Mortgage recording tax | 0.15% | [Alabama Department of Revenue](https://www.revenue.alabama.gov/tax-types/recordation-tax/) | Aug 14, 2023 |
| Homestead exemption, state taxes (assessed value) | $4,000 | [Alabama Department of Revenue: Homestead Exemptions](https://www.revenue.alabama.gov/property-tax/homestead-exemptions/) | Oct 20, 2025 |
| AHFA Step Up help, up to | $10,000 | [Alabama Housing Finance Authority: Step Up](https://www.ahfa.com/programs/homeownership/available-programs/step-up) | Oct 29, 2026 |

## Alabama property tax: the 2nd-lowest rate in the US

The Census Bureau puts the median Alabama homeowner’s property tax bill at $890 a year, which is 0.38% of the median home value. Nationally the ratio is 0.89%, and among the states and DC only one comes in lower. On the median home, Alabama’s rate works out to $74 a month; the same home taxed at the national ratio would carry $173.

Rates still vary by county and city, because local millage is layered on top of the state’s share. Two discounts are worth knowing about before you buy:

- **Regular homestead exemption (H-1).** If you own and live in the home, you can exempt up to $4,000 of assessed value from state property taxes and $2,000 from county taxes. Counties, cities and other taxing authorities may grant more. Owners who are 65 or older or disabled qualify for larger exemptions.
- **Apply locally.** The exemption is not automatic. You claim it at your county’s revenue commissioner or tax assessor office, usually once you have moved in.

> **Tip: Ask what the exemption is worth on this house**
>
> The exemption is set in assessed value, and the county decides how that relates to market value. Ask the county office, or check the current tax notice, to see what the bill looks like with the homestead exemption applied.

## A monthly payment where taxes barely register

Homes in Alabama are cheaper than in most states — the median value is the 8th-lowest among the states and DC, below the US median of $360,600. That keeps principal and interest modest, and the low tax rate does the rest.

> **Worked example: Median Alabama home ($233,300), 10% down, 30-year fixed at 7.24%**
>
> | Monthly cost | Amount |
> |---|---:|
> | Principal and interest on $209,970 | $1,431 |
> | Property tax at 0.38% | $74 |
> | Homeowners insurance (national average per $1,000 of value) | $95 |
> | PMI (midpoint of Freddie Mac’s typical range) | $105 |
> | **Total** | **$1,705** |
> 
> Insurance is estimated with Freddie Mac’s national average of $4.90 per $1,000 of home value, so treat it as a placeholder until you have quotes — expect more near the Gulf.

Change the inputs in the [mortgage payment calculator](https://mortgage-math-us.com/tools/mortgage-payment-calculator/?price=233000&down=10&tax=0.38&state=AL); it opens with Alabama’s median price and tax rate.

## Recording costs: Alabama’s deed tax and mortgage tax

Alabama is one of 8 states that charge both a statewide tax on the deed and a separate tax on recording the mortgage. Both are paid at closing, when the documents go to the county probate office.

| Tax | Rate | On the median home with 10% down |
|---|---:|---:|
| Deed tax (on the price) | 0.1% | $233 |
| Mortgage tax (on the loan) | 0.15% | $315 |
| **Both** | | **$548** |

The purchase contract decides who pays the deed tax. The mortgage tax follows your loan, so it shows up among the buyer’s costs on the Loan Estimate — and a larger loan means a larger tax. Add lender, title and prepaid items and the CFPB’s typical range of 2%–5% of the price puts total closing costs on the median home at roughly $4,666–$11,665. The [closing cost estimator](https://mortgage-math-us.com/tools/closing-cost-calculator/?state=AL) adds both Alabama taxes automatically.

## AHFA Step Up and First Step

The Alabama Housing Finance Authority (AHFA) runs its programs through participating lenders. Two cover most buyers:

| | Step Up | First Step |
|---|---|---|
| What it is | Down-payment help for moderate-income buyers who can afford a payment but lack savings | Below-market 30-year fixed rates funded by mortgage revenue bonds |
| Help available | 4% of the sales price, up to $10,000 | Same down-payment help available |
| How it is repaid | Second mortgage over 10 years | Second mortgage over 10 years |
| Income limit | $172,800, any household size or county | Federal limits by area |
| Minimum credit score | 640 | 640 |
| Buyer type | First-time or repeat | First-time or repeat |

Step Up borrowers must complete a homeownership education course. AHFA’s Affordable Income Subsidy Grant can add help with closing costs for eligible borrowers.

> **Worked example: Step Up on the median Alabama home**
>
> $233,300 × 4% = $9,332, capped at $10,000 → **$9,332** of help. Paired with an FHA loan, that covers the whole $8,166 minimum FHA down payment and leaves about $1,167 toward closing costs.

Compare these with federal options in the [first-time buyer programs guide](https://mortgage-math-us.com/first-time-buyers/programs/).

## What Alabama’s median income buys

On the state’s median household income of $66,659, Freddie Mac’s guideline of keeping housing under 30% of gross income allows $1,666 a month. At today’s average rate with 10% down and Alabama’s tax rate, that supports a home of about **$228,000** — $5,300 less than the median home value.

Owning is the norm here: 71% of occupied homes are lived in by their owners, above the national share of 65.3%. If you are deciding between renting at the state’s median of $1,077/mo and buying, the [rent vs buy calculator](https://mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=AL&price=233000&rent=1077) runs both paths with Alabama’s numbers, and the [affordability calculator](https://mortgage-math-us.com/tools/affordability-calculator/?state=AL&income=66659) shows the price your own income supports.

## Insurance and flood risk on the coast

Low taxes can be offset by insurance in Mobile and Baldwin counties, where wind and hurricane exposure push premiums up and some policies carry separate wind deductibles. Standard homeowners policies don’t cover flooding. If a home sits in a FEMA Special Flood Hazard Area and the loan is federally backed or from a regulated lender, flood insurance is required. Get quotes during your inspection period, before the earnest money is at risk.

## Frequently asked questions

### What is the property tax rate in Alabama?

Census figures put Alabama’s effective rate at 0.38% of home value, with a median bill of $890 a year — the 2nd-lowest rate among the states and DC. Your bill depends on county and city millage and on exemptions such as the homestead exemption.

### Does Alabama have a mortgage tax?

Yes. Alabama charges 0.15% of the loan amount when the mortgage is recorded, plus a deed tax of 0.1% of the price. On the median home with 10% down the two add up to about $548.

### How much is the homestead exemption in Alabama?

The regular H-1 exemption removes up to $4,000 of assessed value from state property taxes and $2,000 from county taxes for owners under 65 who are not disabled. Apply at your county office.

### Does Alabama have first-time home buyer programs?

AHFA’s Step Up and First Step programs are open to first-time and repeat buyers. Step Up gives 4% of the price, up to $10,000, as a second mortgage over 10 years for households earning up to $172,800.

### What credit score do I need for AHFA?

AHFA sets a minimum credit score of 640 for all of its programs, and Step Up borrowers must complete a homeownership education course.

### How much do I need to earn to buy a house in Alabama?

To keep housing under 30% of income on the median $233,300 home with 10% down at today’s average rate, you need about $68,200 a year, assuming few other debts. The median Alabama household earns $66,659.

## Sources

- [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US01) — Median value of owner-occupied homes (2024 ACS 1-year)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US01) — Median household income (2024 ACS 1-year)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US01) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US01) — Median gross rent (2024 ACS 1-year)
- [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data)
- [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026)
- [Alabama Department of Revenue](https://www.revenue.alabama.gov/tax-types/recordation-tax/) — State real estate transfer tax; State tax on recording a mortgage (Aug 14, 2023)
- [Alabama Housing Finance Authority: Step Up](https://www.ahfa.com/programs/homeownership/available-programs/step-up) — AHFA Step Up down payment assistance (share of the sales price); AHFA Step Up down payment assistance, up to; AHFA Step Up second mortgage term (Oct 29, 2026)
- [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026)
- [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year)
- [Alabama Department of Revenue: Homestead Exemptions](https://www.revenue.alabama.gov/property-tax/homestead-exemptions/) — Alabama regular homestead exemption (H-1), state taxes (assessed value); Alabama regular homestead exemption (H-1), county taxes (assessed value) (Oct 20, 2025)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US01) — Share of occupied homes lived in by their owners (2024 ACS 1-year)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year)
- [Alabama Housing Finance Authority: Step Up](https://www.ahfa.com/programs/homeownership/available-programs/step-up)
- [Alabama Department of Revenue: Homestead exemptions](https://www.revenue.alabama.gov/property-tax/homestead-exemptions/)
- [AHFA: First Step mortgage revenue bonds](https://www.ahfa.com/programs/homeownership/available-programs/first-step-mortgage-revenue-bonds)

_General information, not financial advice._