First time home buyer, Montgomery AL

First-Time Homebuyer Guide in Montgomery, AL

Buying your first home is a lot of new words, deadlines, and money moving around. Here's how it works in Montgomery, step by step, from setting your budget to getting the keys, plus the help that's actually available right now.

Talk to Britt about buying See the seven steps

Alabama State Capitol at sunset, seen down Dexter Avenue in downtown Montgomery — Buying your first home in Montgomery Dexter Avenue, Montgomery, Alabama

61 days on marketThe 2025 median for Montgomery homes in River Region MLS data.

4.6 months of supplyMontgomery metro, January through June 2026, per Redfin.

About 3% below askingThe median gap on 2025 River Region homes that sold under list price.

Start here

You may have more room than you think

Redfin's look at the Montgomery metro for the first half of 2026 showed active listings up 5.4% from a year earlier. For a first-time buyer, more homes to choose from can mean more time to decide and more room to ask for things.

That room has limits. In 2025 River Region data, 54% of closings still sold at or above asking price. A fairly priced home in good shape can move fast, while one that's been sitting often leaves more to talk about. Part of my job is showing you which one you're looking at.

The other thing to know is that Alabama is a buyer beware state on used homes. So this guide spends extra time on the part that protects you: checking the house before your money is on the line.

Step one

Set your budget before you fall in love with a house

The number a lender approves and the payment you're comfortable with aren't always the same. Start with the monthly payment that lets you sleep at night, then work backward. Here's what to count.

The full monthly payment: loan, property taxes, homeowners insurance, and any mortgage insurance or HOA dues.
Down payment. FHA loans allow as little as 3.5% down, and some conventional loans go as low as 3%. VA and USDA loans have their own rules.
Closing costs. They usually run 2% to 4% of the price, so about $6,000 to $12,000 on a $300,000 home.
Money due before closing: earnest money, plus about $500 for an inspection and $650 for an appraisal.
Cash left over for moving, and for whatever breaks the first month you own it.

Still saving up? Alabama's first-time and second-chance savings account lets you deduct deposits from your state income taxes, up to $5,000 a year or $10,000 on a joint return. Accounts have to be opened by December 31, 2028, so ask your tax pro if it fits.

See the full cost breakdown Alabama savings account rules

Down payment help

What's available in Montgomery right now

I checked these on the Alabama Housing Finance Authority (AHFA) website in November 2026. Programs and limits change, so confirm them with a participating lender before you count on the money.

First Step

A 30-year fixed loan with a below-market rate. In target areas, it's open to first-time and repeat buyers. Everywhere else, you can't have owned a home in the past three years. Income and price limits apply, and they depend on the address.

AHFA First Step details

Step Up

Built for moderate-income buyers who can handle a payment but need help with the down payment. You don't have to be a first-time buyer. Income can't exceed $172,800, and you'll need to complete a homebuyer education course.

AHFA Step Up details

How the help works: both programs can provide up to $10,000 or 4% of the sales price, whichever is lower. That's a 10-year second mortgage, not free money, so it adds to your monthly payment. Both call for a 640 credit score and a debt-to-income ratio of 45% or lower, and you apply through a participating lender. With an HFA Advantage conventional loan, buyers at or below 80% of area median income may also qualify for a closing cost grant of 0.5% to 1% of the loan. See the grant details.

What about the City of Montgomery? The city has used federal HOME funds for first-time buyer down payment help, but I couldn't find a city program open to buyers right now. The 2026 HOME funding request I found only covers rental housing. If that changes, the Community Development Division is the place to look.

How it works

The seven steps to your first Montgomery home

Here's the whole trip, in order, and where I come in.

1
Set your budget
Pick a monthly payment you're comfortable with and add up your cash. If AHFA help might fit, ask about it now, not after you find a house.
2
Get preapproved
Talk to more than one lender and ask each for a Loan Estimate so you can compare them side by side. A preapproval letter isn't a guaranteed loan, but sellers take it seriously.
3
Search and tour
You'll get Alabama's brokerage services form, and before touring homes with me you'll sign a written agreement that spells out my pay. It isn't set by law and it's negotiable. Then I show you homes that fit your list.
4
Make an offer
I pull recent sales so you know what the house is worth before you write a number. Then I help you put together the price, earnest money, deadlines, and any help you want from the seller.
5
Inspect the home
Get a home inspection during your inspection period, plus a termite inspection. This is your chance to find problems and ask for repairs before you're locked in.
6
Finish your financing
Your lender orders the appraisal and finishes underwriting. Don't open new credit, change jobs, or move big money around without calling your lender first.
7
Close and get the keys
You'll get your Closing Disclosure at least three business days before closing. Do a final walkthrough, sign, and get your keys. Then ask the Revenue Commissioner about your homestead exemption.

Your offer

Price is only part of it

In 2025 River Region data, homes on the market 90 days or more closed at a median of 98.3% of list price. Homes under contract within two weeks sold at full asking price. That's why I look at how long a home has been sitting before you pick your number.

7 signs you can negotiate

Earnest moneyUsually $1,000 or 1% of the price, and it can be more on a competitive home. It gets credited to you at closing if the sale goes through as agreed.

Help from the sellerYou can ask the seller to pay some of your closing costs. Your loan type caps how much they can pay, so I check that with your lender first.

DeadlinesYour offer sets the dates for your inspection, loan, and closing. Miss one and you could lose your rights, so I keep track of them with you.

Montgomery checks

Four things to check on a Montgomery house

These come down to the address, so I look them up on each home you're serious about.

Age of the home

Older homes and lead paint

On most homes built before 1978, the seller has to share what they know about lead paint, and you get a 10-day window to test for it. Older homes can also need a closer look at the roof, wiring, and plumbing.

EPA lead paint rule

Water

Flood zones

Montgomery has been in the National Flood Insurance Program since 1982, and a flood zone can add insurance to your payment. Check before you get attached, and call the city at 334-625-2690 with questions.

City flood information

Historic districts

Rules on exterior changes

In districts like Capitol Heights, Cloverdale, and Cottage Hill, planned exterior work needs approval from the Architectural Review Board first. If you plan on changing the outside, check before you buy.

Architectural Review Board

Address details

City limits and school zones

A Montgomery mailing address doesn't always mean inside the city limits, and that can change your taxes and services. School zones are set by address too, so confirm them with the school system.

Living in Montgomery

Protect yourself

What buyer beware means for you

Three things I walk every first-time buyer through.

The seller may not tell you much

Alabama doesn't require a seller disclosure form on used homes. Sellers do have to disclose known health or safety defects you couldn't easily see, and answer direct questions truthfully. So ask specific questions, and ask them in writing.

Inspection and appraisal do different jobs

The inspection is for you and looks at the condition of the house. The appraisal is for your lender and looks at value. A home can pass the appraisal and still need a new roof.

Double-check the money

Compare your Closing Disclosure to your Loan Estimate and ask about anything that changed. Before you wire money, call the closing office at a number you already trust, not one from an email.

This is general information, not legal advice. For a specific question, talk to a real estate attorney.Alabama disclosure rules Closing Disclosure explainer

Fair housing: I work with every buyer the same way. Federal law bars discrimination based on race, color, national origin, religion, sex, familial status, or disability. I can give you facts about a home or an address, but where you live is your call.

First-time buyer FAQ

What first-time buyers ask me

How much money do I need to buy my first home in Montgomery, AL?

It depends on the price and the loan. On a $300,000 home, closing costs alone often run about $6,000 to $12,000, plus your down payment, moving costs, and an inspection and appraisal that usually come due before closing. Your lender's Loan Estimate gives you the real numbers for your loan.

Is there down payment assistance for first-time buyers in Montgomery?

Yes, through the Alabama Housing Finance Authority. First Step and Step Up can provide up to $10,000 or 4% of the sales price, whichever is lower, as a 10-year second mortgage, so it is money you pay back. Both are used through a participating lender. I could not find a City of Montgomery down payment program open to buyers right now.

Do I have to be a first-time buyer to use AHFA programs?

No. Step Up does not require it. First Step is open to first-time and repeat buyers in target areas, and in other areas you cannot have owned a home in the previous three years. A participating lender can check the address and your income for you.

Do I need a home inspection in Alabama?

It is not required, but I strongly recommend one. Alabama generally follows buyer beware on used homes and does not require a seller disclosure form, so finding problems before closing mostly falls on you. This is general information and not legal advice.

Your next step

Ready to start on your first home?

Call, text, or email me. Tell me where you are in the process, and I'll help you figure out your next step.

Britt Dowling, REALTOR® Broker Associate, Real Broker, LLC · License 000123826

40 sales in 2025
Top 20 Agent, Montgomery MAAR MLS
95 five-star reviews, 5.0 rating
Montgomery Chamber Ambassador
Board of Directors, Ezekiel Academy

(334) 530-3576 britt.dowling@gmail.com Contact Britt

Costs shown are general estimates and will vary by home, loan, and lender. Market figures are historical and do not predict what any home will sell for. AHFA program terms, limits, and availability can change, and qualifying is up to the lender and program. I am not a lender. This page is general information and is not legal, tax, or financial advice.