- Mortgage borrowing limits are the same in all Alabama counties.
- If you’re getting a conforming mortgage, you can borrow up to $647,200
- FHA borrowers can get a mortgage of up to $420,680
If you’re looking to buy a home in Alabama, it’s important to know how much you can borrow. If your budget is on the high end, your county’s borrowing limits will help you determine which type of mortgage you can get.
Mortgage borrowing limits in Alabama are the same in every county in 2022: $647,200 for conforming mortgages and $420,680 for FHA mortgages.
How do mortgage borrowing limits work?
Most types of mortgages have a limit on how much you can borrow. For conforming mortgages, these limits are set by the Federal Housing Finance Agency. FHA Mortgage limits are determined by the Federal Housing Administration.
In 2022, the baseline conforming mortgage limit is $647,200. However, in high-cost areas, you may be able to get a conforming mortgage for more than this, since the FHFA establishes different limits for areas where median home values tend to exceed the baseline limit. In these places, conforming limits can go up to $970,800.
FHA mortgage limits work similarly. In 2022, borrowers in low cost areas can get FHA mortgages up to $420,680, while those in high cost areas can get FHA mortgages up to $970,800.
If you want to buy a home that costs more than the conforming mortgage limit in your county, you’ll need to get a jumbo mortgage. The maximum amount you can get on a jumbo mortgage will vary from lender to lender. Some will lend up to $2 or $3 million, while others will lend much larger amounts.
Keep in mind that borrowing limits are just the maximum amount an individual can borrow. Your lender will determine how much it believes you can afford to pay back, and won’t lend you more than that, even if that number falls below your county’s borrowing limit.
Alabama borrowing limits in 2022 by county
How to determine which type of mortgage is best for you
Though how much you’re planning to borrow will play a part in helping you determine which type of mortgage you should get, you first need to understand what you might be able to qualify for.
If you have a
of at least 620, you may be able to qualify for a conforming mortgage. These are mortgages that meet the FHFA’s conforming loan limit guidelines and are eligible to be purchased by Fannie Mae or Freddie Mac, the two government-sponsored enterprises overseen by the FHFA.
These mortgages allow down payments as low as 3%. If you put less than 20% down with a conforming mortgage, you’ll pay mortgage insurance until you reach 20% equity in your home.
FHA mortgages are good options for lower-income borrowers or those whose credit prevents them from getting a conforming mortgage. They typically require a credit score of at least 580 and a
of at least 3.5%. If you make a larger down payment, you may be able to get one of these mortgages with a score as low as 500.
FHA mortgages require borrowers to pay both an upfront mortgage insurance premium and an annual mortgage insurance premium. Unlike with conforming mortgages, FHA mortgage insurance doesn’t go away once you reach 20% equity in your home; you’ll typically pay this cost each month for the life of the loan.
If you’re buying a home that costs more than the conforming borrowing limit for your county, you’ll need to get a jumbo mortgage. The requirements for these mortgages will vary from lender to lender, but often you’ll need a credit score of at least 680 and a 10% to 20% down payment to qualify.
If you’re eligible, you may also want to explore your VA and USDA mortgage options. VA mortgages are available to service members or veterans who meet minimum service requirements. Some surviving spouses may also be eligible. USDA mortgages are available to low- to moderate-income borrowers in rural and some suburban areas. VA and USDA mortgages have no borrowing limits.