EMBRY GROUP AT CRUE REALTY | BUYER'S GUIDE
Embry Group at Crue Realty | Huntsville, AL
The cash you need to buy a home in Huntsville comes down to three main pieces: your down payment, your closing costs, and a few smaller payments along the way, like earnest money and your inspection. Depending on your loan, the down payment can be as low as zero. Closing costs vary by loan and price, and your lender will put an estimate in writing within three business days of your application. Here's how each piece works so you can plan. To test monthly payments at different prices, try our affordability calculator.
1. Your Down Payment
The 20% down rule is a myth for most buyers. Minimums depend on the loan:
- Conventional loans: as little as 3% down for some eligible buyers, with mortgage insurance until you build enough equity
- FHA loans: 3.5% down for borrowers who meet the credit score requirement
- VA loans: no down payment required for eligible veterans and service members
- USDA loans: no down payment required in eligible areas, some of which sit just outside Huntsville city limits
These are program minimums. Your lender looks at your full picture, and putting more down lowers your monthly payment and can remove mortgage insurance. The Alabama Housing Finance Authority (AHFA) also offers down payment assistance for eligible buyers, so ask your lender whether you qualify.
2. Earnest Money
When your offer is accepted, you'll put down earnest money to show the seller you're serious. It's held in escrow and credited toward your down payment or closing costs at closing. The amount is negotiable, and your agent will tell you what's typical for the home and price point.
3. Inspection and Appraisal
These are usually paid before closing:
- Home inspection: paid directly to the inspector, usually at the time of the inspection. Add-ons like a termite inspection or sewer scope cost extra.
- Appraisal: ordered by your lender. Some lenders collect it upfront and others roll it into closing costs.
4. Closing Costs
Closing costs are the fees to finalize your loan and transfer ownership. They typically include:
- Lender fees for processing and underwriting your loan
- Title search and title insurance
- Closing attorney fees (in Alabama, closings are handled by a closing attorney or title company)
- Recording fees and taxes
If you've signed a buyer agreement and the seller isn't covering your agent's full fee, that difference may also be due at closing. See Do You Have to Pay Your Buyer's Agent Now?
5. Prepaid Costs and Escrow
You'll also prepay some ongoing costs at closing:
- A partial month of mortgage interest
- Your first year of homeowners insurance
- An initial deposit into your escrow account for future property taxes and insurance
Alabama's property taxes are among the lowest in the country, which helps keep this piece smaller than in many states. File for your homestead exemption once you move in.
6. A Cushion After Closing
Don't drain your savings to zero. Some lenders want to see reserves left over, and every new homeowner runs into surprises: a broken appliance, moving costs, the lawn mower you didn't own yet.
Ways to Lower Your Cash to Close
- Seller concessions: Ask the seller to credit some of your closing costs. Each loan program caps how much a seller can contribute.
- Lender credits: Some lenders cover part of your closing costs in exchange for a slightly higher rate.
- Down payment assistance: Programs like AHFA's can help eligible buyers.
- Timing your closing date: Closing near the end of the month reduces the prepaid interest due at closing.
How to Know Your Real Number
Once you apply, your lender must send you a Loan Estimate within three business days, which lists your estimated closing costs and cash to close. You'll get a final Closing Disclosure at least three business days before closing. Compare the two, and ask about anything that changed.
One last tip: before you wire money for closing, call your closing attorney or title company at a number you already trust to confirm the wiring instructions. Never rely on instructions sent only by email.
Plan Your Purchase Step by Step
Want a clear plan from pre-approval to closing day? Our free Buyer's Guide walks you through every step, including how to prepare your finances. Get the Buyer's Guide here.
Ready to Make a Move?
The Embry Group at Crue Realty has helped hundreds of buyers, sellers, and investors navigate the North Alabama market. We're here to help you do the same.
Call or text: (256) 690-0340
Email: [email protected] | Website: embrygrouprealestate.com
Embry Group at Crue Realty | Huntsville, AL | (256) 690-0340 | [email protected]
