Top Tips for First-Time Homebuyers
in Birmingham, AL
Birmingham provides an excellent environment for first-time homebuyers and young families aiming to settle down. With its expanding job market and comparatively affordable housing prices compared to other major cities, Birmingham has a lot to offer families and individuals looking to become homeowners and find career opportunities.
LinkedIn recently ranked Birmingham as the seventh fastest-growing city where BA graduates can launch careers. The city's continuous public and private partnerships, such as Rev Birmingham and the Birmingham Inclusive Growth (BIG) Partnership, are dedicated to boosting the economy, attracting investors and rejuvenating the downtown area to create lively commercial districts for all residents.
But searching for and purchasing your first property can be daunting - especially if this is your first time doing it. The key is going into the process informed and prepared. This Birmingham, Alabama, first-time homebuyer guide will give you excellent foundational knowledge for navigating the home buying process and leave you in a position to make informed decisions when looking for your dream home in the Birmingham Metropolitan area.
Understanding the Local Housing Market
When considering Birmingham as a place to put down roots, it's wise to educate yourself on the local real estate market conditions. Housing inventory, home prices, and demand can fluctuate over time and impact your experience. So, put in the effort to understand the current market conditions. Bookmark resources you find and check on them monthly—real estate markets are hyperlocal, and prices and inventory can change quickly.
There are many ways to look into the conditions of the Birmingham real estate market. You can glean plenty of information from sites such as Zillow, Rocket Homes and Redfin. These sites and other leading competitors offer regularly updated pages with the current real estate market conditions in Birmingham, AL. Another good practice is to chat with a local real estate professional to get a lay of the land and up-to-date market insights for different neighborhoods. It'll paint a picture as to what to expect as a buyer right now.
Birmingham generally offers excellent affordability compared to larger metro areas. It features a robust jobs market and various attractions and activities. As of late 2024, the median home sale price here is only $194,500—significantly under the national average and markedly lower than homes in cities of comparable sizes.
Financial Preparation: Setting Yourself Up for Homebuying Success in Birmingham
The next step in home buying involves getting your finances in order. Drawing up your budget, checking your credit health and assessing what assistance may be available to you as a first-time buyer are all essential tasks.
Check Your Credit Score
Your credit score impacts your mortgage interest rates and loan approval chances. Aim for a score over 640 to qualify for the best rates and favorable federal programs such as FHA, USDA and VA home loans. To boost your score, go in and check your credit reports from Experian, Equifax, and TransUnion and dispute any errors. It's also wise to pay down any debts and avoid taking on new credit when house hunting. Doing so will improve your Debt-to-Income (DTI) ratio.
Determine Your Budget
Factor in all the ongoing costs of homeownership when determining your price range, not just the mortgage. Be sure to account for property taxes, home insurance, HOA fees (if applicable), and maintenance costs. Ideally, you want to look at homes where the total monthly housing costs would be less than or equal to 30% of your gross monthly income.
Save for a Down Payment
Saving for a down payment is a prerequisite for getting on the housing ladder. Even if you can secure Down Payment Assistance (DPA) at the city or state level, you still need to contribute your funds. Save as much as possible; a larger down payment can lead to more favorable interest rates and loan agreements.
Lastly, shop around for local down payment assistance (DPA) programs that can help first-time buyers. Birmingham, AL, has the Ready to Own Program. Here are the details:
- Up to $10,000 in forgivable loan assistance
- 0% interest
- Funds can cover down payment, closing costs, interest rate buydowns
- Homebuyer education required
- Eligibility: 600+ credit score, income under 80% of area median
There are also state-sponsored first-time homebuyer mortgages that provide lending at preferential rates. The Alabama First Step and Step Up mortgage programs offer various benefits, and you can learn more about these home loan programs on the Alabama Home Financing Authority website.
If you want to save money when buying a home, LGI Homes offers builder-paid closing costs at Hunter's Point at Innsbrooke.
Get Pre-Qualified by Lenders
Lastly, getting a mortgage pre-qualification is worthwhile. It shows sellers you're serious about buying a house and lets you know how much you can afford to spend on a home and the current interest rates. Getting pre-qualified for a mortgage is easy.
Here's what you can expect when you seek pre-qualification:
- It will give you an idea of how much you can afford.
- It is a quick estimate and is not a commitment from you or the lender.
- It doesn't require paperwork.
- It doesn't require a hard credit check and won't negatively affect your credit score.
- It's different from a pre-approval; you can get pre-qualified quickly.
Explore Your Homebuying Options in Birmingham, AL
When embarking on your home search in Birmingham, you'll want to explore all possible options to find the right fit. Here are some tips on where to look and what to consider when evaluating homes.
Research Neighborhoods and Nearby Towns and Cities
Birmingham spans almost 100 neighborhoods and has several popular nearby cities and towns, where you can find homes in master-planned communities and nice suburbs. So spend time researching online or speaking to a real estate professional to identify areas that match your lifestyle, commute needs, and budget.
When deciding on target neighborhoods, ideal locations or cities in the Birmingham Metropolitan area, consider factors like school districts, recreation opportunities, community amenities, nearby freeways, commercial centers and anything important to you and your family.
View Home Listings Online
Sites like Zillow and Realtor.com allow you to evaluate homes currently on the market. You can search for homes and use filters to find the best home for you and your family. Use search filters to narrow results by price range, bedrooms, bathrooms and square footage.
These sites make it easy to see the prices of homes in different neighborhoods, nearby towns and cities and other criteria.
Consider Birmingham New Construction Homes
As a first-time homebuyer, consider looking into new construction homes in Birmingham, which are an excellent choice. They deliver several advantages over buying an existing home, including but not limited to:
- Modern Building Standards: New homes incorporate the most up-to-date materials, include energy-efficient features and are built to higher construction standards set by the homebuilding industry.
- Upgrades You Want: Most builders charge extra for upgrades like granite countertops, appliances, luxury vinyl plank flooring and integrated technology. Every LGI home includes designer upgrades and premium finishes as standard features. With LGI, you can get a new home with the popular upgrades you want at no extra cost!
- Move-In Ready: Another advantage of brand new homes is that there is no need to fix up parts of a property that need renovations. New construction homes are complete and ready for immediate move-in, perfect for quick timelines such as job relocation.
- Extended Warranties: Everything in a new home is brand new and under warranty. LGI Homes offers a 12-month workmanship and 10-year structural warranty, giving you peace of mind against unwanted surprises.
Leading Birmingham home builders like LGI Homes offer high-quality new construction homes in the most popular Birmingham neighborhoods.
Touring model homes is worthwhile. You can see the new community and experience the difference between resale and brand-new homes.
You can see the curb appeal of our homes, walk through our open-concept floorplans, view designer upgrades throughout each home first-hand, and appreciate why more than 55,000 homebuyers chose LGI Homes as their homebuilder.
Buying Your First Home in Birmingham is Within Reach
Homebuying may make first-time buyers feel overwhelmed, but having the correct information and support can make a significant difference. The good news is that you can head into the process informed and prepared using the advice above.
If buying a quality, affordable new build home interests you, contact one of our friendly New Home Consultants at LGI Homes. They can tell you about our latest developments and available homes in Birmingham, answer any questions and discuss our financial promotions and simplified homebuying process with you.