FHA Loans in Alabama: One Limit in All 67 Counties, and Two Recording Taxes

Start in Huntsville, drive south to the Gulf Coast at Baldwin County, and the FHA loan limit on a one-unit home never moves. It is $541,287 in Madison County and $541,287 in Baldwin County.

All 67 Alabama counties have the same 2026 FHA loan limit, $541,287 for a one-unit home, so the county a home is in does not change how large an FHA loan can be.

I'm Jeff Moran, NMLS #483943, licensed to originate mortgages in Alabama through C2 Financial Corporation. This page covers what an FHA loan looks like in Alabama specifically. The national explainer on FHA loans covers the program itself.

FHA loan limits in Alabama for 2026

HUD's Mortgagee Letter 2025-23, dated December 11, 2025, sets the 2026 limits for FHA case numbers assigned on or after January 1, 2026. HUD's county file puts all 67 Alabama counties at the national floor:

Home type	FHA limit in every Alabama county
One unit	$541,287
Two units	$693,050
Three units	$837,700
Four units	$1,041,125

No Alabama county is above the floor. Next door in Georgia, 34 counties are, most of them around Atlanta. The Federal Housing Finance Agency's 2026 announcement sets the conforming baseline that Fannie Mae and Freddie Mac use at $832,750, and Alabama uses that baseline in every county.

The limit applies to the loan amount, and the price can be higher with a bigger down payment. HUD's FHA handbook says the maximum loan is the lesser of the area limit or a percentage of the adjusted value, which is the lower of the purchase price and the appraised value. The upfront mortgage insurance premium can be financed into the loan without counting against the limit.

What stays the same in Alabama

The rest of FHA works here the way it works everywhere. The handbook asks you to put in at least 3.5 percent of the adjusted value, and a credit score of 580 or higher can borrow up to 96.5 percent of that value on a purchase. Mortgage insurance has two parts, one paid upfront and one added to the monthly payment. The explainer linked above walks through what that costs and when conventional wins.

Alabama's two recording taxes on an FHA purchase

Alabama is unusual because the Department of Revenue taxes two different documents: the deed that transfers the home, and the mortgage that secures the loan. Both come on top of ordinary county recording fees.

On a low down payment loan, you'll want to see the recording taxes on your estimate before you write an offer, because the 3.5 percent you put in is not the only money due at the closing table.

FHA does leave room to ask for help with those costs. The handbook lets sellers, builders and other interested parties contribute up to 6 percent of the sales price toward your closing costs, prepaid items and discount points. The Alabama Department of Revenue says which documents are taxable but not whether the buyer or the seller pays, so your purchase contract decides. You'll want that settled in the offer rather than found on the closing statement.

FHA refinances in Alabama and the mortgage tax

Alabama's mortgage recordation tax reaches a refinance, because the new mortgage is recorded. An FHA streamline refinance, which is open only to a client who already has an FHA-insured mortgage, skips the appraisal, and the new mortgage still gets recorded and taxed. You'll want to count the tax as a cost when you work out whether a refinance pays for itself. The Alabama refinance page has the full picture.

Closing, title and flood on the Gulf Coast

Alabama is not simply an attorney-closing state, and no statewide custom says whether the buyer or the seller pays for the owner's title policy, so that too is a contract term. Who pays for title insurance in each state shows how that compares across the country.

Coastal homes in Baldwin County, including those in Daphne, Fairhope and Foley, carry one FHA flood rule you'll want to ask about early. A home in a FEMA Special Flood Hazard Area is only eligible if its community participates in the National Flood Insurance Program, and the lender has to order its own flood zone check.

Run your numbers

Run your numbers and you will see rates for your scenario with FHA priced next to conventional, plus Alabama closing costs that include both recording taxes. Pre-approval comes after that, when you want a letter behind an offer. Which mortgage fits you compares FHA with the other programs side by side.

Nothing here is a loan approval, a denial, or a commitment to lend. FHA limits are published once a year and rules in the Handbook are revised, so what applies to a specific file is confirmed at application.

Common questions

What is the FHA loan limit in Alabama?

HUD sets the 2026 limit at the national floor in every Alabama county, which means the limit for a one-unit home is the same in all 67 counties from Madison to Baldwin. Two-, three- and four-unit homes have higher floors that are also identical statewide. The limit applies to the loan amount, and it takes effect for FHA case numbers assigned on or after January 1, 2026.

Does the FHA limit change by county in Alabama?

No. HUD's 2026 county file lists every Alabama county at the national floor, so Birmingham, Huntsville, Mobile, Montgomery and the Gulf Coast all share one limit. In some other states, higher-priced counties get a higher limit, but Alabama has none.

Does an FHA loan in Alabama require a 3.5 percent down payment?

The Handbook's minimum required investment is at least 3.5 percent of the adjusted value of the property, in cash or its equivalent, and it is the same in Alabama as anywhere. Alabama's recording taxes and other closing costs are separate from it.

Do I pay Alabama's mortgage tax on an FHA loan?

The Alabama Department of Revenue taxes mortgages recorded in the state, and an FHA mortgage is recorded like any other. Who pays it on a purchase is decided by the contract, and FHA allows a seller to contribute toward closing costs up to the limit in Handbook section II.A.4.d.

Can I do an FHA streamline refinance in Alabama?

If you already have an FHA-insured mortgage, a streamline refinance can skip the appraisal under Handbook section II.A.8.d. Alabama's mortgage recordation tax still applies to the new mortgage, so its cost belongs in the comparison.

Can I buy a home on the Gulf Coast with an FHA loan?

Yes, if the home meets FHA's flood rules. A home in a Special Flood Hazard Area is only eligible when its community participates in the National Flood Insurance Program, and the lender orders a separate flood zone determination.