New Alabama Law Makes It Easier for Disabled Veterans to Buy a Home
How HB77 Changes Mortgage Qualification for 100% Disabled Veterans
For many years, Alabama has offered a significant benefit to veterans who are 100% permanently disabled from service: a full property tax exemption on their primary residence.
However, there was one frustrating problem during the home-buying process.
Even though disabled veterans did not actually pay property taxes, mortgage lenders were still required to include those taxes in the loan approval calculation. This meant that many veterans appeared to have higher monthly housing costs on paper, which made it harder for them to qualify for a mortgage.
Now, thanks to Alabama House Bill 77 (HB77), that has finally changed.
What Changed With HB77
Under the new law, lenders can now remove property taxes from the mortgage calculation immediately when working with veterans who qualify for Alabama’s 100% disabled veteran property tax exemption.
In simple terms, that means:
- Property taxes no longer need to be counted in the monthly mortgage estimate
- Veterans may now qualify for larger loan amounts
- Mortgage approvals can better reflect the veteran’s true housing costs
This adjustment ensures that lenders calculate affordability based on what disabled veterans will actually pay, not an expense they are legally exempt from.
Why This Matters for Disabled Veterans
For many veterans, this change can make a meaningful difference when buying a home.
Before HB77, the property tax portion added to a mortgage calculation could sometimes push a borrower’s debt-to-income ratio higher than allowed by lenders. Even though those taxes would eventually be removed after closing, they still created barriers during the approval process.
With the new law in place, disabled veterans now benefit from:
- Greater purchasing power
- More accurate mortgage approvals
- Fewer obstacles during the loan process
In some cases, this could mean qualifying for a home that was previously just out of reach.
What the Property Tax Exemption Already Provides
Alabama’s property tax exemption for 100% permanently disabled veterans is already one of the most valuable benefits available to those who served.
Eligible veterans typically receive:
- Full exemption from property taxes on their primary residence
- Significant long-term savings over the life of homeownership
- Reduced overall housing costs compared to other homeowners
HB77 strengthens that benefit by making sure it applies during the mortgage approval process, not just after the home purchase.
What Veterans Should Know When Buying a Home
If you are a 100% disabled veteran planning to buy a home in Alabama, there are a few key steps to take:
- Verify your eligibility for the property tax exemption with your VA disability documentation.
- Work with a lender familiar with HB77, so the exemption is properly applied during the loan qualification process.
- Discuss how the change affects your buying power, since removing property taxes from the calculation can impact the loan amount you qualify for.
Because the law is relatively new, not every lender may be applying it the same way yet, which is why working with knowledgeable professionals can make the process smoother.
A Small Change With a Big Impact
HB77 may sound like a technical adjustment, but for many veterans, it removes an unnecessary barrier that existed during the home-buying process.
By allowing lenders to recognize the property tax exemption upfront, Alabama is helping disabled veterans access homeownership more fairly and more easily.
For those who have served the country and sacrificed for it, this change is a meaningful step toward ensuring they receive the full benefit they’ve earned.
🇺🇸 In short: Disabled veterans in Alabama can now qualify for a home more easily because their property tax exemption is counted during the loan approval process — not after closing.
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