For statewide rules on deposits, notices and closing in Alabama, start with our Alabama DSCR loan page. If you are still choosing a city, our best Alabama cities for rental property post ranks eight markets on rent against principal and interest. This one goes deeper on a single market: the real tax line on a Huntsville rental and what it does to the ratio.

Every number below was checked on November 13, 2026 against HUD User, the Census Bureau, the Madison County Tax Assessor and Tax Collector, the Alabama Department of Revenue and the cities of Huntsville and Madison.

What HUD Says Huntsville Rents

HUD raised every Huntsville bedroom size for FY2027, and the four bedroom rose the most, by $132.

The area is just two counties, Madison and Limestone. So one benchmark covers a townhouse near Research Park, a newer four bedroom in Madison and a brick ranch out toward Athens. The spread between the two and four bedroom figures, $900 a month, is the biggest story in this table, because it decides which houses work.

Prices From Huntsville to Limestone County

The city of Huntsville is the cheapest of the four places here, and the city of Madison is the most expensive.

Huntsville's July 2025 estimate of 233,627 is larger than Birmingham, Montgomery or Mobile. The Census rent column is an average of every lease, old one bedrooms included, so it sits far below the three and four bedroom benchmarks. Limestone County's $970 is a reminder that HUD's single figure for both counties can run well ahead of what much of the rural side actually rents for.

The Millage Inside Huntsville

The Madison County Tax Assessor lists the Huntsville district at 58.0 mills, which is $5.80 per $100 of assessed value.

A rental is assessed at 20% of its appraised value in Alabama's Class II. So the Huntsville district total works out to 58.0 times 0.20, or 1.16% of value a year. On the $293,600 city median, that is about $3,406 a year, or $284 a month. Schools are almost half of it, which is why the district matters more than the street address.

Run the DSCR on your deal

The Full Payment Math

At the city median, only the four bedroom clears 1.00 on HUD rent.

The setup: 25% down, 30 year amortization at Freddie Mac's 7.11% average for the week of November 12, 2026, tax at 58.0 mills on 20% of the price, and insurance of $1,800 a year, which is an example number, not market data and not a quote. I use the survey rate as a reference only; it is not a DSCR rate and not a rate from us.

As price ceilings, the HUD rent holds 1.00 up to about $198,100 for a two bedroom, $263,600 for a three bedroom and $347,800 for a four bedroom. Switch the median three bedroom to interest only with 30% down and the full payment drops to about $1,652, which moves it from 0.91 to about 1.05. Our interest only DSCR loan guide explains when that trade is worth it.

Huntsville, Madison and the County

The city of Madison carries 11.5 more mills than Huntsville, and rural Madison County carries 21.5 fewer.

The Assessor lists the Madison district at 69.5 mills, with the same state, county and city lines but a 39.0 mill school levy. Rural Madison County, district 01, totals 33.5 mills on land and 36.5 with improvements, because a 3.0 mill volunteer fire levy applies to buildings. Here is what that does to the same three bedroom rent:

On Madison's $398,800 median, the tax alone is about $462 a month, and a four bedroom at HUD rent lands near 0.85. Madison's schools are the draw for tenants, and the rents there often beat the HUD figure, but the math needs real comps to work. Parts of Huntsville and Madison also sit in Limestone County, which has its own levies, so pull that county's bill for any parcel west of the line.

Why Your Neighbor Pays Half

The same house costs a rental owner about $142 more a month in Huntsville tax than an owner occupant, before any exemption.

Alabama puts single family homes their owners live in at 10% in Class III, and Madison County says the owner must own and occupy the home as a primary residence on October 1 and apply by December 31; the exemption is not automatic. On the $293,600 median inside Huntsville, that is about $142 a month at 10% versus $284 at 20%. If you buy from an owner occupant, the seller's bill is not your bill. Taxes are due October 1 and delinquent after December 31, and Madison County charges fees and interest on any payment after December 31.

Short Term Rentals in Huntsville and Madison

Huntsville generally does not permit short term rentals in most residential zoning districts, so check zoning before you count nightly income.

The city defines a short term rental as a stay of 179 days or less and requires the operator to hold city business paperwork and collect lodging tax. Huntsville's lodging tax went from 9% to 10% on October 1, 2026, plus a $2 per room per night surcharge, and stays of 180 consecutive days or more are exempt. Next door, as of October 1, 2026, the City of Madison requires its own STR permit and city business paperwork for every short term rental unit, issues permits after an inspection, and charges a 10% lodging tax plus $2 per room per night. How a lender counts short term rental income is confirmed per file on a call.

Loan Terms for Huntsville Deals

At Huntsville prices, most loans stay under the lines where reserves come into play.

• Room under the reserve lines: a loan on a Huntsville median house sits far under $1 million, so with the LTV also under 75%, no reserves are required. We also skip asset sourcing, large deposit sourcing and asset seasoning.
• A lower payment option: interest only comes as ten years on a 40 year term or as a 30 year term with interest only. The cap is 70% LTV on a purchase or rate and term refinance and 65% when you take cash out.
• Family money: a gift can fund all of it, meaning the down payment, the closing costs and the reserves.
• Pulling equity later: cash out reaches 80% LTV, and you do not have to wait out an ownership seasoning period.
• Your first rental: you do not need to own your home or show a rental history (VOR), the ratio can go as low as 0.50, and the loan can go as high as $5 million.

Insurance is the other swing line, and our DSCR loan insurance post shows how much premium a rental can carry. If your income is easier to show with deposits than with rent, see bank statement loans.

Where Huntsville Deals Break

They break on bedroom count, the tax district and the rent comp for the exact subdivision, rarely on the HUD figure itself.

My Huntsville Checklist

1. Find the tax district for the parcel, and confirm whether it sits in Madison or Limestone County.
2. Multiply the price by 0.20, then by the total mills divided by 1,000, to get the yearly tax.
3. Favor three and four bedrooms where the HUD rent has the most room.
4. Pull rent comps for the bedroom count in that subdivision.
5. Check zoning and the city STR rules before you plan any stay under 180 days.
6. Send us the address. We will price the tax, rent and payment the same way an underwriter would.

Sources

All sources checked November 13, 2026. Data changes, so confirm before you rely on it.

1. HUD User, FY2027 Fair Market Rents, Madison County, AL (Huntsville MSA). Studio $1,119, 1 bed $1,177, 2 bed $1,341, 3 bed $1,735, 4 bed $2,241 (FY2026 $1,030, $1,136, $1,310, $1,690, $2,109); area of Madison and Limestone counties
2. U.S. Census Bureau QuickFacts, Huntsville and Madison cities and Madison and Limestone counties, Alabama. Median value of owner occupied housing units, owner occupied rate and median gross rent, ACS 2020 to 2024; population estimates July 1, 2025 (V2025)
3. Madison County, Alabama, Tax Assessor, Madison County Property Tax Facts. Huntsville (02): State 6.5, County 11.0, City 13.0, School 27.5, total 58.0 mills; Madison (05): School 39.0, total 69.5; Rural (01): 33.5 land, 36.5 with improvements (3.0 volunteer fire); homestead requires ownership and occupancy October 1, apply by December 31
4. Madison County, Alabama, Tax Collector, Important Dates. Taxes due October 1; last day December 31; delinquent January 1 with fees and interest
5. Alabama Department of Revenue, Property Tax Assessment. Class II 20%, all property not otherwise classified; Class III 10%, single family owner occupied residential
6. City of Huntsville, Short Term Rentals. City business approval required; generally not permitted in most residential zoning districts; stays of 179 days or less; lodging tax collection
7. City of Huntsville, Lodging Tax Rates. Lodging tax 10% effective October 1, 2026 (was 9%); $2 per room per night surcharge; stays of 180 consecutive days or more exempt
8. City of Madison, Alabama, Short Term Rentals. As of October 1, 2026, STR permit and city business approval required for each unit; 10% lodging tax plus $2 per room per night; permits issued after inspection
9. Freddie Mac Primary Mortgage Market Survey. 30 year fixed average 7.11% as of November 12, 2026 (reference only)

Frequently asked questions