The Tennessee Housing Development Agency (TDHA) introduced a new $60 Million program designed to help the 55 hardest areas throughout the state that have struggled to recover from the 2008 housing crash. According to a report in the Knoxville News Sentinel, seven of those areas lie in or around Knox County, Tennessee, with one area extending into Jefferson and Sevier Counties.
Hardest Hit Fund – Down Payment Assistance
The program, known as The Hardest Hit Fund Down Payment Assistance (HHF-DPA), would allow first-time home buyers in the affected areas to get $15,000 to use as a down payment. THDA Director Ralph Perrey emphasized that this was not charity. “It’s not a gift, it’s not a grant. We are going to structure it as a second mortgage; a ‘soft second,’ if you will. It will be forgivable over a 10-year period, during which time the borrower accrues no interest and makes no payments. Beginning in year six, 20 percent of the outstanding down payment note will be forgiven. So at the end of 10 years, if that buyer is still in that home, still in that mortgage, they’ll have no obligation for repayment of the down payment assistance that we provide.”
The program uses zip codes to more precisely focus on the hardest hit areas and will have certain income and credit requirements. For example, in Knox County, one- or two-person households with incomes up to $61,000 may be eligible, and incomes up to $71,000 for larger households, Perrey said. “That’s going to surprise some people who may have thought they made too much money to work with our program,” Perrey said. Applicants have to have a minimum credit score of 640 and a maximum debt-to-income ratio of 45 percent. THDA doesn’t lend the money directly; it’s all handled through private lenders. “We have literally scores of East Tennessee lenders who offer THDA products,” Perrey said. “That’s the place to start: with the lender, who will set you up with a mortgage, and set you up with the down payment assistance program. We also think that the homebuyer education component is an important part of this.”
Eligible Zip Codes
The eligible zip codes in Knox County are: 37721, 37871, 37924, 37914, 37917, 37921 and 37912. Coincidently, the 37912 zip code is where Bond, Botes & Lawson’s Knoxville office is located.
For full eligibility information and a list of participating lenders, go here.