People in six ZIP codes around Davidson County can now get $15,000 toward a down payment on a first-time home purchase.
Tennessee Housing Development Agency Executive Director Ralph M. Perrey and Nashville Mayor Megan Barry announced last week that $60 million in federal money will be available for the program, spread across 55 ZIP codes in the state where neighborhoods have struggled to recover from the 2008 housing crash.
“Our goal is to provide a shot in the arm to the neighborhoods and housing markets in Tennessee where the effects of the housing crisis have been most difficult to erase,” said Perrey.
Six of the eligible ZIP codes are in north and south Davidson County, with two extending into Rutherford and Robertson counties. Barry mentioned the Bordeaux, Inglewood, Buena Vista, and northeastern neighborhoods.
“There are many families who made a smart investment in a home many years ago, only to watch the neighborhood start to deteriorate through no fault of their own. Those are the families we want to help by generating increased attention and home sales in their area,” said Mayor Barry.
Eligible borrowers who purchase homes in targeted ZIP Codes using THDA’s Great Choice Home Loan program can apply for $15,000 in HHF-DPA assistance toward their down payment and closing costs in the form of a forgivable second mortgage loan.
The rules of a Great Choice Home Loan include a maximum household income. The max varies by county and household size. In Nashville and surrounding counties, a 1- or 2-person household cannot earn more than $82,200 annually. A household of three or more cannot earn more than $95,900.
“We’re creating a substantial incentive for homeowners to buy in areas that are struggling for sales right now. Increased market activity in these areas will help stabilize property values for existing homeowners, thereby reducing the risk they will fall into delinquency or foreclosure,” said Perrey.
Homebuyers will make no monthly payments on the second mortgage loan during its 10 year term, and it does not accrue any interest. In addition, THDA will forgive 20% of the second mortgage loan each year starting in year six. Therefore, if a homeowner does not refinance, sell or move out of their home by the end of the tenth year, the second mortgage loan would be completely forgiven.
“This program represents a significant increase in the dollar value of the down payment assistance we’re able to offer in these ZIP Codes. As buyers jump on that offer, it’s going to push property values in the right direction for the entire neighborhood. We want this program to boost to the financial security of every family in the area, not just the ones moving in,” said Perrey.
THDA received approval from the U.S. Department of Treasury to commit $60 million in federal funding to its new HHF Down Payment Assistance Program. The source of this funding is U.S. Treasury’s Hardest Hit Fund (HHF).
“I want to thank Treasury for allowing us to target the areas in Tennessee that are in need of stabilization. The HHF dollars will continue to be utilized where they can be most effective,” said Perrey.
THDA’s $15,000 HHF Down Payment Assistance program is available in targeted ZIP Codes based on a number of “stress” factors, including foreclosures, short sales, and negative equity rates.
For additional information, visit THDA.org.