Ralph M. Perrey, Executive Director of the Tennessee Housing Development Agency spoke to the Chattanooga Times Free Press about various issues facing home buyers in Tennessee on March 16, 2018.Hardest Hit Fund designated ZIP codes in Hamilton, Bradley and Rhea counties:
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As homebuying season approaches, local residents of moderate income looking for their first home have less than a year left to take advantage of $15,000 in down payment assistance from the state of Tennessee before funds run out.
The Tennessee Housing Development Agency will run out of $60 million in down payment assistance for designated ZIP codes in Tennessee by the fall of this year, executive director Ralph Perrey said this week. The Hardest Hit Fund provides $15,000 of down payment help for eligible homebuyers in certain ZIP codes, including nine areas in Hamilton, Bradley and Rhea counties.
"We want people to know it's still available," Perrey said. "For a first-time homebuyer, it makes a lot of sense and it's a great time to buy."
The funds were designated for the state by the U.S. Department of the Treasury in March 2017 to help stabilize neighborhoods hit hardest by the housing crisis that are recovering more slowly than others. The HHF was estimated to last until 2020, but Perrey said they have seen a great need in the state and expect to run out later this year. Those who qualify for a Great Choice Home Loan also qualify for assistance through the Hardest Hit Fund.
To be eligible in Hamilton County, a one- or two-person household can't earn more than $59,500 annually and households with three or more people must not earn more than $68,425. The borrower must also have a credit score of at least 640 and a debt-to-income ratio of no more than 45 percent. Previous homeowners that have been renting for at least three years are also eligible for the Great Choice Home Loan and HHF assistance.
The Great Choice Home Loan program provides a 30-year, fixed interest rate mortgage loan, down payment assistance and homebuyer education to middle/moderate income residents in any ZIP code.
Last year in Hamilton County there were 126 borrowers who received HHF assistance, including 111 residents ages 18 to 34 and 15 residents 55 and older, the agency said. In Hamilton, more than $13.1 million was provided in down payment assistance in the past year. The area that has received the most help - $4.8 million – is East Ridge, or ZIP code 37412. Other eligible areas include Ridgeside, north of Brainerd Road, and along Highway 58.
In Bradley County, more than $11 million has been given in assistance since 2017, and Rhea County has received almost $3 million.
"We offer a competitive, fixed rate with no gimmicks," Perrey said. "I think that's important with first-time homebuyers. We want people to succeed in homeownership."
Bettie Teasley, director of research and planning for the housing agency, said there are slightly more homeowners in Chattanooga than renters - 53.4 percent of residents own a home.
But, Chattanooga has experienced a 1.5 percent decrease in homeownership since 2000. Across the state, there has been a 3 percent decrease.
"Some of that is being driven by cities that are really struggling with the housing crisis still, like Memphis which has lost 6.6 percent," Teasley said.
The median home price in Hamilton County was $190,000 in 2016, according to the latest data from the state comptroller's office.
The state originally received $200 million through the HHF in 2009 to help with foreclosure prevention but those funds ran out in 2015. Perrey said there were some states that didn't use all their allotted money or had a hard time "putting it to work." From 2009-2015, the funds were used to help pay residents' mortgages who lost their job because of the Great Recession.
"I was surprised that they gave us more money," Perrey said about the federal government. "I really didn't expect Congress to put anymore money into the Hardest Hit Fund."
For more information about the Hardest Hit Fund or other down payment assistance available through the state housing agency, visit thda.org.
Contact staff writer Allison Shirk at ashirk@timesfreepress.com or 423-757-6651.