Down-payment program to help local low- and middle- income people buy homes

Program can provide $15,000 for eligible home buyers

FILE - In this July 22, 2015, file photo, a "Sold" sign is posted outside a Harbor Beach neighborhood home in Fort Lauderdale, Fla. Losing a home to a foreclosure or short sale is devastating, but it doesn’t have to define you. Rebuilding credit, working with a housing counselor and steering clear of predatory lenders are just a few of the ways to get back on your feet and on the path to owning another home. (AP Photo/Wilfredo Lee, File)
photo Ralph Perrey, executive director of Tennessee Housing Development Agency

Homeowner zones

People in these ZIP Code areas may apply for assistance373113740437406374113741237416Source: THDA

For disabled Army veteran Gardell Johnson, the idea he might qualify for $15,000 to make a down payment on a house might be a dream come true.

"He needs all the help he can get," Johnson's fiancée, who goes by Loria, said Thursday after hearing such a sum might suddenly become available.

She said Johnson has hearing loss and post-traumatic stress disorder, and frets in the busy and noisy apartment complex where he's been living.

With a home of his own, "he'll be more settled, keep him calm in a nice area, take some of the stress out of him."

The new program announced by Tennessee Housing Development Agency Executive Director Ralph Perrey and Chattanooga Mayor Andy Berke will help low- and middle- income people in neighborhoods such as Orchard Knob, Murray Hills, Highland Park and Woodmore become homeowners.

The program gives qualified applicants $15,000 to make down payments on homes. They won't have to repay the money if they stay in the homes they buy for at least 10 years.

"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," Perrey said during a news conference Thursday morning in front of a small row of homes on Kirby Street built by Chattanooga Neighborhood Enterprise.

People who buy rather than rent homes put down roots, he said. They take better care of their properties, they care about having good schools and pleasant parks. "They begin to be involved in things that make for strong neighborhoods."

Berke said home ownership is "part of the American Dream," instilling pride and a sense of community.

The THDA chief said the statewide program will use $60 million from the federal government's "Hardest Hit" program for people and communities affected by the 2007 housing crisis.

In Chattanooga, the money will target homebuyers in six ZIP codes. Singles or couples with incomes under $61,000 and families with incomes up to $70,000 may qualify if they meet certain financial criteria and work through homeowner counseling courses such as one offered by CNE.

Perrey called the money a 10-year "forgivable second mortgage." They won't have to make payments and no interest will accumulate. Starting in year six, THDA will forgive 20 percent of the loan each year for homeowners who stay put. Those who sell their homes will have to repay the balance of the down- payment money.

"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 the financial security of every family in the area, not just the ones moving in," he said.

That sounds like just the right prescription for his neighborhood, said La Monte Vaughn Sr., immediate past president of the Orchard Knob Neighborhood Association.

It's a historic section of town with many long-time residents, Vaughn said, but neighbors there are concerned that investors are buying vacant houses for rental property.

"The idea that these homes are there and they can be rehabbed and turned into nice homes, that's what we have been after anyway," he said.

"Anything where anybody wants to come in, establish roots and become part of a good community where they can raise their kids and not have to worry about things, that's a positive thing," Vaughn said.

For more information on the program, visit