Home ownership fell last year to the lowest level in 19 years as a growing share of young adults avoided the American dream of buying a home.

With more student debt and less confidence in both the job and housing markets than their parents had at their age, homebuying has not bounced back with the overall economy since the housing slump caused the Great Recession of 2009-2010.

But Ralph Perrey is eager to reverse the drop in home ownership, at least in Tennessee. As head of the Tennessee Housing Development Agency, Perrey is touring the state this week to preach his message of hope for both home buyers and home lenders.

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Ralph Perrey

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* THDA offers FHA-backed loans with down payment and closing cost assistance in Hamilton County for homes up to $240,000
* Loans are available for first-time home buyers, military home buyers or those in rural or targeted areas of the state
* Income limits go up to $65,665 for a couple and $75,514 for larger households
* Interest-free, forgivable loans (after 15 years in a house) are available for up to 4 percent of the purchase price to pay down payment and closing fees
* 30-year loans are available from THDA at 3.99 percent, although such loans require mortgage insurance fees
* On the web at to find local lenders in the mortgage loan program

"The talk is that it's too hard to get a mortgage loan, but we think many people still aspire to home ownership," Perrey said during a visit to Chattanooga to kick off a statewide tour to promote THDA loans. "People may be more cautious about their homebuying decisions than in the past and may postpone buying a home until later in life. But at some point, most people want to be a home owner and we think we can help that to happen for many prospective buyers."

Government-backed loans from FHA and VA require a 3.5 percent down payment and closing costs often push up the price of buying a house up to nearly 10 percent of the purchase price.

But as the designated housing agency for the state for more than four decades able to issue tax-exempt bonds and operate as a nonprofit agency, THDA is able to provide help with down payments or to those whose credit score or finances are not enough to qualify for most other type home loans.

"If you check out our programs, folks may find out that they are closer to home ownership that they might realize," Perrey said.

THDA provides assistance for up to 4 percent of the purchase price of a home for down payment and closing costs. Such expenses can be provided by the housing agency at zero interest and the down payment assistance portion of a loan is ultimately forgiven if the buyer stays in the house for 15 years.

"Through strategic refunding of bonds through the years we have a pool of money that because of IRS rules we can only use to reinvest at zero percent interest," Perrey explained.

According to a RealtyTrac analysis of nearly 1.5 million home loans made in the United States last year, the average home buyer put down 14 percent of the purchase price at closing. The median price of homes nationwide was $229,579.

But homes were only about half that median price in Southeast Tennessee and, on average, about one in five homes bougtht last year were financed with THDA or other bank help that kept the down payment below 3 percent. RealtyTrac found 21.2 percent of the homes sold last year in Hamilton County had less than a 3 percent down payment.

At present, THDA is offering 30-year fixed loans at 3.99 percent, although the mortgage insurance and fees push up the effective borrowing rate above some conventional loan rates, if buyers are able to qualify for such borrowing.

Perrey said for the first time in seven years, THDA is preparing to again offer conventional loans by the middle of this year. Pending board approval next year, THDA expects to go to the bond market with about a $150 million issue in April and to offer an alternative to FHA-backed loans later this year. That alternative should help more credit unions and small community banks that don't handle FHA loans to be able to serve as THDA lenders, Perrey said. That also help some borrowers avoid FHA-related fees.

Perrey said he expects THDA loan volume to grow again this year above the $210 million of mortgages made in 2014.

THDA, which was created in 1973, has a loan portfolio of nearly $2 billion and provides most of the home loans in Tennessee with no or little down payments for first time home buyers.

Home sales data from 2013 shows 2,711 homes sold within THDA's sales price limit of $240,000. Last year, THDA funded 120 mortgages in Hamilton County and 46 home loans in Bradley County.

Contact Dave Flessner at dflessner@timesfree or at 757-6340.