Down Payment Help Program Launch
CHATTANOOGA, Tenn. (WDEF) – Buying a home has become increasingly difficult for many first-time buyers as housing prices and upfront costs continue rising nationwide.
Now, leaders in Chattanooga say a new partnership aims to make homeownership more accessible for working families.
The city has officially launched a new Down Payment Assistance Program in partnership with the Tennessee Housing Development Agency.
The initiative will provide qualifying first-time homebuyers with up to $21,000 to help cover down payment and closing costs, which city leaders say are among the biggest barriers to homeownership.
Mayor Tim Kelly said the city heard concerns from teachers, nurses, first responders and other workers who want to live in Chattanooga but struggle to afford the upfront expense of purchasing a home.
The assistance is structured as a zero-percent interest deferred loan with no monthly payments.
Repayment is only required if the home is sold or refinanced through a cash-out refinance. Buyers must continue using the home as their primary residence for the duration of the loan.
To qualify, applicants must:
- Not have owned a home within the last three years
- Purchase a home within Chattanooga city limits
- Meet income eligibility requirements
- Buy a home priced at four hundred thousand dollars or less
- Complete an approved homebuyer education course
- Work with a participating lender
The program is available to households earning up to 120% of area median income.
The city also confirmed eligible townhomes will qualify under the program.
The city says lenders are currently onboarding, while local real estate partners are preparing for applications to begin.
Mortgage loan applications dated on or after June 1, 2026, will be eligible for funding.
Additional information, including participating lenders and full program guidelines, is expected to be released in the coming weeks.
The city also plans to host multiple informational sessions for first responders, educators and the general public throughout May and June.
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