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Down Payment Assistance Programs – The Pathway to Your New Home

There’s no denying it. The housing market in Nashville is hotter than its chicken! According to WalletHub, Nashville is ranked as one of the Top 10 Places to buy a home. And our information about Down Payment Assistance Programs can help you secure your next home in Music City.

And who can blame anyone from wanting to live here? From the glistening shine and twang of Broadway…to the tree-covered yards, glowing and crackling from your firepit. From the pillowy mouth hug that is the warm biscuits from Loveless Café…to the champagne giggle that is the Jell-O shot at White Limozeen, a Dolly Parton-themed rooftop bar. Whether you’re a little bit country or a little bit rock-and-roll…Nashville, quite simply, has a little flavor for everyone.

Which explains why so many people are moving to Nashville in droves. According to a report by WKRN News 2, Nashville is fourth in the nation for inbound moves. Much like the rest of the country’s housing market, the demand for homes exceeds the inventory of available houses. That available pool shrinks even more when you factor in the unique challenges that can face first time home buyers. This is especially true for those who need a little assistance when it comes to purchasing their dream home.

The Down Payment Reality Check:

One of the biggest pieces of the home purchasing puzzle is the (drumroll) Down Payment! Size does matter here, and it dictates almost everything else about the home buying big picture. From loan type to insurance rates, on the walkway to your new front door, there’s hardly one cobblestone down payment isn’t touching. Consider it the threshold to your piece of the American pie.

But what happens when you don’t have that monetary welcome mat just sitting around to be used? With a hot housing market, home costs are also heating up. If you don’t have the funds available for a decent down payment, does that mean your chance of owning your own home is not a reality?

The answer is NO! You deserve home ownership as much as anyone. And with so much riding on the down payment, there are programs and companies that now are in place to help you get there. Various organizations with a shared commitment can provide help. They each share a vision of seeing more Americans have access to becoming first-time homeowners.

Enter Down Payment Assistance programs:

What are Down Payment assistance programs anyway? These are variously funded organizations that provide down payment loans to new buyers. Just like all the honky tonks on Music Row, there are many different options to saddle up with. First time home buyers can possibly receive down payment assistance from government-funded finance agencies, non-profits, or sometimes even employers. The list is long. In this crowd of choices, how do you determine which program is right for you? We’ve assembled a little sample of local and national option

Chenoa:

Chenoa Fund is a national down payment assistance program provided through CBC Mortgage Agency. The Cedar Band Corporation is wholly owned by the Cedar Band of Paiutes, which is federally recognized as one of five constituent bands of the Paiute Indian Tribe of Utah. They can offer assistance nationwide (with the exception of New York). They are dedicated to diverse communities having the ability to become homeowners. Boasting 75% of financing for first-time homeowners, they are also proud that 55% of their recipients are minorities.

Their down payment assistance program offers:

Two different loan options: 3.5% of the loan amount or 5% of the purchase price.
These options can be used for the down payment and to help cover closing costs.
Both have the option to be forgiven after 36 to 120 consecutive on-time payments on the first mortgage.
In addition, this will also have an option for full payment.

There are some stipulations and requirements for this program.

There are minimum credit scores and some income limits, depending on the type of the loan. Examples of that can be:

Payable loans have no income limits and will consider credit scores as low as 640.
Forgivable loans will have income limits. They cannot exceed 115% of the median area income. Their credit score threshold instead is 600.

The Housing Fund (THF):

The Housing Fund’s mission is to provide resources and direction to individuals and their communities. They focuse on accessibility to home ownership for low- and moderate-income individuals. Since 1996, the THF has assisted over 3,700 first time home buyers to be the recipients of over $27 million in down payment assistance. The Housing Fund was established as a 501(C)(3) organization, and they finance affording housing and neighborhood revitalization projects.

This organization offers:

A minimum loan amount of $5,000. They have a maximum loan amount cap of $35,000.
The loan timeframe is a 10-year with a fixed interest rate.
That interest rate is tied into the borrower’s income vs the area median income.

They too have stipulations. Some of those are:

Borrower’s income is not to exceed 120% of the area median income.
There are minimum credit score limits. If your loan amount is $10,000 or less, your minimum credit score needs to be 600. Any loans over $10k will require 620 credit score.
All borrowers much complete homebuyer’s education prior to closing.

Tennessee Housing Development (THDA):

The Tennessee Housing Development was founded by General Assembly in 1973. They are governed by both executive and legislative branches.

Their focus is rooted in the creation of more home-owning opportunities. Whether it’s between the production of more affordable housing units for low and moderate-income individuals in Tennessee. Or it’s through the revitalization and rehabilitation to existing properties. This has resulted in a staggering $10 BILLION in mortgages financed since establishment.

The THDA offers:

Deferred payments! And example of this would be a $6,000 loan with 0% interest that is deferred until the end of a 30-year first mortgage.
Loan forgiveness! In the above scenario, this loan would be forgiven.
They offer an amortizing option.
The loan can be used for down payment and covering closing costs.

Some of their down payment assistance parameters:

At the time of refinancing or if the borrower ever decides to sell, the loan amount in its entirety would be due.
A homebuyer’s education course will still be required.

There are just a few sources that help our community and country. Thankfully in Tennessee, we have access to not only the beauty of the state, but also so many incredible resources. These resources allow more of us the opportunity to call this place home.

To learn how we’re helping more and more first-time homebuyers find their own front porches, give us a call. We can’t wait to welcome you to the neighborhood.