City Down Payment Assistance

What is City Down Payment Assistance?

City Down Payment Assistance is a forgivable loan for homebuyers in Chattanooga, Tennessee.

• City of Chattanooga DPA administered by CNE - HUD HOME-funded forgivable second mortgage up to $25,000 at 0% interest, deferred, forgiven over 10 years. Available for first-time homebuyers purchasing within Chattanooga city limits at or below 80% AMI.
• City of Chattanooga Down Payment Assistance is a HUD HOME / CDBG-funded forgivable second mortgage administered by Chattanooga Neighborhood Enterprise (CNE) on behalf of the City of Chattanooga. Eligible buyers purchasing within Chattanooga city limits receive up to $25,000 toward down payment and closing costs (the larger of CNE's two DPA tracks). The loan is 0% interest, deferred, and forgivable over a 10-year HUD HOME affordability period (longer term reflecting the larger subsidy amount per 24 CFR 92.254 - 10 years for $15,000-$40,000 assistance). Pre-purchase homebuyer education provided in-house by CNE.
• Funding comes from Federal, HOME, and City.

Do you have to pay it back?

City Down Payment Assistance is forgiven after 10 years, so a buyer who stays that long does not repay it.

• Repayment is triggered by Forgiven over 10-year affordability period (1/10 per year of owner-occupancy). Unforgiven balance due on sale/refi/transfer/non-occupancy before period end, limited to net proceeds.
• The assistance is recorded in 2nd Lien position.
• Forgiveness and repayment terms are set by the program and can change — confirm them on the official program page before applying.

Who qualifies?

City Down Payment Assistance is open to first-time homebuyers and buyers who will live in the home as their primary residence.

What are the income limits?

City Down Payment Assistance limits household income to 80% of the area median income, which varies by county and household size.

• Household income at or below 80% AMI per HUD HOME for Chattanooga MSA; verify household-size table with CNE.
• The limit applies to total household income, not only the borrower’s.
• Area median income figures are published by HUD and updated annually, so check the current table for the county before relying on a number.

What kind of home can it be used for?

City Down Payment Assistance caps the purchase price as follows: Per HUD HOME 95% area median for Chattanooga MSA.

• Eligible property types include Single-family detached, condominium, townhouse, PUD, manufactured home on permanent foundation per HOME / first-mortgage rules.
• New construction is eligible.
• Manufactured homes are eligible.

Is there eligibility for specific groups?

City Down Payment Assistance names veterans, active-duty service members, reservists and National Guard members, and surviving spouses among the groups it serves.

• Being named here means the program mentions the group, not that membership alone qualifies an applicant — the rest of the eligibility rules still apply.

Where does it apply?

City Down Payment Assistance serves buyers purchasing in Chattanooga, Tennessee.

How do you apply?

Applications for City Down Payment Assistance go through the administering agency, which publishes the current terms and the application steps on its own site.

1. 1

   Take a homebuyer education course

   Required by the program, through CNE - HUD-approved housing counseling agency. Pre-purchase homebuyer education provided in-house. Certificate required at closing..

2. 2

   Contact the administering agency to reserve funds

   Funds are reserved through Apply through CNE intake; subject to annual City of Chattanooga / HUD HOME / CDBG allocation., and are subject to availability.

3. 3

   Work with a lender who handles the program

   Hey Prescott is not a lender and does not accept applications; this page describes the program so a buyer can take it to a lender or housing counselor.