City of Chattanooga Down Payment Assistance Program

What is City of Chattanooga Down Payment Assistance Program?

City of Chattanooga Down Payment Assistance Program is a forgivable loan for homebuyers in Chattanooga, Tennessee, administered by City of Chattanooga, Department of Economic & Community Development.

• The City of Chattanooga DPA Program provides forgivable, deferred-payment loans to income-eligible first-time homebuyers purchasing a primary residence within the City of Chattanooga. Designed to bridge the affordability gap; can be combined with THDA programs for up to $21,000 total assistance.
• Up to $15,000 toward down payment and closing costs; combinable with THDA for up to $21,000 total.
• Funding comes from City of Chattanooga (municipal).

How much assistance does it provide?

City of Chattanooga Down Payment Assistance Program offers up to $15,000 in assistance.

• Buyer contribution: Borrower must contribute at least $1,000 of own funds (not from a gift); eligible costs include earnest money, credit report, appraisal, inspection, and education fees.
• The program can be combined with THDA Great Choice / Great Choice Plus (up to $21,000 combined).
• Amounts are the program's published maximums, not an offer — City of Chattanooga, Department of Economic & Community Development determines any individual award.

Do you have to pay it back?

City of Chattanooga Down Payment Assistance Program is forgiven after 30 years, so a buyer who stays that long does not repay it.

• Repayment is triggered by Sale, cash-out refinance, or loss of owner-occupancy before the end of the 30-year term (rate-and-term refinances may be subordinated without triggering repayment).
• The assistance is recorded in Subordinate (second) 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 of Chattanooga Down Payment Assistance Program is open to first-time homebuyers and buyers who will live in the home as their primary residence.

What are the income limits?

City of Chattanooga Down Payment Assistance Program limits household income to 120% of the area median income, which varies by county and household size.

• FY2026 max income (effective June 1, 2026), 120% AMI Chattanooga TN-GA MSA: 1p $81,800; 2p $93,500; 3p $105,200; 4p $116,900; 5p $126,250; 6p $135,600.
• 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 of Chattanooga Down Payment Assistance Program caps the purchase price at $400,000.

• Eligible property types include single_family, townhome, condo, and manufactured.
• New construction is eligible.
• Manufactured homes are eligible.

Where does it apply?

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

How do you apply?

Applications for City of Chattanooga Down Payment Assistance Program go through City of Chattanooga, Department of Economic & Community Development, 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 THDA-approved homebuyer education provider; certificate dated within 12 months of closing..

2. 2

   Contact City of Chattanooga, Department of Economic & Community Development to reserve funds

   Funds are reserved with the provider 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.