Downpayment Assistance Program

Downpayment Assistance Program is a forgivable loan for homebuyers in Knoxville, Tennessee. Knoxville HND HUD HOME-funded forgivable second mortgage for FTHBs purchasing within Knoxville city limits. Up to $20,000 at 0% interest, deferred, forgiven over 10 years. 80% AMI ceiling. City of Knoxville Housing and Neighborhood Development (HND) Downpayment Assistance Program is a HUD HOME-funded forgivable second mortgage for first-time homebuyers purchasing a primary residence within Knoxville city limits. Eligible buyers receive up to $20,000 toward down payment and closing costs. The loan is 0% interest, deferred (no monthly payments), and forgivable over a 10-year HUD HOME affordability period (1/10 per year of owner-occupancy. longer term reflecting larger subsidy per 24 CFR 92.254). Pre-purchase homebuyer education required. Funding comes from Federal, HOME, and City.

Downpayment Assistance Program is forgiven after 10 years, so a homebuyer who stays that long does not repay it. Repayment is triggered by Forgiven over 10-year HUD HOME affordability period (1/10 per year). 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.

Downpayment Assistance Program is open to first-time homebuyers and homebuyers who will live in the home as their primary residence. "First-time" has exceptions here: Standard HUD HOME exceptions. On credit, the program states: 620 typical minimum FICO. A homebuyer education course is required, through HUD-approved housing counseling agency required. Local providers include Knoxville Area Urban League, East Tennessee Realtors Association partner counseling. Online via eHome America accepted. Certificate required at closing. Residency requirement: Property within Knoxville city limits; primary residence; 10-year affordability period. Citizenship or immigration status: Per HUD HOME federal eligibility. First-time homebuyer required. Household income at or below 80% AMI per HUD HOME limits for Knoxville MSA (2025: $48,400 (1p) to $91,250 (8p)). Property must be within Knoxville city limits and used as borrower's primary residence. HUD-approved housing counseling required. Minimum $500 borrower contribution. Property must pass HQS / NSPIRE; pre-1978 housing subject to Lead Safe Housing Rule. 10-year HUD HOME affordability period.

Downpayment Assistance Program 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 Knoxville MSA. 2025 limits: $48,400 (1p) to $91,250 (8p). The limit applies to total household income, not only the borrower’s. The program lists a maximum household size of 8. Area median income figures are published by HUD and updated annually, so check the current table for the county before relying on a number.

Downpayment Assistance Program caps the purchase price at $300,000. Eligible property types include Single-family detached, condominium, townhouse, PUD, 2-unit (1 unit owner-occupied), manufactured home on permanent foundation. New construction is eligible. Manufactured homes are eligible.

Downpayment Assistance Program 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.

Downpayment Assistance Program serves homebuyers purchasing in Knoxville, Tennessee.

Applications for Downpayment Assistance Program go through the administering agency, which publishes the current terms and the application steps on its own site. Funds are reserved through Apply through Knoxville HND; subject to annual HOME / CDBG allocation. Hey Prescott is not a lender and does not accept applications; this page describes the program so a homebuyer can take it to a lender or housing counselor.