Chattanooga offering loans, grants for eligible first-time homebuyers

Racquel Harrison, 44, has rented in Chattanooga for approximately 14 years, and she’s hopeful those days will soon be behind her.

During that time, Harrison saw the cost of housing almost double. The first house she rented in the late 2000s cost her $650 a month. It had a fence, two bedrooms, hardwood floors and a front and backyard.

Now, Harrison is paying about $1,000 a month for a two-bedroom apartment, but she’s looking for more permanent accommodations where she can raise her three-year-old daughter.

“For her future — not only mine but hers — I want something that I can own,” she said. “I wish I had listened to my grandparents back in the day: ‘You need to start saving, and when you get money, invest in property.'”

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Harrison joined scores of other Chattanooga residents at the Glenwood Community Center on Monday evening to learn how they can make their aspirations of homeownership a reality. The Affordable Housing Resource Fair featured the rollout of a new program offering eligible first-time homebuyers earning at or below the median area income grants and zero-interest loans, which applicants can use toward the purchase of a house. The initiative is a partnership between the city and the nonprofit Chattanooga Neighborhood Enterprise.

Households earning less than 80% of the area median income — which ranges from $42,150 for one person to $65,000 for a family of five — would be eligible for a one-time grant of up to $10,000 and a $50,000 loan.

Households earning between 80% and 100% of the area median income would be eligible for a zero-interest loan of up to $40,000. In Chattanooga, 100% of the area median income ranges from $52,688 for one person to $81,250 for a five-person household. The loan is due and payable in full at the time of resale or cash-out refinance.

Chattanooga’s chief housing officer, Nicole Heyman, started at the city late last year, and over the past several months, Heyman said she’s been taking a deep dive into the community’s affordable housing needs. It became clear to Heyman that the city needed more opportunities for first-time homebuyers to receive financing, noting that one of the biggest obstacles for working families is saving up for a down payment.

“Every month you put a little away and then something breaks — your refrigerator breaks, your car breaks, your child needs a medical appointment,” Heyman said in an interview. “I really felt like if we were going to make access to homeownership and wealth building for our working families an opportunity, we were going to have to find a way to put some money into that dream.”

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Heyman said Chattanooga has set aside $1.5 million for the program, which comes from the city’s own funds, plus federal relief dollars received during the pandemic.

“We hope it’s wildly successful,” she said. “We would love to be able to see folks in homes, and if it is as successful as we think it is, we will find ways to replenish the fund.”

Eligible applicants cannot have owned a home in the past three years. Participants must contribute at least $500 towards the purchase of the house, use the property as their main residence during the loan period and attend homebuyer education courses. The home’s sale price cannot exceed $300,000.

Martina Guilfoil, the president and CEO of Chattanooga Neighborhood Enterprise, said her organization has been trying to get a downpayment assistance program off the ground for years and submitted a proposal to the city when funding became available during the pandemic.

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Average wages in Chattanooga aren’t keeping pace with the cost of living, she said, a gap which has intensified the struggle residents have finding an affordable home. This funding is designed to bridge the gap.

“There just isn’t a lot on the market,” Guilfoil said, “so Realtors are going to have to work really hard with our customers to find homes that qualify. They’re out there, but there’s not a lot of product.”

Those interested in learning more can reach out to Chattanooga Neighborhood Enterprise at 423-756-6201.

Contact David Floyd at [email protected] or 423-757-6249.