Tennessee First Time Homebuyer Tax Credit Down Payment Loan Assistance Program

In order to ensure that their first time home buyers have every tool available to gain access to the Federal $8000 tax credit for first time home buyers the Tennessee Housing Development Agency has enacted the THDA Stimulus Second Mortgage Program. The Tennessee short term loan program is intended to be paid in full when the home buyer gets their tax credit refund in 2010 when they file their 2009 taxes.
The THDA Stimulus Second Mortgage Program is designed to be used to assist first time home buyers with down payment and closing cost assistance. To participate in this program, as it stands now, first time buyers must purchase their home before December 1, 2009.
Also, first time buyers must use a THDA first mortgage program: Great Rate or Great Advantage to purchase their home in order to be eligible for the down payment loan assistance program. Below you will find additional program details.

Tennessee First Time Homebuyer Tax Credit Stimulus Second Mortgage Program Details

You must be a first time homebuyer and use, as already mentioned, the Great Rate or Great Advantage first mortgage program from THDA to qualify for the Tax Credit Stimulus Second Mortgage Program.

Home price and household limits apply depending on the location of the home being purchased.

Home buyers can get up to 3.5% of the home’s sales price.

There is no interest charged until June 1, 2010. If the loan is not paid in full by June 1, 2010 then the interest rate on the second mortgage will be set at 1% above the corresponding first mortgage rate if amortized.

Homebuyers who do not pay the loan off before the grace period runs out will have payments begin July 1, 2010 for ten years.

You may only use the Stimulus Loan Program in conjunction with an FHA mortgage.

To be eligible, you must have 620 minimum credit score.

There is no pre-payment penalty and the second mortgage is due in full if the home is sold, the first mortgage refinanced, or if the mortgage is assumed.

The second mortgage stimulus mortgage is only good for primary residences.

All homebuyers will be required to take THDA approved homebuyer education counseling classes.

You must apply for any Tennessee Housing Development Agency through THDA approved and participating mortgage lenders in TN. To locate the THDA visit: Housing Authority – Housing Agency State by State Listings for Home Buyers.