CHATTANOOGA, Tenn. (April 20, 2026) – The City of Chattanooga is launching a new Down Payment Assistance Program <http://chattanooga.gov/dpa>, and with a first-of-its-kind partnership with the Tennessee Housing Development Agency (THDA), first-time homebuyers can access up to $21,000.
Funds are available to households earning up to 120% of area median income, approximately $92,000 for a two-person household and $114,000 for a family of four.
The program expands access to homeownership amid rising housing costs. The average age of a first-time homebuyer nationwide has climbed to 40.
“We listened to our first responders, nurses and teachers who all say they love Chattanooga and want to live in the city,” said Mayor Tim Kelly. “Their biggest barrier isn’t the monthly mortgage, but the upfront cost of getting in the door. We appreciate the City Council for approving this funding and the state for working with us to help more working families achieve homeownership and build generational wealth in Chattanooga.”
The Down Payment Assistance Program is structured as a 0% interest deferred loan with no monthly payments. Repayment is required only when the home is sold or refinanced through a cash-out refinance. Participants must occupy the home as their primary residence for the duration of the loan.
To qualify, applicants must:
- Not have owned a home within the last three years
- Purchase a home within Chattanooga city limits as their primary residence
- Have a household income at or below 120% AMI
- Purchase a home priced at or below $400,000
- Complete an approved homebuyer education course
- Work with a participating lender
Lenders who already work with THDA may access the city’s Down Payment Assistance Program after completing a brief training. Local financial institutions offering their own affordable housing products are also encouraged to apply to become participating lenders directly through the city. Information about the application process can be found on the city’s website <https://chattanooga.gov/pay-and-apply/down-payment-assistance-program>.
The city will work with participating lenders to ensure a streamlined, user-friendly application process.
Additional details, including program guidelines and participating lenders, will be available on the city’s website in the coming weeks.
To help residents learn more, the city will host a series of information sessions in May and June. Initial dates include:
- Police and Fire Personnel: 1:30-2:30 p.m. on May 18 at the Family
Justice Center - Educators: 3-4 p.m. on June 2 at Public Education Foundation
- General Public: 5-6 p.m. on June 8 at Bessie Smith Cultural Center
For more information, visit chattanooga.gov/dpa.