With the enactment of specific social progress legislation, the Tennessee Housing Authority, otherwise known locally as the THDA, has been an instrumental player in helping Tennessee citizens get into homes to start families, set down roots, and build communities.
And, with the rise in real estate values making it harder for first time home buyers to get started, the THDA today has become far more important in helping folks achieve the American Dream.
The Agency and THDA Loans
The THDA is not a home lender. Instead, the agency works through financial institutions and banks who partner with the agency to distribute financing assistance funded by the state. Loans are qualified by private partners’ loan officers, and then the THDA backs this reducing the risk to such partners.
The loans are required to be conservative, typically 30-year loans with fixed interest rate charge and the offer of a 5 percent down payment assistance option. And any eligible borrowers have to take a specific home borrower financing education program for awareness as well.
Specifically helping low and moderate income level buyers and families, the agency aims to assist would-be buyers with a variety of financial tools that either give folks the means to get past common challenges in loan approval or providing the means by which these buyers can finance who would otherwise be barred from the market.
The benefits are huge and multiple, affecting buyers individually and the state economy as a whole.
While the THDA does have a key administration function over federal and state funded programs for housing, the agency itself can also issue state bonds that also raise funds for housing assistance and program reach.
Familiar targets include first-time buyers as well as military veteran buyers. Specific assistance programs include the following:
The Great Choice Home Loan
As mentioned earlier, the THDA supports 30-year home THDA loans with a fixed interest rate. It’s one of the most predictable and conservative home financing models available. Once set, a borrower pretty much knows what his liability is going to be each month for the next three decades.
To increase qualification rates, THDA accepts a lowered minimum credit score of 640 instead of the mainstream 700 level.
There is a maximum income limit in the program, as it is intended for lower income applicants versus those in the higher bands. The THDA also limits the maximum price for a home that will be financed. The cap is determined by county, depending on the real estate levels from one region to the next.
Down Payment Assistance
The THDA also provides programs that assist homebuyers with down payment assistance. The financing works as a second loan on the home bought, but it doesn’t have to be paid back right away with one program, or it can be as much as 5 percent of the down payment with the THDA’s second assistance programs.
The first program’s liability doesn’t happen until the title of the home changes (i.e. a sale, transfer or other). The second functions as part of the loan and mortgage. Both allow a buyer to get into a purchase that he or she might otherwise be unable to complete due to insufficient cash.