The Tennessee Housing Development Agency is offering $15,000 in down payment assistance to Great Choice-eligible home buyers who purchase a home in targeted neighborhoods across the state that were hard hit by the downturn and have been slower to recover, through the Hardest Hit Fund Down Payment Assistance program.

By stimulating home sales in these areas, the program is designed to protect the families already living in there from blight, falling property values, and risk of foreclosure.

“Our goal is to provide a shot in the arm to the neighborhoods and housing markets in Tennessee where the effects of the housing crisis have been most difficult to erase,” said Ralph Perrey, THDA director.

Eligible borrowers who purchase homes in targeted ZIP Codes using THDA’s Great Choice Home Loan program can apply for $15,000 in HHF-DPA assistance toward their down payment and closing costs in the form of a forgivable second mortgage loan.

Areas in Middle Tennessee include La Vergne, Christiana and Clarksville, as well as parts of Davidson, Sumner and Robertson counties.

Home buyers will make no monthly payments on the second mortgage loan during its 10 year term, and it does not accrue any interest. In addition, THDA will forgive 20 percent of the second mortgage loan each year starting in year six. Therefore, if a homeowner does not refinance, sell or move out of their home by the end of the tenth year, the second mortgage loan would be completely forgiven. THDA received approval from the U.S. Department of Treasury to commit $60 million in federal funding to its new HHF Down Payment Assistance Program. The source of this funding is U.S. Treasury’s Hardest Hit Fund.

THDA’s $15,000 Hardest Hit Fund Down Payment Assistance program is available in targeted ZIP Codes based on a number of “stress” factors, including foreclosures, short sales, and negative equity rates.