A state funded down payment program is gaining popularity in East Tennessee. The new program offers $15,000 to first-time home buyers in certain ZIP Codes.

It's called the Hardest Hit Fund Down Payment Assistance program. It can help with the down payment and closing costs on a home in targeted areas that have been slow to rebuild since the recession.

The program started back in March and since then, 140 buyers in ZIP Codes in Knox, Anderson, Cocke, Hamblen and Jefferson counties have taken advantage of the program.

Emily and Joel Clabough just closed on their new home is East Knoxville last week. The couple said with the cost of down payments, they thought they would be saving to buy a home for years. But, with the help of this program, they are finally homeowners.

"It was perfect for our family because we had just enough savings that we could make this possible. We had enough for closing costs and things like that," Emily Clabough said.

The Claboughs used the $15,000 on their down payment, but the funds can also be used for closing costs.

"It's also great for the families who aren't able to save a large down payment. It really assists them to to realize their dreams of home ownership," said Parker Borofsky, a loan officer with Mortgage Investors Group.

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The Tennessee Housing and Development Agency received $60 million from the U.S. Department of Treasury to launch the program. The home loans require at least a 640 credit score.

The agency is targeting specific areas that have been slow to rebuild since the recession. Knoxville neighborhoods located in the eligible ZIP Codes include North Knoxville, Old North Knoxville, Edgewood, Parkridge, Park City, Whittle Springs, Burlington, West Haven, Lonsdale, Norwood and Pleasant Ridge. Across East Tennessee, 20 ZIP Codes are eligible.

But realtor Jennifer Trantanella with Elite Reality said there are some misconceptions about these areas.

“People think it’s distressed communities only and it’s not. There are a lot of homes in nice areas where people can get in,” Trantanella said.

The program works by providing a 10-year second mortgage loan with no monthly payments and no accrued interest. THDA will also forgive 20 percent of the loan each year starting in year six – which means after 10 years without selling or refinancing the home, the loan is completely forgiven.

But, if the homeowner sells before the 10 years are up, Borofsky said the $15,000 can be recaptured.

“Basically, it would come out of the proceeds of selling the home. It would be due back,” she said.

But for families like the Claboughs who don’t plan to move, lenders say this could be a great option for them.

“This is the forever home. It’s bigger than what we could have ever hoped for, better than we could have ever hoped for. Honestly, I will be happy if I never have touch another moving box again,” Joel Clabough said.