THDA proposes $30M starter‑home revolving fund to spur smaller owner‑occupied builds

Ralph Perry, executive director of the Tennessee Housing Development Agency, proposed a $30 million one‑time Starter Home Revolving Loan Fund to provide interest‑free construction financing to local builders who construct units under 1,500 square feet and sell them to owner‑occupants rather than investors. “We will offer a interest free construction loan to your hometown builders,” Perry told the committee, and characterized the proposal as a supply‑side incentive intended to increase inventory at entry‑level price points where local land and regulatory costs permit.

THDA said the fund would revolve as homes are built and sold — loans repaid at closing would be re‑lent for subsequent starter builds — and that the agency would work through participating community lenders to underwrite and administer loans, with customary lender skin‑in‑the‑game (80% loan‑to‑cost examples discussed). Lawmakers asked about safeguards to prevent immediate resale to investors and about applicability to nonprofit builders; THDA replied that program rules and underwriting would require owner‑occupancy at purchase and that experienced construction lenders and local program parameters would be part of the design.