Tennessee Housing Development Agency (THDA) Programs:
Updated May 2026THDA’s Great Choice mortgage and linked down-payment assistance remain the primary statewide option for first‑time and moderate‑income buyers. THDA issues 30‑year fixed mortgages through approved lenders and two standard DPA choices that must be used with a qualifying THDA first mortgage. Always verify current rates, county income/purchase limits, and targeted‑area rules with a THDA‑approved lender or THDA before applying.
Tennessee First-Time Homebuyer Mortgage Programs:
Eligibility: First‑time buyers (no primary residence in past 3 years; first‑time rule waived in THDA "targeted" areas); household income and purchase‑price limits vary by county — check THDA’s county charts.
Offerings: 30‑year fixed THDA home loans (can pair with FHA, VA, USDA, or Freddie Mac HFA Advantage via THDA channels).
Requirements:
- County-specific household income limits — check THDA’s official county charts for exact numbers. (See THDA program pages listed below.)
- Credit score: many THDA loan guides show a typical minimum around 640 for several products; confirm exact underwriting rules with your THDA‑approved lender.
- Debt-to-income: underwriters commonly target ~45% max DTI for affordability; case‑by‑case exceptions exist — confirm with your lender/AUS.
- Homebuyer education is required for most THDA loans — complete a THDA‑approved course early in the process.
Down Payment Assistance (DPA) Options (THDA Great Choice Plus / HFA Plus):
Two standard THDA DPA choices (Great Choice Plus):
- Deferred (no monthly payments): A flat $6,000 0% interest deferred second mortgage (repayable on sale or refinance or forgiven per program terms). See THDA DPA page: THDA DPA.
- Amortizing (monthly payments): A subordinate loan commonly offered as up to 5% of the sales price (commonly capped at about $15,000), amortized over a long term at the same rate as the first mortgage. Availability and exact caps vary by product and lender; confirm with THDA or a THDA‑approved lender. See Great Choice details: THDA Great Choice.
Both options are normally available only alongside a qualifying THDA first mortgage. THDA materials and lender notices should be consulted for the current DPA structure and any temporary changes to percentages or caps. For official details and lender instructions, see THDA’s program pages and THDA lender resources: THDA DPA and Great Choice.
Tennessee Homeownership for Heroes:
Description: Enhanced benefits for eligible public servants (military, veterans, teachers, law enforcement, firefighters, EMTs, and some healthcare workers). THDA’s Homeownership for Heroes commonly provides a small interest‑rate reduction on the first mortgage (typically a 0.50% rate discount) and access to the same DPA options when eligible. THDA announced that K–12 teachers were added to the Heroes program on May 5, 2026 — see THDA’s news post: THDA news. Confirm qualifying occupations and documentation with THDA or your lender.
Local Programs (Examples):
Cities, counties, and nonprofits often layer local DPA or forgivable second loans on top of THDA assistance — funding and terms change often. Below are official program entry points to confirm availability.
Nashville / Davidson County
NeighborhoodLIFT (AHR): Affordable Housing Resources (AHR) administers NeighborhoodLIFT and other local down‑payment programs for Middle Tennessee. AHR runs down‑payment and lender programs for many Davidson‑area buyers; availability is by funding round — check AHR for current openings and eligibility: AHR NeighborhoodLIFT / AHR.
Memphis / Shelby County
Memphis‑Shelby programs: Shelby County and the City of Memphis have administered Helping Homebuyers and HOME‑funded DPA programs in funding rounds. Historical official materials (example press release) show $15,000 DPA offerings; confirm current funding, eligibility, and administering partners on Shelby County’s official pages: Memphis‑Shelby Helping Homebuyers (official).
Knoxville / Knox County
City of Knoxville programs: Knoxville’s Housing & Neighborhood Development coordinates local DPA, developer‑paired offers, and project‑specific assistance (availability varies; some programs require purchasing from approved developers). See the City of Knoxville housing page for current options and requirements: Knoxville Housing.
Chattanooga
City DPA: The City of Chattanooga offers up to $15,000 in a 0% deferred loan, and through a partnership with THDA eligible buyers may stack city funds with THDA assistance for up to about $21,000 total. See the City of Chattanooga DPA page for FY2026 income limits and program details: Chattanooga DPA.
Additional Notes:
- USDA: 0% down in eligible rural areas — income and property‑location limits apply.
- VA: 0% down for eligible veterans/active‑duty borrowers (lender overlays may apply).
- FHA: 3.5% down (minimum credit 580 for the low‑down option; higher down/credit requirements apply for lower scores).
Always verify income limits, sales‑price caps, and local DPA funds with the official program page or a THDA‑approved lender before preparing an offer. Official THDA links: THDA DPA, Great Choice details, and THDA program resources available from THDA’s website.
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