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 offers 30‑year fixed mortgages through approved lenders and two standard DPA choices that must be used with a qualifying THDA first mortgage. 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; repeat‑buyer exceptions in targeted areas); income- and purchase-price limits vary by county.
Offerings: 30‑year fixed THDA home loans (can pair with FHA, VA, USDA, or conventional products via THDA bond or HFA channels).
Requirements:
- County-specific household income limits — check the latest THDA chart for exact numbers. (See THDA’s income limits PDF.)
- Credit score: THDA typically documents a 640 minimum for many products; 620 may be possible for some loan types or with compensating factors — confirm with your lender.
- Debt-to-income: underwriters commonly target ~45% max DTI; case-by-case allowances (up to ~50%) may be possible with compensating factors.
- 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:
- Deferred (no monthly payments): Flat $6,000 forgivable second mortgage (0% interest; due on sale/refinance or forgiven per program terms). See THDA for exact forgiveness terms and exceptions.
- Amortizing (monthly payments): Up to 5% of the sales price (commonly capped at $15,000) as a subordinate loan amortized over a long term (paired with the first mortgage interest rate).
Both options are normally available only alongside a qualifying THDA first mortgage. For official details, see THDA’s DPA page and Great Choice program materials.
Tennessee Homeownership for Heroes:
Description: Enhanced benefits for eligible public servants (military, veterans, teachers, law enforcement, firefighters, EMTs, healthcare workers in some tiers). THDA’s Homeownership for Heroes commonly provides a small interest-rate reduction on the first mortgage (about 0.5%) and access to the same DPA options when eligible. Check occupation documentation rules with THDA or your lender.
Local Programs (Examples):
Cities and counties 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 in the Nashville area; the program has historically offered up to $15,000 in down‑payment assistance on qualifying properties in certain Middle Tennessee counties (Davidson, Rutherford, Sumner, Wilson). See AHR for current availability and income limits: AHR NeighborhoodLIFT.
Memphis / Shelby County
Memphis‑Shelby programs: Shelby County and the City of Memphis administer Helping Homebuyers / HCD programs and HOME-funded DPA that vary by funding round. Check the official Shelby County program documents for current amounts and eligibility: 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 local options and requirements: Knoxville Housing.
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 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 links: THDA program pages and income limits — THDA DPA, Great Choice details, and THDA income limits (PDF).
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Frequently Asked Questions
What first-time home buyer programs are available in Tennessee?
Tennessee buyers may be eligible for statewide assistance, local affordability programs, and federal financing such as FHA, VA, and USDA loans. The options available depend on location, income, and the type of home being purchased.
Who qualifies as a first-time buyer in Tennessee?
Many Tennessee programs define a first-time buyer as someone who has not owned a principal residence during the previous three years. Some special circumstances may allow broader eligibility.
How much down payment assistance can Tennessee buyers receive?
Tennessee assistance programs may help with some of the down payment and closing costs through grants, second mortgages, or deferred-payment loans. The amount depends on the program and your qualifications.
Do Tennessee programs require homebuyer education?
Many Tennessee first-time buyer programs require homebuyer education before closing. This helps buyers understand mortgage financing, monthly costs, and the responsibilities that come with ownership.
Should Tennessee buyers work with an agent familiar with assistance programs?
Yes. A Tennessee real estate agent who understands first-time buyer assistance can help you choose the right homes, work effectively with lenders, and reduce last-minute surprises.