First-Time Home Buyer Programs in Tennessee

Tennessee Housing Development Agency (THDA) Programs:

Great Choice Home Loan:

Eligibility: Targets first-time homebuyers (no homeownership in the past three years), buyers in targeted areas (e.g., zip codes like 37207, 38111), or veterans/active-duty military (exempt from first-time requirement).
Offerings: Provides a 30-year fixed-rate mortgage (FHA, VA, USDA, or conventional) with competitive rates; can be paired with down payment assistance or Mortgage Credit Certificate (MCC).
Requirements:

• Income must not exceed $119,760 for a 1-2 person household or $139,720 for 3 or more in high-cost counties (e.g., Davidson); lower limits apply elsewhere (e.g., $90,360 in Madison County).
• Minimum credit score of 640 (620 for some USDA loans).
• Debt-to-income ratio capped at 45% (50% with compensating factors).
• Homebuyer education course required.
• Purchase price limit of $400,000 (non-targeted areas) or $487,800 (targeted areas).

Learn more about the Great Choice Home Loan

Great Choice Plus:

Benefits: Offers two options: 1) $6,000 as a 0% interest, forgivable second mortgage (forgiven after 30 years, due if sold/refinanced earlier); 2) Up to 5% of the sales price (max $15,000) as a 30-year second mortgage with monthly payments at the same rate as the first mortgage. Funds can cover down payment or closing costs.
Eligibility: Must use a Great Choice Home Loan; same income and purchase price limits apply; homebuyer education course required.

Learn more about Great Choice Plus

Homeownership for Heroes:

Description: Provides a 30-year fixed-rate mortgage with a 0.5% interest rate reduction for active-duty military, veterans, National Guard, law enforcement, firefighters, EMTs/paramedics, and state/local law enforcement. Includes Great Choice Plus down payment assistance (up to $15,000 or $6,000).
Requirements: Minimum credit score of 640; proof of eligible occupation or military service; homebuyer education course; same income and purchase price limits as Great Choice. Military members/veterans exempt from first-time requirement.

Learn more about Homeownership for Heroes

Local Programs:

Nashville

The Housing Fund Down Payment Assistance: Offers up to $35,000 as a second mortgage (5% interest, repaid over 10-15 years) for down payment, closing costs, or prepaid expenses; income at or below 80% AMI (e.g., $68,400 for a family of four in Davidson County). Affordable Housing Resources (AHR) NeighborhoodLIFT provides up to $15,000 in targeted areas.

Learn more about The Housing Fund

Memphis

Memphis Down Payment Assistance: Provides up to $10,000 as a forgivable loan (forgiven after 10 years) for down payment and closing costs; income capped at 80% AMI (e.g., $58,720 for a family of four in Shelby County); targets revitalization areas. Homebuyer Incentive Program (HIPC) offers additional support.

Learn more about Memphis Down Payment Assistance

Knoxville

Knoxville Down Payment Assistance: Offers up to $25,000 as a second mortgage (same interest rate as first, 15-year term) for down payment and closing costs; income capped at 80% AMI (e.g., $66,800 for a family of four in Knox County). Funding may be limited.

Learn more about Knoxville Housing Programs

Additional Information:

• Mortgage Credit Certificate (MCC): Provides a federal tax credit of up to 50% of annual mortgage interest (max $2,000 yearly) for first-time buyers, repeat buyers, and veterans; fee applies; combinable with THDA loans.
• HFA Advantage Program: Offers 3% down payment conventional loans for first-time and repeat buyers; same eligibility as Great Choice.
• FHA Loans: Minimum 3.5% down payment, suitable for credit scores as low as 580 (10% if below 580).
• USDA Loans: Zero-down payment for rural Tennessee areas; income limits apply.
• VA Loans: Zero-down payment for eligible veterans or active military.
• Median Home Price: $380,700 (February 2025); median down payment: $49,500 (December 2024).

Explore additional HUD homeownership resources