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; 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 conventional products via THDA bond/HFA channels).
Requirements:
- County-specific household income limits — check THDA’s official charts for exact numbers. (See THDA program pages listed below.)
- Credit score: THDA guidance typically documents a 640 minimum for many products; confirm exact underwriting rules with your THDA-approved lender.
- Debt-to-income: underwriters commonly target ~45% max DTI; case-by-case allowances may 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): Flat $6,000 forgivable/deferred second mortgage (0% interest; due on sale/refinance or forgiven per program terms). See THDA DPA page: THDA DPA.
- Amortizing (monthly payments): Up to 5% of the sales price (commonly capped at $15,000) as a subordinate loan amortized over a long term at the same interest rate as the first mortgage (terms per THDA rules).
Both options are normally available only alongside a qualifying THDA first mortgage. For official details and lender instructions, see THDA’s program pages and materials: Great Choice details and THDA homebuyer resources (handbook and lender notices) available on THDA’s site.
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 expanded the Homeownership for Heroes program to include K–12 teachers (announced May 5, 2026); confirm qualifying occupations and documentation with THDA or your lender. THDA news.
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; NeighborhoodLIFT has historically offered up to $15,000 in down‑payment assistance in eligible Nashville-area counties. 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 administer Helping Homebuyers / HCD programs and HOME-funded DPA that vary by funding round. Confirm current amounts and eligibility on Shelby County’s official pages and program documents: 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.
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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