First-time homebuyer assistance programs in Tennessee

With fixed, competitive interest rates and 30-year terms, the THDA’s mortgages make it more affordable to carry a home. And with down payment assistance, the agency opens the door to many more Tennesseans.

Great Choice Home Loan

This program is designed for first-time homebuyers, though repeat buyers can pass if they buy in certain areas or haven’t owned a home for three years.

To qualify, you’ll need to have a minimum credit score of 640 and fall within the agency’s income and purchase price limits.

When you have a Great Choice loan, you can also qualify for and use the agency’s down payment assistance program, Great Choice Plus.

Homeownership for the Brave

This program is designed to help active-duty and veteran members of the military. That category also includes reservists and spouses of qualifying members.

Improving on the features of the Great Choice Home Loan, a Homeownership for the Brave loan also includes:

  • An interest rate reduced by 0.5% compared to the traditional Great Choice program.
  • No first-time homebuyer requirement.
  • No to low down payment requirements, depending on the type of loan you use.

The credit score requirements and income and purchase price limits are the same as with the Great Choice program.

Great Choice Plus

When you’ve qualified for a Great Choice loan, you can also apply for down payment assistance through a Great Choice Plus second loan.

It’s structured as a second mortgage on your home, with a 15-year term and the same interest rate as your first loan. You can use this second mortgage to help cover your upfront expenses, specifically your down payment and closing costs.

For homes with a purchase price under $150,000, you can qualify for up to $6,000 in assistance. For homes over that sale price, you’re eligible for $7,500. You can apply for the assistance program through your participating lender.

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Who qualifies for first-time homebuyer programs in TN?

To ensure the Tennessee Housing Development Agency only helps those who need it most, you’ll have to fall within certain income and purchase price limits to qualify.

And because your loan isn’t granted to you directly through THDA, you’ll also have to meet the basic credit score, income and debt requirements for whatever type of loan you want. You’ll work with one of THDA’s approved lenders to find what’s available.

Finally, all homebuyers receiving assistance through THDA are required to attend a homebuyer education course.

More: Get a free credit score and credit monitoring from Credit Sesame.

Nationwide first-time homebuyer programs

The most common way to become a homeowner is to get a “conventional” mortgage in the private market.

You'll typically need a credit score of at least 620 to attract a lender. Applicants often need to be able to put down at least 5% of the home’s cost — though ideally, you’d have a 20% down payment so you don’t have to pay for private mortgage insurance.

More: Use these savings accounts to build up your down payment.

If that sounds a bit steep, you should know the federal government offers a number of nonconventional loans that may be better for first-time buyers.

FHA loans

The Federal Housing Administration (FHA) is a division of the Department of Housing and Urban Development. The government introduced FHA loans in 1934 in response to the needs of the housing market. At the time, homeownership was inaccessible to many Americans, and only four out of 10 households owned their homes. Since its inception, the FHA has insured more than 46 million mortgages.

The terms of an FHA mortgage are less strict than those of conventional mortgages. The average credit score you’ll need is 580, but if you have enough for a significant down payment, your score could be as low as 500. The minimum down payment for an FHA loan is 3.5%, but putting down less than 10% will mean you’ll pay a mortgage insurance premium (MIP) along with your monthly payments.

While these loans are more accessible and have made it possible for more Americans to live the dream of home ownership, the associated fees can add up.

The FHA's Loan Requirements Explained.

A walkthrough of how to meet the FHA's requirements.

See Guide

VA loans

In 1944, Congress passed an act to increase benefits to eligible veterans. At the top of the list of priorities for veterans at the time was a loan guarantee program. And so now, the U.S. Department of Veterans Affairs (VA) is authorized to guarantee or insure home, farm and business loans made to veterans by lending institutions.

These loans are available to active service members, veterans and some surviving military spouses. They don’t require a down payment or mortgage insurance, but borrowers do pay a funding fee.

USDA loans

USDA loans are mortgages for rural and suburban homeowners. They’re guaranteed by the United States Department of Agriculture and require no down payment and no private mortgage insurance.

You will have to pay an upfront guarantee fee of 1% of the loan amount and an annual fee of 0.35%, but these costs are generally more affordable than paying for mortgage insurance.

There are income limits to qualify, so you won’t be able to take out a USDA loan if your household earns too much. The current income limits in most parts of the U.S. are $86,850 for one- to four-member households and $114,650 for five- to eight-member households, but the thresholds may be higher if you live in a county with a steeper-than-average cost of living.

You can check your eligibility through the USDA’s website.

Next steps

Now that you know all about the national and state programs available to you, there are still a few things you can do to prepare before you apply for a mortgage.

First, look at your credit score: Do you meet the requirements for loans and support? If you don’t already have your score handy, you can check it for free through Credit Sesame.

Is your score not going to cut it? A little help from Self credit repair can bring your score up and get you application-ready.

Next, make sure you’ve gathered all the documents you’ll need to demonstrate your income and assets.

After that, you can think about getting pre-approved for a mortgage so you can get house hunting.

State-Level First-Time Homebuyer Programs
Arizona Department of Housing (ADOH)
Arkansas Development Finance Authority (ADFA)
California Housing Finance Agency (CalHFA)
Colorado Housing and Finance Agency (CHFA)
Connecticut Housing Finance Authority (CHFA)
Delaware State Housing Authority (DSHA)
Florida Housing Finance Corp. (Florida Housing)
Georgia Dream
Hawaii Housing and Finance Development Corporation (HHFDC)
Idaho Housing and Finance Association
Illinois Housing Development Authority (IHDA)
Indiana Housing and Community Development Authority (IHCDA)
Iowa Finance Authority (IFA)
Kansas Housing Resources Corporation
Kentucky Housing Corporation (KHC)
Louisiana Housing Corporation (LHC)
MassHousing (Massachusetts)
Michigan State Housing Development Authority (MSHDA)
Minnesota Housing
Missouri Housing Development Commission (MHDC)
Montana Board of Housing (MBOH)
Nebraska Investment Finance Authority (NIFA)
Nevada Housing Division
New Mexico Mortgage Finance Authority (MFA)
State of New York Mortgage Agency (SONYMA)
North Carolina Housing Finance Agency (NCHFA)
Ohio Housing Finance Agency (OHFA)
Oklahoma Housing Finance Agency (OHFA)
Oregon Housing and Community Services (OHCS)
Pennsylvania Housing Finance Agency (PHFA)
South Dakota Housing Development Authority (SDHDA)
Tennessee Housing Development Authority (THDA)
Texas Department of Housing and Community Affairs (TDHCA)
Utah Housing Corp
Virginia Housing
Washington State Housing Finance Commission (WSHFC)
Wisconsin Housing and Economic Development Authority (WHEDA)
Wyoming Community Development Authority (WCDA)

About the Author

Sigrid Forberg

Sigrid Forberg

Staff Writer

Sigrid is a staff writer with MoneyWise. A graduate of Carleton University's journalism program, she spent the better part of the last six years writing about business and retail. In her spare time, she enjoys reading, baking and riding her bicycle.

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