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Tennessee was the No. 6 destination for U-Haul customers in 2022, according to the moving company. Nashville’s downtown energy and country music charm certainly played a role in attracting new residents (the city earned a spot on Bankrate’s best places to live in 2022 list), but smaller cities like Knoxville, Bristol and Johnson City are experiencing growth, too.
If you’re a first-time homebuyer exploring your options in the state, the Tennessee Housing Development Agency might be able to help make your move more affordable. The state’s housing finance agency works with a number of banks, credit unions and mortgage lenders to make buying a home a reality for first-time buyers.
Tennessee first-time homebuyer loan programs
THDA Great Choice Home Loan
The Tennessee Housing Development Agency (THDA) offers first-time and repeat homebuyers the Great Choice Home Loan program, which can apply to a conventional, FHA, VA or USDA loan. These are 30-year loans with fixed interest rates, which vary based on market and mortgage lender.
- 3 percent down payment for GC97 conventional loan; 3.5 percent down payment for FHA or USDA loan (down payment assistance available)
- 640 minimum credit score
- Must complete homebuyer education course
- Must meet THDA income limits, which vary depending on county and size of household
- Must meet THDA purchase price limits, which vary across the state
THDA Homeownership for the Brave
THDA’s Homeownership for the Brave program is designed to help military servicemembers and their spouses by reducing the interest rate on a mortgage by one-half of a percentage point. You don’t have to be a first-time homebuyer to take advantage of this program, but you must take a homebuyer education course to be eligible. You’ll also need a minimum credit score of 640 and to meet the income and purchase price limits of the Great Choice program.
This option is available to:
- Active-duty servicemembers, including the National Guard
- Veterans (excluding those who were dishonorably discharged)
- Reservists with at least 180 days of active-duty service
- Spouses and surviving spouses of qualified servicemembers, reservists and veterans
Tennessee down payment assistance
THDA Great Choice Plus
If you’re applying for a Great Choice Loan through the THDA and you need help coming up with the cash to cover the down payment and closing costs, Great Choice Plus is designed to ease that financial stress. This is a second mortgage that comes with the same interest rate as your first 30-year mortgage, but the length of the term is shorter: 15 years. You’ll pay back the loan in that time with monthly payments. The borrower requirements are the same as the ones set by the Great Choice Loan program.
How much down payment assistance can you receive with Great Choice Plus? It depends on the price of your home:
- Under $150,000: $6,000
- Over $150,000: $7,500
Other Tennessee homebuyer assistance programs
In addition to support from one of the THDA programs, consider other first-time homebuyer assistance offerings if you’re looking for a property in certain regions of Tennessee.
In Chattanooga, for example, the Chattanooga Neighborhood Enterprise offers down payment assistance that covers up to $15,000 for qualified buyers. It’s a second loan that comes with an interest rate that is one-half of a percentage point lower than your first mortgage.
Meanwhile, in Memphis, certain first-time homebuyers could qualify for up to $10,000 of down payment assistance through the city, which can be forgiven after five years.
Other first-time homebuyer loan programs
To find out if you qualify for an affordable mortgage or down payment assistance in Tennessee, you’ll want to check your credit score to make sure you have a 640 or above. Then, use the Tennessee Housing Development Authority’s (THDA) guide to verify that your income is within the limits of the county where you’re hoping to buy.