Tennessee first-time homebuyer assistance programs
Did you know: Tennessee was the fifth most popular destination for U-Haul customers in 2024? Despite its growing popularity, homes in Tennessee remain fairly affordable, with a median sales price of just $380,700 as of February 2025 — below the national median.
If you’re a first-timer exploring your options in the state, the Tennessee Housing Development Agency (THDA) might be able to help make your move more affordable. This agency works with banks, credit unions and mortgage lenders to make homeownership a reality for first-time homebuyers.
- Median home price (Feb. 2025): $380,700 (Redfin)
- Median down payment (Dec. 2024): $49,500 (ATTOM)
- Most affordable counties: Decatur, Gibson, Hancock, Haywood, Lake, Lauderdale, Obion, Perry (ATTOM)
Tennessee first-time homebuyer programs
THDA Great Choice Home Loan
The Tennessee Housing Development Agency offers first-time homebuyers — as well as repeat homebuyers who belong to the military or are buying in targeted areas — the Great Choice Home Loan program. You can qualify for Great Choice with a FHA, VA or USDA loan — or a conventional loan, but you’ll need to make a 22 percent down payment. These are 30-year loans with fixed interest rates.
THDA HFA Advantage
If you’d prefer to use a conventional loan, but can’t afford a large down payment, you may qualify for the HFA Advantage program, which allows 3 percent down payments for first-time and repeat buyers, regardless of where you’re buying. You may cover the down payment with assistance from THDA. While the requirements are very similar to those for Great Choice, note that income eligibility is calculated based only on the borrower, not the household.
THDA Homeownership for Heroes
THDA’s Homeownership for Heroes offers the benefits of the Great Choice program to qualified members of the military or veterans, state and local law enforcement officers, emergency medical technicians (EMTs), paramedics and firefighters — plus a 0.5 percent mortgage rate discount. Note that, unless you’re affiliated with the military, you must still meet the first-time buyer requirement.
Tennessee down payment assistance and grants
THDA Great Choice Plus
If you qualify for a Great Choice Loan through the THDA, you can pair it with assistance that helps cover your down payment and closing costs. There are two options:
- Amortizing: Up to 5 percent of the sales price — a maximum of $15,000 — packaged as a 30-year loan, with the same rate as the first mortgage.
- Deferred: Up to $6,000 in the form of a no-interest loan that’s forgivable at the end of your first mortgage term.
If you receive an HFA Advantage loan, you’re eligible for a down payment assistance program called HFA Advantage Plus with the same structure and benefits as Great Choice Plus.
The Housing Fund Down Payment Assistance
The Housing Fund offers loans of up to $35,000 to help Tennesseans cover down payments, prepaid expenses and closing costs. All loans have a 5 percent interest rate and are repaid over 10 or 15 years.
City-specific homebuyer assistance programs
Chattanooga Neighborhood Enterprise
Through Chattanooga Neighborhood Lending, the Chattanooga Neighborhood Enterprise offers mortgages, including ITIN loans, and multiple down payment assistance programs. One option offers up to $25,000 for qualified buyers as a 15-year second loan with the same interest rate as the first mortgage.
City of Memphis
Memphis sponsors numerous homebuyer assistance and incentive programs, including for housing voucherholders, members of the police department, firefighters, educators and those buying in targeted areas. It also offers a program available broadly to first-time homebuyers in Memphis. Qualified buyers could receive up to $25,000 — or 10 percent of the sales price — for down payment and closing costs in the form of a forgivable, deferred-payment loan. The assistance is forgiven if the home remains your primary residence for five or ten years, depending on the amount of assistance.
Other Tennessee first-time homebuyer loans
Tennesseans can also take advantage of national programs geared toward first-time homebuyers. These include:
- FHA loans: Loans insured by the Federal Housing Administration (FHA) have more lenient financial requirements than other loans. You can qualify for an FHA loan with a 3.5 percent down payment if you have a credit score as low as 580.
- VA loans: For qualifying active-duty military, veterans and surviving spouses, a loan guaranteed by the U.S. Department of Veterans Affairs (VA) is a great option. These loans typically come with lower interest rates and don’t require a down payment.
- USDA loans: Loans guaranteed by the U.S. Department of Agriculture (USDA) also require no down payment, but you’ll need to buy in a designated rural area and meet area-specific income requirements.
- HomeReady and Home Possible loans: HomeReady and Home Possible are loan programs created by government-sponsored enterprises Fannie Mae and Freddie Mac. They’re specifically for first-time homebuyers, requiring only 3 percent down and having more flexible income requirements.
Get started
To find out if you qualify for an affordable mortgage or down payment assistance in Tennessee, first check your credit score to ensure you meet program minimums.
Be sure to shop around for the best mortgage lender, and spend some time ensuring you’re researching the mortgage rates available.
Once you’ve researched your options for first-time homebuyer assistance, read up on buying a house in Tennessee and the Tennessee housing market. Last but not least? Set a budget that includes all the costs of homeownership, including expenses like homeowners insurance.
