Did you know: Tennessee was the fifth most popular destination for U-Haul customers in 2023? Nashville’s downtown energy and country music charm certainly played a role in attracting new residents, but smaller cities like Knoxville, Bristol and Johnson City are experiencing growth, too.

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. The state’s housing finance agency works with a number of banks, credit unions and mortgage lenders to make homeownership a reality for first-time home buyers.

Tennessee first-time homebuyer programs

THDA Great Choice Home Loan

The Tennessee Housing Development Agency 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.

Borrower requirements:

  • Make a 3 percent down payment for GC97 conventional loan; 3.5 percent down payment for FHA or USDA loan (down payment assistance available); no down payment required for VA or USDA loans
  • Have a 640 minimum credit score
  • Must complete homebuyer education course
  • Must meet THDA income limits, which vary depending on county and size of household

Property requirements:

THDA Homeownership for Heroes

THDA’s Homeownership for Heroes program is designed to help those who serve their city, state and country 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 (see above).

The program is available to:

  • Active-duty military, National Guard, veterans
  • State and local law enforcement officers
  • EMTs/paramedics
  • Firefighters

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. The assistance come as one of two options:

  • 6 percent of the purchase price as 15-year loan with monthly payments
  • Up to $6,000 loan with payment deferred until you sell, refinance and pay off of the original mortgage

Other Tennessee homebuyer assistance programs

In addition to support from one of the THDA programs, other first-time homebuyer assistance offerings exist with certain regions of Tennessee. Here are a couple offered in specific cities.

Chattanooga Neighborhood Enterprise

In Chattanooga, the Chattanooga Neighborhood Enterprise offers first-time homebuyer loans and down payment assistance (DPA). The DPA covers up to $15,000 for qualified buyers. It’s a second loan that comes with an interest rate at the rate of the first mortgage, with a minimum rate of 3 percent. Assistance is available in Bledsoe, Bradley, Marion, Grundy, Hamilton, McMinn, Meigs, Polk, Rhea and Sequatchie counties.

Memphis down payment assistance

Meanwhile, in Memphis, certain first-time homebuyers could qualify for up to $25,000 of down payment assistance through the city, depending on funding availability. To qualify, you must have an income at 80 percent or less of the median income and the home must be within home purchase limits.

Other Tennessee first-time homebuyer loans

On a national level, there are loans geared toward first-time homebuyers that Tennesseans can take advantage of. Some of the loans you can explore include:

  • FHA loans: Loans insured by the Federal Housing Administration (FHA) have more lenient financial requirements than other loans. You can get an FHA loan with 3.5 percent down and a credit score as low as 580.
  • VA loans: For 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 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 home buyers, 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, 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.

Once you’ve researched your options for first-time homebuyer assistance, read up on buying a house in Tennessee and the Tennessee housing market.