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.

Borrower requirements:

  • 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

Property requirements:

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

Bankrate Insight
Outside of local and state offerings, turn to Bankrate’s guide to first-time homebuyer programs to find out if you qualify for other nationally-available forms of assistance.

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 have an understanding of options available to you, you can compare interest rates and terms from the mortgage lenders that work with the THDA.

First-time homebuyer programs in nearby states