First-Time Home Buyer Programs in Tennessee

Tennessee Housing Development Agency (THDA) Programs:

Great Choice Home Loan:

Eligibility: Targets first-time homebuyers (no homeownership in the past three years) or buyers in targeted areas; veterans exempt from first-time requirement.
Offerings: Provides a 30-year fixed-rate mortgage (FHA, VA, USDA, or conventional) with competitive rates; can be paired with down payment assistance.
Requirements:

• Income must not exceed county-specific limits (e.g., $99,440 for a 1-2 person household in Davidson County as of 2025).
• Minimum credit score of 640 (varies by loan type).
• Debt-to-income ratio capped at 45% (50% with compensating factors).
• Homebuyer education course required.
• Purchase price limit of $349,525 (non-targeted areas) or $427,198 (targeted areas).

Great Choice Plus:

Benefits: Offers up to $7,500 as a 0% interest deferred loan (repayable upon sale, refinance, or after 30 years) for down payment and closing costs; available with Great Choice Home Loan.
Eligibility: Must use a THDA first mortgage; income and purchase price limits apply (same as Great Choice Home Loan).

Heroes Program:

Description: Provides a 30-year fixed-rate mortgage with a reduced interest rate and up to $10,000 in down payment assistance (0% interest, deferred) for teachers, law enforcement, firefighters, healthcare workers, and military personnel.
Requirements: Must meet Great Choice criteria; proof of eligible occupation or military service required; credit score of 640; limited annual funding.

Local Programs:

Nashville

Metro Nashville Down Payment Assistance: Offers up to $15,000 as a deferred loan (0% interest, due upon sale or refinance) for down payment and closing costs; income must be at or below 80% AMI (e.g., $66,750 for a family of four).

Memphis

Memphis Down Payment Assistance: Provides up to $12,000 as a forgivable loan (forgiven after 10 years) for down payment and closing costs; income capped at 80% AMI; targets revitalization areas.

Knoxville

Knoxville Homebuyer Assistance: Offers up to $10,000 as a 0% interest deferred loan (repayable upon sale) for down payment and closing costs; income must be below 80% AMI.

Additional Information:

• Mortgage Credit Certificate (MCC): Provides a federal tax credit of up to 30% of annual mortgage interest (max $2,000 yearly) for first-time buyers; fee applies; combinable with THDA loans.
• FHA Loans: Minimum 3.5% down payment, suitable for credit scores as low as 580 (10% if below 580).
• USDA Loans: Zero-down payment for rural Tennessee areas; income limits apply.
• VA Loans: Zero-down payment for eligible veterans or active military.