First-Time Homebuyer Programs in Tennessee: What You Need to Know

Buying your first home in Tennessee is one of the biggest financial steps you’ll ever take — and it comes with a lot of questions. The good news? There are first-time homebuyer programs in Tennessee designed specifically to help people like you get into a home with less stress, lower upfront costs, and more support along the way. Here’s a clear breakdown of what’s available and how it works.

What Makes a “First-Time Homebuyer” Program?

Before we get into the specifics, it helps to know what actually qualifies you as a first-time homebuyer — because the definition is broader than most people think.

In most program guidelines, a first-time homebuyer is someone who has not owned a primary home in the last three years. That means even if you owned a home years ago, you may still qualify.

These programs are designed to lower the two biggest barriers to homeownership: the down payment and the closing costs. They typically come in the form of grants, forgivable loans, or low-interest second mortgages. We’ll explain each of those as we go.

Tennessee Housing Development Agency (THDA): The Starting Point

The Tennessee Housing Development Agency, or THDA, is the state agency that oversees most of Tennessee’s homebuyer assistance programs. If you’re a first-time buyer in Tennessee, THDA is usually the first place to look.

Great Choice Home Loan

THDA’s flagship program is the Great Choice Home Loan. It offers a 30-year, fixed-rate mortgage at a competitive rate — and it can be paired with down payment assistance (more on that below).

To qualify, you’ll generally need to meet income and purchase price limits that vary by county, complete a homebuyer education course, and have a credit score of at least 640. The home you buy must be your primary home — not a rental or vacation property.

Rates through this program vary based on your credit profile, loan type, and current market conditions, so it’s worth talking to a loan officer to see what you’d actually qualify for.

Great Choice Plus

Great Choice Plus is an add-on to the Great Choice Home Loan. It provides down payment assistance equal to 6% of the loan amount, which you can use toward your down payment or closing costs.

This assistance comes as a second loan with 0% interest and no monthly payment. It’s only due when you sell the home, refinance, or pay off the first mortgage. That structure makes it much more manageable than a traditional second mortgage.

Down Payment Assistance: How It Actually Works

Down payment assistance — often called DPA — is money that helps cover what you owe upfront when you buy a home. It doesn’t eliminate the requirement, but it can significantly reduce how much cash you need on day one.

In Tennessee, DPA typically comes in one of three forms:

Grants — money you don’t have to pay back
Forgivable loans — loans that are forgiven after you stay in the home for a set number of years
Deferred loans — loans with no monthly payment, due only when you sell or refinance

THDA’s Great Choice Plus is an example of a deferred loan. Other programs, including some offered through local governments and nonprofits in cities like Nashville and Memphis, may offer grants or forgivable loans with different terms.

The key thing to understand: down payment assistance comes with eligibility rules and conditions. Each program has eligibility requirements, and some have income caps or require you to stay in the home for a minimum number of years. A loan officer can help you figure out which programs you actually qualify for.

Federal Loan Programs That Pair Well With Tennessee Assistance

Most Tennessee first-time homebuyer programs are designed to work alongside federal loan types. Knowing the difference helps you understand which combination might fit your situation.

FHA Loans

An FHA loan is backed by the Federal Housing Administration. It requires a down payment as low as 3.5% for buyers with a credit score of 580 or higher. FHA loans are often a strong option for first-time buyers because they have more flexible credit requirements than conventional loans.

THDA’s Great Choice program is compatible with FHA financing, so you can stack the two together.

USDA Loans

If you’re looking at homes in rural or suburban areas of Tennessee, a USDA loan might be worth exploring. These loans are backed by the U.S. Department of Agriculture and are available in eligible rural areas — which includes a surprising number of Tennessee communities outside of the major metros.

USDA loans have specific income limits and geographic restrictions, but for buyers who qualify, they can be a very strong option.

VA Loans

If you’re a veteran, active-duty service member, or surviving spouse, a VA loan may be available to you. VA loans are backed by the Department of Veterans Affairs and come with distinct benefits — including no required down payment for eligible borrowers.

Tennessee has a significant military and veteran population, and VA loans are a valuable option worth exploring if you’ve served.

Homebuyer Education: Why It’s Required (and Actually Useful)

Many Tennessee first-time homebuyer programs require you to complete a homebuyer education course before closing. This might feel like a hurdle, but it’s one worth taking seriously.

These courses — often available online — walk you through the full homebuying process: budgeting, understanding your mortgage, what to expect at closing, and how to maintain your home after you move in. Most take four to eight hours to complete.

For THDA programs, you’ll need to use an approved HUD-certified education provider. Your loan officer can point you to the right resources.

Buyers who complete education courses tend to feel more confident and prepared throughout the process. It’s one of the most practical steps you can take early on.

How to Get Started With First-Time Homebuyer Programs in Tennessee

Knowing these programs exist is step one. Actually using them takes a little more legwork — but it’s not complicated when you have the right help.

Here’s a simple starting path:

Check your credit score. Most programs require a minimum score, typically 640 or higher. If you’re not there yet, a loan officer can help you understand what to work on.
Understand your income and target purchase price. THDA programs have limits based on both — and those limits change by county.
Talk to a loan officer. This is the step most people put off, but it’s the most important. A loan officer can review your situation, identify which programs you qualify for, and walk you through the application process.
Complete your homebuyer education. Get this done early — it’s required before closing for most assistance programs.
Get pre-approved. Pre-approval shows sellers you’re a serious buyer and gives you a clear picture of what you can afford.

At Integrity Home Lending, we work with Tennessee homebuyers every day to help them find the right path forward. Whether you’re just starting to think about buying or you’re ready to move, we’ll help you understand your options clearly — no pressure, no jargon.

Ready to find out which first-time homebuyer programs you qualify for in Tennessee? Connect with the Integrity Home Lending team today — we’ll walk you through your options step by step.

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Licensed in Tennessee. NMLS #2412324. Equal Housing Opportunity.

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Integrity Home Lending | NMLS #2412324 | Equal Housing Opportunity

Integrity Home Lending is a wholesale mortgage broker licensed in AL, CO, FL, GA, IL, IN, MD, NJ, NC, PA, SC, TN, and VA. Not all applicants will qualify. Rates, terms, and conditions are subject to change without notice. This content is for educational purposes only and does not constitute a loan commitment or guarantee of any terms.