Mortgage Industry Analyst & Contributing Writer · NMLS #2103487, MBA
Tennessee First-Time Home Buyer Programs 2026: THDA Guide
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THDA Programs Overview
The Tennessee Housing Development Agency (THDA) is the state housing finance agency, offering below-market first mortgages and down payment assistance through approved lenders in all 95 Tennessee counties.
The flagship Great Choice Home Loan pairs with Great Choice Plus DPA, which offers two structures: a $6,000 deferred second or a 6% amortizing second repaid over 30 years at the same rate as your first mortgage.
| Program | Type | Max Benefit | Key Requirement |
|---|---|---|---|
| Great Choice Home Loan | First mortgage (FHA/VA/USDA/Conventional) | Below-market rate | 640 credit, first-time buyer* |
| Great Choice Plus — Deferred | DPA second loan | $6,000 | 0% interest, due at sale/refi |
| Great Choice Plus — Amortizing | DPA second loan | 6% of loan amount | Repaid over 30 years |
| Homeownership for Heroes | Rate discount | 0.50% rate reduction | Military, veterans, first responders |
| THDA MCC | Tax credit | Up to $2,000/year | Reduces federal tax liability |
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Great Choice Home Loan: Below-Market First Mortgage
The Great Choice Home Loan is THDA's primary first mortgage, offering 30-year fixed-rate FHA, VA, USDA, and conventional loans at rates typically 0.25-0.50% below market.
First-time buyer means no ownership interest in a primary residence in the past 3 years — waived in targeted areas (covering much of rural Tennessee) and for qualified veterans and their spouses.
Minimum credit score is 640. Income limits are approximately $100,000-$130,000 depending on county and household size, and the purchase price limit is around $500,000. See our FHA vs conventional guide for loan-type help.
- 30-year fixed-rate FHA, VA, USDA, or conventional loans
- Rates typically 0.25-0.50% below market
- Minimum 640 credit score
- First-time buyer (waived in targeted areas and for veterans)
- Income limits ~$100,000-$130,000 by county
- Purchase price limit ~$500,000
Great Choice Plus: Two DPA Options
Great Choice Plus offers two down payment assistance structures, and choosing the right one matters.
The Deferred option provides $6,000 as a 0% interest second loan with no monthly payments — due only when you sell, refinance, or pay off the first mortgage. Best for buyers who want zero added monthly cost.
The Amortizing option provides 6% of the loan amount — $18,000 on a $300,000 loan — repaid monthly over 30 years at the same rate as your first mortgage. On a $300,000 loan at 6.5%, that is about $114/month. Best for buyers who need maximum assistance and can handle the added payment.
- Deferred: $6,000, 0% interest, no monthly payment, due at exit
- Amortizing: 6% of loan amount, repaid over 30 years
- Amortizing on $300K loan: $18,000 at ~$114/month
- Deferred = less help but zero monthly cost
- Amortizing = 3x more help with small monthly payment
- Both pair with Great Choice first mortgage
Homeownership for Heroes: 0.50% Rate Discount
THDA's Homeownership for Heroes program offers a 0.50% interest rate reduction on the Great Choice first mortgage for military members, veterans, National Guard, reservists, and first responders including law enforcement, EMTs, paramedics, and firefighters.
On a $300,000 loan, a 0.50% rate cut saves roughly $95/month — over $34,000 across 30 years. It stacks with Great Choice Plus DPA.
If you qualify, this is one of the best veteran/homebuyer benefits in the Southeast. Ask your THDA lender specifically about the Heroes rate.
- 0.50% rate reduction on Great Choice first mortgage
- For military, veterans, Guard/Reserves, first responders
- Saves ~$95/month on a $300K loan
- Stacks with Great Choice Plus DPA
- Same 640 credit and income requirements
- Ask your lender specifically about the Heroes rate
THDA Income and Purchase Price Limits 2026
THDA income limits vary by county and household size. Here are the approximate 2026 limits for major Tennessee counties — verify at THDA.org.
- Nashville metro counties have the highest limits
- Income limits based on total household income
- Purchase price limit ~$500,000 statewide
- Targeted areas have higher limits and no first-time requirement
- Verify current limits at THDA.org
| County | Income Limit (1-2 persons) | Income Limit (3+ persons) | Purchase Price Limit |
|---|---|---|---|
| Davidson (Nashville) | ~$120,000 | ~$138,000 | ~$500,000 |
| Williamson (Franklin) | ~$130,000 | ~$149,500 | ~$500,000 |
| Rutherford (Murfreesboro) | ~$115,000 | ~$132,000 | ~$500,000 |
| Shelby (Memphis) | ~$105,000 | ~$120,750 | ~$500,000 |
| Knox (Knoxville) | ~$105,000 | ~$120,750 | ~$500,000 |
| Hamilton (Chattanooga) | ~$100,000 | ~$115,000 | ~$500,000 |
| Sumner (Hendersonville) | ~$115,000 | ~$132,000 | ~$500,000 |
| Montgomery (Clarksville) | ~$100,000 | ~$115,000 | ~$500,000 |
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To qualify for THDA programs, first-time buyer status means no ownership in a primary residence in the past 3 years — waived in targeted areas and for veterans.
Credit score: minimum 640 for all THDA programs. DTI: maximum 45% for most loans, up to 50% with automated approval. See our DTI ratio guide for strategies.
Occupancy: primary residence only. Homebuyer education: required for all borrowers using DPA — THDA-approved courses are available online and in-person statewide.
- First-time buyer (past 3 years) — waived in targeted areas and for veterans
- Credit score: 640+ for all programs
- DTI: 45% max (50% with AUS approval)
- Primary residence only
- Complete THDA-approved homebuyer education
- Must use a THDA-approved lender
How to Apply for THDA Programs
THDA programs are accessed through approved lenders — you cannot apply directly to THDA.
Step 1: Find a THDA-approved lender at THDA.org. Step 2: Get pre-approved — the lender verifies credit, income, and program eligibility including Heroes status. Step 3: Complete homebuyer education. Step 4: Find a home within the purchase price limit. Step 5: Close — DPA funds are delivered at settlement.
- Step 1: Find a THDA-approved lender at THDA.org
- Step 2: Get pre-approved and choose deferred vs amortizing DPA
- Step 3: Complete THDA-approved homebuyer education
- Step 4: Shop within the ~$500K purchase price limit
- Step 5: Close — DPA funds delivered at settlement
- Tip: Ask about the Heroes rate if you served or work in public safety
Local Tennessee DPA Programs
Several Tennessee cities offer additional assistance.
- Nashville's MDHA program is the largest local program
- Local programs may stack with THDA — ask your lender
- City programs typically have lower income limits
- Funding cycles open and close — check availability early
| Program | Area | Assistance | Key Details |
|---|---|---|---|
| Nashville MDHA DPA | Nashville-Davidson | Up to $15,000-$30,000 | Deferred, income limits |
| Memphis DPA | Memphis | Up to $10,000 | Deferred 0% loan |
| Knoxville HAP | Knoxville | Up to $15,000 | Forgivable after 5-10 years |
| Chattanooga HAP | Chattanooga | Up to $15,000 | Deferred, income-restricted |
| Clarksville HAP | Clarksville | Up to $10,000 | Forgivable grant |
| Murfreesboro HAP | Murfreesboro | Up to $10,000 | Deferred 0% loan |
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Updated November 1, 2026
| Lender | Rate | Action |
|---|---|---|
Veterans United | 5.500% | Check Rate |
Navy Federal CU | 5.500% | Check Rate |
Better.com | 5.625% | Check Rate |
New American Funding | 5.625% | Check Rate |
Rocket Mortgage | 5.750% | Check Rate |
CrossCountry Mortgage | 5.750% | Check Rate |
Rates shown are illustrative. Actual rates vary by credit score, location, and loan details.
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Mortgage Industry Analyst & Contributing Writer
MBA and NMLS #2103487. Former loan officer at Bank of America and regional sales manager. Expert in USDA, FHA 203k, and DPA programs.
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