Key Takeaways
-
-
Tennessee offers multiple first-time homebuyer programs including low-interest loans, tax credits, and down payment assistance.
-
The Great Choice Home Loan is the most widely used option and can be combined with additional assistance like Great Choice Plus.
-
Special programs exist for military and frontline workers, offering reduced interest rates through Homeownership for Heroes.
-
Completing a homebuyer education course is a required first step for accessing most Tennessee Housing Development Agency (THDA) programs.
-
If you’re looking to buy your first home in Tennessee, understanding the 2025 Tennessee first-time homebuyer programs is crucial. The state offers a range of options—from down payment assistance and low-interest mortgage loans to tax credits—designed to make homeownership more attainable. Whether you’re purchasing in a major metro area like Nashville or a rural community, these state-backed initiatives could save you thousands and help you become a homeowner sooner.
2025 Tennessee Housing Market Trends
Tennessee’s housing market continues to grow. In 2024, home prices rose by an average of 5.5%, with Knoxville seeing over 93% growth in five years. Nashville and Memphis remain competitive, with demand outpacing inventory. As values increase, locking in a mortgage with assistance could protect you from future affordability issues.
Top First-Time Homebuyer Programs in Tennessee
The Tennessee Housing Development Agency (THDA) oversees the state’s major programs. Each one offers unique benefits based on your income, credit, and eligibility.
| Program | Best For | Key Benefits | Requirements |
| Great Choice Home Loan | Moderate-income first-time buyers | 30-year fixed-rate, low 3.5% down payment | Min 640 credit score, <45% DTI, income/purchase limits, THDA homebuyer education |
| Homeownership for Heroes | Military, EMTs, firefighters, law enforcement | 0.5% lower rate than standard Great Choice loan | 640+ credit score, income/price limits, THDA education course |
| Great Choice Plus | Buyers needing help with closing costs or down payment | $6,000 deferred or up to $15,000 repayable second mortgage | Must qualify for Great Choice Home Loan |
| New Start Loan Program | Very low-income buyers working with nonprofits | 0%–reduced interest rate loans | 620+ credit, <41% DTI, income limits, homebuyer education |
Understanding Down Payment Assistance in Tennessee
Down payment assistance (DPA) can reduce upfront costs dramatically. Tennessee’s options vary in structure, so it’s important to know which works best for your situation.
| Type | How It Works | Best For |
| Deferred Second Mortgage | Repaid when you sell or refinance | Buyers staying long-term |
| Forgivable Second Mortgage | Forgiven if you live in the home long enough | Buyers planning to stay at least 30 years |
| Grants | Often don’t require repayment | First-time buyers needing immediate help |
| Mortgage Credit Certificates (MCC) | Up to $2,000/year in tax credits | Buyers meeting income/home price limits |
How to Apply for Tennessee First-Time Homebuyer Programs
To qualify and apply for THDA’s assistance:
- Complete a state-approved homebuyer education course (Cost: $25–$99)
- Work with a THDA-approved lender to begin your mortgage application
- Choose a THDA-approved realtor to find your eligible home
- Apply for down payment assistance through Great Choice Plus, if needed
- Close on your home and officially become a homeowner
Other First-Time Home Loan Options in Tennessee
Even if you don’t qualify for THDA programs, national loan programs offer flexible options for first-time buyers:
| Loan Type | Best For | Benefits |
| Conventional | Buyers with strong credit | Low monthly costs, flexible loan terms |
| FHA Loan | Lower credit score buyers | 3.5% down, easier approval |
| VA Loan | Veterans and active-duty military | No down payment, no PMI |
| USDA Loan | Buyers in rural areas | No down payment, income-based eligibility |
Bottom Line
With rising home prices and competitive markets, Tennessee first-time homebuyer programs in 2025 are more valuable than ever. From down payment assistance to tax-saving MCCs, these tools are designed to help first-time buyers overcome financial barriers. Start by completing your homebuyer education and partnering with a THDA-approved lender. Then, you’ll be one step closer to securing the keys to your first home in Tennessee.
FAQs: Tennessee Down Payment Assistance
No SSN required. Zero impact to credit. Your Information is never sold.
