Tennessee First-Time Homebuyer Programs

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Updated on Monday, April 1, 2019

Buying your first home is a big, exciting step, but when you take into consideration all the pieces to the process — from saving up, finding the perfect home and, not least, securing financing — it can also be overwhelming. If you’ve never done it before, it can be confusing — and costly — to navigate. Help is available. If you’re a Tennessee resident, you have access to a range of statewide assistance programs geared toward prospective homebuyers.

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In January 2019, we reviewed first-time homebuyer programs in Tennessee through the Tennessee Housing Development Agency’s (THDA) website and other sources. This guide will help you determine the assistance available in your area and the qualifications you must meet to receive it.

Tennessee first-time homebuyer programs

The THDA offers several programs targeting first-time buyers, including its own loan program, down payment assistance, loans for active-duty members and veterans of the military and homebuyer tax credits.

THDA Great Choice Home Loan

Features

  • 30-year, fixed-rate mortgage
  • Option for down-payment assistance
  • Monthly payments help fund state housing programs, including home repairs for the elderly, accommodations for people with disabilities and emergency services for the homeless
  • Cannot be used with the Take Credit tax credit program

Eligibility

  • Everyone on the application must have a minimum credit score of 640
  • You must meet income limits by county
  • Maximum purchase price between $250,000 and $375,000, depending on county
  • Most are insured by the Federal Housing Administration (FHA) or the U.S. Department of Agriculture’s Office of Rural Development (RD), so you can borrow up 96.5% of the total home price with a 3.5% down payment
  • Down payment assistance offered to every approved buyer

How it works

The Great Choice Home Loan Program is a 30-year, fixed-rate mortgage offered through qualified Tennessee lenders. Once you’ve clicked through to see if you meet income and purchase-price limits, head over to THDA’s web page for first-time buyers to get in contact with a realtor or lender, or to sign up for a homebuyer education course.

THDA Great Choice Plus

Features

  • If you qualify for a Great Choice loan, you can apply for a Great Choice Plus second loan
  • Loan available for up to 5% of the purchase price
  • No monthly payments and no interest
  • Loan due when you sell, move out of or refinance your home

Eligibility

  • Minimum credit score of 640
  • Income limits and purchase-price limits for Great Choice Program apply
  • Must complete a Homebuyer Education course from a THDA-approved instructor online or in person
  • Available anywhere in Tennessee

How it works

If you’ve chosen a Great Choice home loan and you qualify, you’re also able to apply for a second mortgage, called the Great Choice Plus, to help with the down payment and closing costs, up to 5% of the purchase price. There’s no interest and no monthly payments on this second loan; you need to pay it back when you leave or refinance the home. When you find a qualified Tennessee lender, they can walk you through this process.

THDA Hardest Hit Fund Down-Payment Assistance

Features

  • $15,000 for down-payment assistance in 49 qualifying ZIP codes
  • Forgivable $15,000 second-mortgage loan
  • No interest, no monthly payments for the 10-year term
  • Loan is forgiven at 20% per year in years six through 10

Eligibility

  • Minimum credit score of 640
  • Income and purchase-price limits for Great Choice Program apply
  • Must purchase an existing home in one of 49 eligible ZIP codes
  • Must complete a pre-purchase and post-purchase course from an instructor qualified to teach HHF-DPA homebuyers

How it works

The Hardest Hit Fund (HHF) aims to help revitalize neighborhoods that have recovered more slowly from the economic downturn than other areas in Tennessee. The $15,000 is forgivable after 10 years, and the amount owed drops steadily by $3,000 each year in years six through 10. To see if the home you want to purchase is eligible for the program, check the list of qualifying ZIP codes, and then talk to your qualified realtor or lender.

THDA Take Credit MCC Program

Features

  • Mortgage credit certificate (MCC) of up to $2,000 each year you live in your home
  • Lowers income-tax liability

Eligibility

  • Must be for a primary residence in Tennessee
  • Must either be a first-time homebuyer (hasn’t owned a home in three years), an honorably discharged U.S. military veteran or buying in a “targeted” area
  • Income and purchase-price limits by county apply
  • Must complete a homebuyer education course
  • Cannot be used with a THDA home loan

How it works

This mortgage tax credit lowers your income tax liability by up to $2,000 each year you live in your home. The THDA recommends talking to an accountant to see if this credit makes sense for you. If you’ve decided to pursue it, reach out to a qualified lender for more details about how to apply.

THDA Homeownership for the Brave Program

Features

  • A Great Choice loan with added benefits for active-duty military members and veterans
  • Interest rate reduced by 0.5%
  • Waives first-time homebuyer requirements
  • Allows borrowing up to 100% of home’s purchase price with a U.S. Department of Veterans Affairs (VA)-backed loan or 96.5% with FHA or USDA-RD loans
  • Option for down-payment assistance, if not borrowing 100%

Eligibility

  • Credit score of at least 640
  • Must meet qualifications for a Great Choice loan
  • Active-duty service members, including the National Guard
  • Veterans (not dishonorably discharged)
  • Reservists with at least 180 days of active-duty service
  • Spouses of qualified service members, reservists and veterans (including surviving spouses)

How it works

Active-duty members of the military, honorably discharged veterans and their spouses are likely eligible for the THDA Homeownership for the Brave Program, which reduces the interest rate of your Great Choice loan by a half percent and may cover 100% of your loan. To see if you are eligible for this loan, talk to a THDA qualified lender.

National assistance

Many first-time homebuyers in Tennessee can also benefit from national programs, including FHA, USDA and VA loans. For more information on national first-time homebuyer programs, check out LendingTree’s guide to federal programs for first-time buyers. (LendingTree is MagnifyMoney’s parent company.)

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