Tennessee First-Time Home Buyer Guide 2026
This guide for Tennessee first-time home buyers covers THDA’s Great Choice and Great Choice Plus down payment assistance, Homeownership for Heroes, income and purchase price limits, and step-by-step guidance for first-time buyers in Tennessee.
Great Choice Home Loan Program
Great Choice is THDA’s flagship first mortgage program, designed to make homeownership available and affordable for Tennesseans of middle and moderate income. It is a 30-year, fixed-rate loan that can be paired with Great Choice Plus down payment assistance.
| Feature | Detail |
|---|---|
| Term | 30 years |
| Rate | Fixed for the life of the loan |
| Min credit score | 640 for everyone on the loan application |
| Insuring agency | Most Great Choice loans are insured by FHA or USDA-Rural Development (min 3.5% down) |
| Conventional option | Freddie Mac HFA Advantage®, paired with down payment assistance |
| Income & purchase price limits | Vary by county — see the full chart at thda.org |
| Manufactured housing | Off-site (manufactured) homes are eligible |
| Homebuyer education | Required to receive Great Choice Plus down payment assistance |
Great Choice is available statewide through participating lenders. If your credit score doesn’t meet the 640 minimum, THDA-approved counselors can work with you to improve it before you apply. Confirm current terms and find a participating lender at thda.org.
Great Choice Plus Down Payment Assistance
If you qualify for a Great Choice Home Loan, you can also apply for a Great Choice Plus second loan to help with your down payment and/or closing costs. There are two options to choose from.
| Option | Amount | Terms |
|---|---|---|
| Deferred Option (no monthly payment) | $6,000 or $10,000 | 0% interest; forgiven at the end of a 10-year term; due in full if the home is sold or refinanced before then |
| Amortizing Option (monthly payment) | Up to 5% of the sales price, maximum $15,000 | 30-year amortizing loan at the same interest rate as your first mortgage; not forgivable |
You must continue to comply with the terms of both your primary Great Choice loan and your Great Choice Plus loan, or penalties may apply, including immediate repayment. Confirm current terms at thda.org.
Homeownership for Heroes
THDA’s Homeownership for Heroes program offers all the benefits of a standard Great Choice Home Loan, plus additional perks for those who serve Tennessee communities. It is only available on FHA, USDA, and VA loans.
- Reduced interest rate compared to the standard Great Choice rate
- First-time buyer requirement waived statewide for qualified military members and veterans
- Higher financing: up to 100% of the home’s purchase price with a VA or USDA-RD loan, or 96.5% with an FHA loan
To qualify, participants must be one of the following: active-duty military, National Guard, or veterans; EMTs/paramedics; firefighters; kindergarten–12th grade teachers employed full-time in a Tennessee public or private school; or state and local law enforcement officers.
Income and Purchase Price Limits
| Program | Income Limit | Purchase Price Limit | Geography |
|---|---|---|---|
| Great Choice / Great Choice Plus | Varies by county | Varies by county | Statewide |
| Homeownership for Heroes | Same as Great Choice (varies by county) | Same as Great Choice (varies by county) | Statewide |
Because THDA’s income and purchase price limits vary by county rather than being a single statewide figure, always check the current chart for your specific county at thda.org before assuming you qualify.
Tennessee Down Payment Assistance Eligibility Requirements
To qualify for Great Choice Plus, buyers generally must meet the following requirements:
- Credit score: Minimum 640 for everyone on the loan application
- Owner-occupancy: Must live in the home as a primary residence
- Income and purchase price limits: Household income and purchase price must be at or below the current limit for your county
- Homebuyer education: Required before closing in order to receive Great Choice Plus assistance
- Participating lender: Must use a THDA-approved participating lender
- First-time buyer status: Generally required for Great Choice, though repeat buyers may qualify in some circumstances, and the requirement is waived statewide under Homeownership for Heroes
Combining down payment options: You must choose either the Deferred Option or the Amortizing Option for your Great Choice Plus loan — the two cannot be combined on the same first mortgage. Ask your THDA-approved lender which option best fits your monthly budget and long-term plans.
Step-by-Step Buying Process for Tennessee First-Time Home Buyers
| Step | What to Do | Notes |
|---|---|---|
| 1 | Check your credit score | You need at least 640 for Great Choice and Great Choice Plus. |
| 2 | Find a THDA-participating lender | Not all Tennessee lenders offer Great Choice. Ask specifically about Great Choice Plus eligibility before committing to a lender. |
| 3 | Complete homebuyer education | Required to receive Great Choice Plus assistance. THDA maintains a network of approved homeownership counselors. |
| 4 | Get pre-approved | Your lender calculates your maximum loan amount and confirms your county’s income and purchase price limits. |
| 5 | Make an offer | Your real estate agent will guide you through the standard Tennessee purchase and sale agreement. |
| 6 | Complete due diligence period | Negotiate any inspection-related repairs or credits per your contract terms. |
| 7 | Close with a title company | Tennessee closings are typically handled by title companies rather than attorneys. Review your Closing Disclosure and sign documents. |
