Buying your first home is exciting, but it can also feel overwhelming—especially when it comes to financing. If you’re worried about affording a down payment or qualifying for a mortgage, you’re not alone. The good news? Tennessee offers several programs designed to help first-time buyers make homeownership a reality.
In this guide, we’ll walk you through the top first-time homebuyer programs available in Tennessee, how to qualify, and how much assistance you can get.
1. Why First-Time Homebuyer Programs Matter
Buying a home requires a significant financial investment. Many first-time buyers face common roadblocks like:
❌ Not having enough savings for a down payment
❌ Not knowing what loan options are available
❌ Worrying about qualifying due to credit score or income
That’s where first-time homebuyer programs come in. These programs offer benefits like:
✅ Low or no down payment options
✅ Down payment and closing cost assistance
✅ Lower interest rates
If you’re a first-time buyer in Tennessee, these programs could make homeownership much more affordable for you.
2. Tennessee’s Best First-Time Homebuyer Programs
Tennessee has several programs that help first-time buyers secure a home with minimal upfront costs. Here are the best options:
🏡 THDA Great Choice Home Loan
The Tennessee Housing Development Agency (THDA) offers the Great Choice Home Loan, a popular program for first-time buyers.
✔ 30-year fixed-rate loan with below-market interest rates
✔ Only requires a 3.5% down payment
✔ Can be combined with down payment assistance programs
💡 Who qualifies?
- Minimum credit score of 640
- Income and purchase price limits (varies by county)
- Must complete a homebuyer education course
💰 THDA Down Payment Assistance (DPA) Programs
If you qualify for the Great Choice Home Loan, you can also apply for down payment assistance (DPA):
🔹 Deferred Loan – Up to $6,000 in down payment help, with no monthly payments (repaid when you sell or refinance).
🔹 Amortizing Loan – Up to $6,000 in assistance, repaid over 15 years at 4% interest.
💡 Best for: Buyers who need help covering their down payment and closing costs.
🌿 USDA Loans (Zero Down Payment)
If you’re looking to buy in a rural area of Tennessee, you may qualify for a USDA loan, which requires:
✔ 0% down payment
✔ Low-interest mortgage rates
✔ Flexible credit requirements
💡 Who qualifies?
- Home must be in a USDA-eligible rural area
- Household income must fall within program limits
🔎 Many areas near Knoxville, like parts of Blount and Sevier counties, qualify for USDA loans!
🪖 VA Loans (Zero Down Payment for Military Members)
If you’re a veteran, active-duty service member, or eligible spouse, a VA loan could be your best option:
✔ No down payment required
✔ No private mortgage insurance (PMI)
✔ Competitive interest rates
💡 Who qualifies?
- Must meet military service requirements
- Must have a credit score of at least 580-620 (varies by lender)
🏠 FHA Loans (Low Down Payment Option)
The FHA loan is a great option if you have a lower credit score and need a small down payment:
✔ Down payment as low as 3.5%
✔ More flexible credit requirements
✔ Available nationwide
💡 Who qualifies?
- Credit score of at least 580 (or 500 with a 10% down payment)
- Home must be your primary residence
🏡 Conventional 97 Loan (3% Down Payment)
A Conventional 97 loan allows first-time buyers to purchase a home with just 3% down:
✔ Lower private mortgage insurance (PMI) compared to FHA loans
✔ Can be used on any property type (not just single-family homes)
✔ Available from most major lenders
💡 Who qualifies?
- Credit score of at least 620
- Must be a first-time homebuyer
3. Who Qualifies for These Programs?
While qualifications vary by program, here are the general requirements:
✔ First-time homebuyer status – Defined as not owning a home in the past 3 years
✔ Credit score of 580-640+ (depending on the loan type)
✔ Stable income and employment history
✔ Debt-to-income (DTI) ratio of 43% or lower (some programs allow higher)
✔ Meet income and home price limits (for THDA and USDA loans)
💡 Pro Tip: If your credit score is below 640, consider working with a lender to improve it before applying!
4. How to Apply for First-Time Homebuyer Programs
Applying for these programs is easier than you think! Follow these steps:
Step 1: Check your credit score – Make sure you meet the minimum requirements.
Step 2: Determine your budget – Use an online mortgage calculator to estimate your price range.
Step 3: Get pre-approved – Contact a THDA-approved lender or a bank offering these loan options.
Step 4: Complete a homebuyer education course (if required by THDA).
Step 5: Start house hunting – Work with a local real estate agent to find homes within your budget.
Step 6: Submit your loan application and secure financing.
💡 Pro Tip: Many local lenders specialize in THDA and first-time homebuyer loans. Ask your real estate agent for recommendations!
5. Pros and Cons of Using These Programs
✅ Pros:
✔ Lower down payments make homeownership accessible
✔ Reduced interest rates save money over time
✔ Assistance with closing costs reduces upfront expenses
❌ Cons:
- Some programs have income limits
- You may have to complete a homebuyer education course
- Some loans (like FHA) require mortgage insurance
💡 Pro Tip: Compare multiple loan options to find the best fit for your financial situation!
6. Final Tips for First-Time Buyers in Tennessee
✔ Start saving early – Even with down payment assistance, you’ll need some cash for closing costs.
✔ Get pre-approved before house hunting – This helps you know exactly how much home you can afford.
✔ Work with a knowledgeable real estate agent – They can help you find homes that qualify for these programs.
✔ Ask about grants and local assistance programs – Some cities and counties offer extra incentives for first-time buyers.
Final Thoughts
If you’re a first-time homebuyer in Tennessee, there are plenty of programs to help make homeownership more affordable. Whether you need down payment assistance, a low-interest loan, or a zero-down mortgage, options like THDA, USDA, VA, FHA, and Conventional 97 loans can help you achieve your dream of owning a home.
🚀 Ready to buy? Contact a lender today and take the first step toward homeownership in Tennessee!
