Updated · Mike Certo, NMLS #260555
Tennessee Down Payment Assistance Programs (2026 Guide)
Tennessee's down payment help runs through THDA's Great Choice family, and most of what the internet says about it is a program generation out of date — the wrong forgiveness clock, the wrong amounts, the wrong price caps. Here is the 2026 version, from THDA's current pages and its May 18, 2026 limits chart.
What is the Great Choice Home Loan?
Great Choice is THDA's 30-year fixed first mortgage. It rides on FHA (3.5% down), USDA-RD or VA ($0 down), or Freddie Mac HFA Advantage conventional (3% down) — THDA sets the program terms on top. Requirements: 640 minimum credit score for everyone on the application, county income limits, a $500,000 purchase price cap in every county, and a homebuyer education course (fee capped under $100, certificate good for one year).
Great Choice Plus: the two DPA structures
| Deferred (forgivable) | Amortizing (repayable) | |
|---|---|---|
| Amount | Up to $6,000 (up to $10,000 for qualifying borrowers) | Up to 5% of sales price, $15,000 max |
| Payment | None — 0% interest | Monthly, 30-year term |
| Rate | 0% | Same as your first mortgage |
| What happens later | Forgiven at the end of the 10-year term; due in full if you sell or refinance sooner | Repaid like any second mortgage |
Worth repeating, because most articles get it wrong: the deferred option is forgiven at 10 years under THDA's current program — the "30-year forgiveness" you'll read elsewhere describes the old structure. And when the money isn't needed for down payment, THDA allows it to cover closing costs and prepaids.
Homeownership for Heroes — now including teachers
Heroes gives a program pricing benefit on the first mortgage to firefighters, state and local law enforcement officers, EMTs and paramedics, and Veterans and active-duty military — and as of May 5, 2026, K-12 teachers are eligible too. Veterans using Heroes are exempt from the first-time-buyer rule, and Heroes still combines with Great Choice Plus assistance.
Who counts as first-time (and who's exempt)
First-time means no ownership of a primary residence in the past three years. But THDA waives the rule entirely in 43 targeted counties, waives it by census tract in parts of 21 more counties (including tracts in Davidson, Shelby, Knox, Hamilton, Rutherford, and Montgomery), and exempts Veterans with an honorable discharge statewide. If you owned a home years ago, don't assume you're out — the waiver map is bigger than people think.
2026 income and purchase-price limits (chart dated May 18, 2026)
| Area | Income limit (1-2 person) | Income limit (3+ person) | Purchase price limit |
|---|---|---|---|
| Davidson + most Nashville-MSA counties | $137,760 | $160,720 | $500,000 |
| Shelby County (Memphis) | $98,314 | $113,061 | $500,000 |
| Knox County (Knoxville) | $99,400 | $114,310 | $500,000 |
| Hamilton County (Chattanooga) | $97,434 | $112,049 | $500,000 |
| Montgomery County (Clarksville) | $98,994 | $113,843 | $500,000 |
| Statewide floor (lowest counties) | $92,300 | $106,145 | $500,000 |
Source: THDA down payment assistance + THDA acquisition-cost and income-limits chart (05.18.2026). Targeted areas can carry higher income limits.
National DPA we originate directly
Alongside the THDA map: Chenoa Fund (FHA-paired, repayable and forgivable structures), Arrive Home (low-to-moderate income, including an ITIN path), and Essex Mortgage / NHF (multi-tier pairing for FHA, VA, USDA, and conventional). One DPA program per transaction, whichever family it comes from — we run the side-by-side for your hold period and tell you which one actually costs less.
Tennessee down payment assistance FAQ
Does THDA down payment assistance have to be paid back?
It depends which Great Choice Plus option you take. The deferred option — up to $6,000, and up to $10,000 for qualifying borrowers — is a 0%-interest second with no monthly payment, forgiven at the end of its 10-year term; sell or refinance before then and it is due in full. The amortizing option — up to 5% of the sales price, $15,000 maximum — is a 30-year second you repay monthly, at the same rate as your first mortgage.
When is the Great Choice Plus loan forgiven?
At the end of a 10-year term, per THDA's current program page. Many websites still say 30 years — that is outdated. If you sell or refinance before the 10 years are up, the deferred balance is repaid in full at closing.
What credit score do you need for a THDA loan?
640 minimum for everyone on the application — THDA's floor is firm and applies to Great Choice, Great Choice Plus, and Homeownership for Heroes. Outside the THDA programs, FHA allows lower scores with larger down payments.
What are the income and purchase price limits for THDA?
The purchase price limit is $500,000 in every Tennessee county (THDA chart dated May 18, 2026). Income limits vary by county and household size: $137,760/$160,720 (1-2 person / 3+) across Davidson and most of the Nashville MSA, $98,314/$113,061 in Shelby County, $99,400/$114,310 in Knox, $97,434/$112,049 in Hamilton, with a statewide floor of $92,300/$106,145.
Do you have to be a first-time homebuyer for a THDA loan?
Usually, but there are three big exceptions: 43 targeted Tennessee counties waive the first-time rule entirely, targeted census tracts in 21 more counties waive it by address, and Veterans with an honorable discharge are exempt statewide. First-time means no ownership of a primary residence in the past three years.
Is there down payment help for teachers, firefighters, or police in Tennessee?
Yes — THDA's Homeownership for Heroes serves firefighters, state and local law enforcement, EMTs and paramedics, Veterans and active-duty military, and — as of May 5, 2026 — K-12 teachers. It provides a program pricing benefit on the first mortgage and still combines with Great Choice Plus assistance up to $15,000.
Can THDA assistance be used for closing costs?
Yes. When the funds aren't needed for the down payment, THDA allows Great Choice Plus money to cover closing costs and prepaids.
Do I have to take a class for a THDA loan?
Yes — homebuyer education is required on every THDA loan, the fee is capped under $100, and the certificate is valid for one year. State of Tennessee employees get the class for $30 through the STEP-In program.
Can any lender offer THDA loans?
No. THDA doesn't lend directly to consumers, and its loans close only through THDA-approved lenders called Originating Agents. Ask us about program access for your file — and either way, we originate national down payment assistance (Chenoa Fund, Arrive Home, Essex/NHF) directly.
Can I combine THDA assistance with Chenoa or other national DPA?
No — one down payment assistance program per transaction. Great Choice Plus rides only on a THDA Great Choice first mortgage; national programs pair with their own eligible first mortgages. We run the side-by-side and tell you which family actually costs less for your hold period.
What is the THDA New Start program?
New Start is THDA's path for low and very-low-income Tennesseans, delivered entirely through THDA's nonprofit New Start Program Partners — the nonprofits select the buyers, build the homes, and originate the loans. It isn't something a retail lender offers; if your income fits, we can point you to the partner organizations.
Talk through your Tennessee scenario
Free 20-minute consult. No pressure, no commitment. Mike will tell you straight which program fits — or whether you're better off without one.