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Tennessee First-Time Home Buyer Programs of 2018

July 30, 2018
Finding the Right Mortgage, Mortgages
Tennessee First-Time Home Buyer Programs of 2018
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A house is the biggest purchase many people ever make. If you’ve never applied for a home loan before, it’s easy to feel overwhelmed. That’s why the Tennessee Housing Development Agency, or THDA, created a program to help first-time home buyers through the process.

Some nationally available loan programs may also reduce barriers to homeownership, thanks to relaxed eligibility requirements. Keep reading to learn more about first-time home buyer programs available in the Volunteer State and beyond.

National first-time home buyer loans

Conventional mortgage

National program

Best for

Low down payments

Limited mortgage insurance premiums

What you need to know

A conventional mortgage is a home loan that isn’t guaranteed or insured by the federal government. Conventional mortgages that conform to the requirements set forth by Fannie Mae and Freddie Mac allow down payments as low as 3% for first-time buyers or lower-income home buyers. Unlike FHA loans,

 

FHA loans

National program

Best for

Low credit score

Low down payment

What you need to know

This is the go-to program for many first-time home buyers with lower credit scores. The Federal Housing Administration allows down payments as low as 3.5% for those with credit scores of 580 or higher. The FHA will insure loans for borrowers with scores as low as 500 but requires a 10% down payment

 

VA loans

National program

Best for

Military

Low down payment

What you need to know

Guaranteed by the U.S. Department of Veterans Affairs, these mortgages are available to military members, veterans and surviving spouses. If you qualify, you’ll see benefits such as no minimum credit score and no down payment or mortgage insurance, but you'll likely have to pay a VA funding fee.

 

USDA loans

National program

Best for

Low down payment

Rural

What you need to know

The USDA home loan program encourages rural and suburban homeownership by offering zero-down-payment mortgages to lower-income buyers. Borrowers with nontraditional credit data, like rent or utility payments, can still apply, but those with a score of 640 or above will experience faster loan

Tennessee first-time home buyer programs

THDA programs are available to Tennesseans who haven’t owned a home before, as well as repeat buyers who haven’t lived in a home they own for at least three years or are buying a home in an area designated as economically disadvantaged. Active duty service members, veterans and spouses are also eligible.

If you want to buy a house but worry you won’t qualify for a mortgage, the THDA Great Choice Home Loan program can help by providing down payment and closing cost assistance.

THDA highlights and eligibility requirements

Highlights

  • Includes government-backed and conventional loan options
  • Great Choice mortgage payments help fund programs for the elderly, people with disabilities and the homeless
  • 30-year, fixed interest rate loans
  • Loans and assistance programs available through lenders across Tennessee

Eligibility

  • Borrower must be a Tennessean with a minimum credit score of 640
  • Borrowers must meet income and loan requirements
  • Borrowers must complete home buyer education course to get down payment assistance
  • Property must not exceed purchase price limits, which vary by county

» MORE: Tips for first-time home buyers

Great Choice loan

State program

Learn more

at THDA

Best for

Down payment assistance

Closing cost assistance

What you need to know

This 30-year, fixed-rate loan is available to qualified first-time home buyers as well as repeat buyers purchasing property in certain designated areas. Once qualified for the Great Choice loan, you’re automatically eligible for help with your down payment and closing costs.

 

Homeownership for the Brave

State program

Learn more

at THDA

Best for

Military

Low down payment

Low mortgage rates

What you need to know

This special type of Great Choice loan is for active-duty service members, including the National Guard, veterans and reservists with at least 180 days of active duty. A Homeownership for the Brave loan features reduced interest rates and low down payment requirements, including 0% in some

 

Great Choice Plus

State program

Learn more

at THDA

Best for

Down payment assistance

Closing cost assistance

What you need to know

Saving enough for a down payment is one of the biggest obstacles to homeownership. If you qualify for a Great Choice loan and participate in a home buyer education course, you’ll be eligible for Great Choice Plus, a no-interest, deferred second mortgage that provides up to 5% of the purchase price

 

Hardest Hit Fund

State program

Learn more

at THDA

Best for

Down payment assistance

Closing cost assistance

What you need to know

Certain areas of Tennessee still haven’t recovered from the economic downturn. Should you choose to buy a home in one of these 62 designated ZIP codes, you could qualify for $15,000 in down payment and closing cost assistance through the Hardest Hit Fund Down Payment Assistance program, or HHF-DPA.

Your next step

Now that you’re more familiar with the basics of loan programs for first-time home buyers in Tennessee, it’s time to dive into the specifics. Know that THDA doesn’t review applications or lend money; it relies on a network of lenders that may have additional borrower requirements. Your next step is to talk to a THDA-approved lender to find out exactly what it takes to get qualified.

For full details on the programs listed above, visit the THDA website.

» MORE: See the best Tennessee mortgage lenders

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