Tennessee down payment assistance programs are often made up of grants, forgivable loans, deferred loans, and low-interest second home mortgages to assist with down payments or closing costs.
Best Down Payment Assistance Programs in Tennessee
Great Choice Plus Program for Great Choice Loan Borrowers
Great Choice Plus is designed to assist you with upfront homebuying costs such as your down payment and closing costs when you are using a Great Choice Loan as your primary mortgage.
Great Choice Plus is a second mortgage program that complements your primary home loan. It’s only available to borrowers who qualify for a Great Choice Home Loan.
This program provides financial assistance in two distinct ways:
Deferred Option
Under this option, eligible homebuyers can receive $6,000 in interest-free assistance without making immediate monthly payments. Repayment is deferred until the end of the primary mortgage term.
If the borrower remains in the home for the full 30-year mortgage term, the loan may be fully forgiven, meaning no repayment is required. However, if the home is sold or the primary mortgage is refinanced, the borrower must repay the full balance of the second mortgage.
Amortizing Option
This option assists up to 5% of the home’s purchase price, capped at $15,000.
The loan is repaid through monthly installments over a 30-year term, and the interest rate matches that of the primary Great Choice mortgage.
Program-Specific Eligibility Requirements
To qualify for Great Choice Plus, borrowers generally must:
- Qualify for a Great Choice Loan as their primary mortgage
- Purchase the property as a primary residence
- Meet income and home price limits, which vary by county
Â
Clarksville Down Payment Assistance Program
If you’re looking to buy your first home in Clarksville, the Clarksville First-Time Homebuyers Program could help ease the financial burden of homeownership.
Funded with federal HUD resources and administered by the City of Clarksville, this program provides financial assistance to eligible homebuyers for down payment and closing costs. Assistance amounts depend on the applicant’s financial situation and may be available up to $25,000.
The Clarksville assistance program generally provides two types of support:
- Down Payment Assistance
Eligible buyers may receive a low-interest loan to help cover a portion of their down payment. Repayment is generally structured over a 10-year term.
- Closing Cost Assistance
The program also offers an interest-free loan to help cover closing costs. If the buyer continues to occupy the property for 10 years, the loan may be fully forgiven, meaning no repayment is required.
Unlike Great Choice Plus, which is available statewide and can only be used alongside an eligible Great Choice mortgage, the Clarksville First-Time Homebuyer Program is a city-level assistance program and is only available for homes purchased within the city limits of Clarksville.
Program-Specific Eligibility Requirements
To qualify, applicants generally must:
- Purchase a home within the City of Clarksville limits
- Have a household income below 80% of the Area Median Income (AMI)
- Purchase a property that passes the city’s housing quality and safety inspection standards
Â
Memphis Down Payment Assistance Program
The Memphis Down Payment Assistance Program is a supplemental mortgage assistance program available to homebuyers purchasing a property within the city of Memphis.
The program can cover up to 10% of the required down payment, with assistance capped at $10,000.
Program-Specific Eligibility Requirements
To qualify, applicants generally must:
- Have a household income below 81% of the Area Median Income (AMI)
- Purchase a home within the City of Memphis limits
- Meet any additional eligibility guidelines established for the program
Certain public service professionals, including teachers, police officers, and firefighters, may qualify for special assistance options with fewer restrictions or expanded eligibility.
Knoxville Down Payment Assistance Program
Similar to other Tennessee cities, Knoxville also offers a Knoxville Down Payment Assistance Program designed to help reduce the upfront costs of buying a home. Depending on available funding and the type of housing project, eligible homebuyers may receive assistance to help cover initial home purchase expenses.
The exact amount of assistance varies based on program funding availability and the specific housing development involved.
Program-Specific Eligibility Requirements
This program differs from many other Down Payment Assistance programs in Tennessee in one important way: it is only available for homes built by housing development organizations approved by the City of Knoxville.
Eligible properties must typically be developed through approved organizations, including:
- Home Source East Tennessee
- East Tennessee Housing Development Corporation
- Neighborhood Housing, Inc.
Â
Nashville / The Housing Fund (THF)
Another valuable option for Tennessee homebuyers is The Housing Fund (THF) program. Although many people mistakenly assume this assistance is available only in Nashville, the program can actually be used for home purchases throughout Tennessee.
While the organization is headquartered in Nashville, eligible borrowers may use this assistance statewide.
The Housing Fund is one of the strongest Down Payment Assistance programs in Tennessee, operated by a nonprofit housing organization. Qualified borrowers may receive up to $35,000 to help cover down payment costs, closing costs, and prepaid expenses.
This assistance is offered at a fixed 5% interest rate. However, unlike many other DPA programs, assistance through The Housing Fund is not forgivable and is not structured as a grant, meaning borrowers are required to repay the loan.
Program-Specific Eligibility Requirements
To qualify, applicants generally must:
- Be approved for a primary mortgage loan
- Contribute at least 1% of the home purchase price from their own funds
- Have a minimum credit score of 600 for assistance amounts below $10,000
- Have a minimum credit score of 620 or higher for assistance ranging from $10,000 to $35,000
The Housing Fund program also has more flexible income limits than many of Tennessee’s assistance programs. buyers across three AMI tiers 80%, 100%, and 120% statewide, not limited to specific counties. Loan terms range from 120 to 180 months.Â
So this program is not limited to low-income households. Some middle-income families may also qualify for assistance.
Another major difference is that Great Choice Plus is only available with a Great Choice Loan, while The Housing Fund can be combined with several major mortgage programs including USDA, VA, FHA and certain Conventional loans.
Homeownership for Heroes (Statewide, THDA)
Active-duty military, veterans, law enforcement, firefighters, EMTs, and paramedics qualify for a 0.5% reduction on their Great Choice mortgage rate, for the life of the loan. This program can be combined with Great Choice Plus for both a lower rate and down payment assistance on the same transaction.Â
Common Types of Down Payment Assistance Programs in Tennessee
- Grant Assistance: Financial aid that does not need to be repaid.
- Forgivable Loan: A loan that may be forgiven if you remain in the home for a specified period of time.
- Deferred Loan: Repayment is postponed until a later date, often when the home is sold or refinanced.
- Low-Interest Second Mortgage: A secondary loan designed to help cover your down payment or closing costs.
General Requirements for Down Payment Assistance in Tennessee
Although each program has its own eligibility criteria, most Down Payment Assistance programs in Tennessee share several common requirements. In general, applicants are expected to meet the following minimum qualifications:
First-Time Home Buyer Status
Under Tennessee Housing Development Agency (THDA) guidelines, these programs are generally intended for individuals who have not owned and occupied a primary residence within the past three years. However, there are some exceptions to this rule.
For example, certain military service members or buyers purchasing homes in designated Targeted Areas may still qualify for assistance, even if they have previously owned a home.
Minimum Credit Score Requirements
Most Down Payment Assistance programs in Tennessee require a minimum credit score of 640. However, some programs and lenders may have slightly different credit score requirements depending on the loan type and eligibility criteria.
Debt-to-Income Ratio (DTI)
Your debt-to-income ratio (DTI) generally should not exceed 45% of your gross monthly income. Lenders use this ratio to determine whether you can comfortably manage your mortgage payments alongside existing debts.
Income Limits
Many Tennessee Down Payment Assistance programs are designed for low- to moderate-income households and include income restrictions.
In most cases, your household income must fall below the Area Median Income (AMI) for your region, as determined annually by housing agencies or government organizations such as THDA or HUD.
Primary Residence Requirement
These assistance programs are typically available only for homes that will serve as your primary residence. Vacation homes, second homes, and investment properties are generally not eligible.
Homebuyer Education Course
Many programs require that first-time homebuyer education courses be completed before closing on a home purchase. The courses are designed to help buyers understand the mortgage process, budgeting, and the long-term responsibilities of homeownership.
However, some Down Payment Assistance programs in Tennessee may have more specific eligibility requirements. For example, some programs may only be available for certain professions, income levels, or cities. The special requirements for each program are described in the sections below.
Why Down Payment Assistance Programs Can Help You Buy a Home Faster
DPA programs can make the path to homeownership significantly easier, especially for first-time home buyers struggling to save for upfront costs. Here are some of the biggest advantages:
- No need for a large upfront savings fund: DPA programs can reduce the amount of cash you need to bring to closing.
- Become a homeowner sooner: Instead of spending years saving for a down payment, you may be able to purchase a home much faster.
- Preserve your savings for other expenses: Keeping more cash on hand can help cover moving expenses, home repairs, furniture, or essential appliances after purchase.
- Can be combined with mortgage loans like FHA, VA, or Conventional loans: In many cases, you can use a Down Payment Assistance program alongside a first mortgage, including FHA, VA, or Conventional loans, to help cover your down payment and closing costs.
