Tennessee First-Time Home Buyer Programs 2026: THDA Grants, DPA & Nashville Assistance
THDA Great Choice: below-market rate + up to 6% down payment assistance. Nashville boom buyers: $30K grants available.
640+ credit • Purchase price up to $475K (Nashville) • Statewide programs + city grants
⚡ Quick Answer: Tennessee First-Time Buyer Programs 2026
Main State Programs:
- ✅ THDA Great Choice — below-market 30-yr rate
- ✅ Great Choice Plus — up to 6% DPA ($0 monthly)
- ✅ Homeownership for the Brave — veterans only
- ✅ HHF-DPA — up to $15K targeted counties
City Programs:
- 🏙️ Nashville BSDI — up to $30,000 forgivable
- 🏙️ Memphis DAP — up to $10,000
- 🏙️ Knoxville KCDC — up to $8,000
- 🏙️ Chattanooga CDFI — up to $12,500
1. THDA Great Choice Loan — Tennessee's Primary First-Time Buyer Program
The Tennessee Housing Development Agency (THDA) Great Choice loan is the cornerstone of homeownership assistance in Tennessee. It offers a 30-year fixed-rate mortgage at below-market interest rates — typically 0.25% to 0.75% below conventional rates — exclusively for first-time buyers and qualifying repeat buyers in targeted areas.
| Requirement | Standard | With Great Choice Plus |
|---|---|---|
| Minimum Credit Score | 640 | 640 |
| Down Payment Required | 3.5% (FHA) / 3% (Conv.) | Can be $0 with DPA |
| DPA Amount | None | Up to 6% of purchase price |
| DPA Repayment | N/A | Deferred — due at sale/refi |
| Max Purchase Price (Nashville) | $475,000 | $475,000 |
| Homebuyer Education | Required (online OK) | Required (online OK) |
| Loan Types Accepted | FHA, VA, USDA, Conv. | FHA, VA, USDA, Conv. |
💡 Real Example: Nashville buyer, $375,000 home with FHA + Great Choice Plus: DPA = $22,500 (6%). FHA requires $13,125 down (3.5%). Net out of pocket: $0 + closing costs only (~$6,000–$9,000). Total savings vs. standard FHA: $22,500.
2. City-Specific Programs: Nashville, Memphis, Knoxville & Chattanooga
🏙️ Nashville — MDHA BSDI Program
- Amount: Up to $30,000
- Type: Forgivable after 5 years occupancy
- Income Limit: 80% AMI (~$73,000 single)
- Buyer Education: Required (MDHA-approved)
- First-Time Buyer: Required
- Contact: nashville.gov/mdha
🏙️ Memphis — City DAP
- Amount: Up to $10,000
- Type: Soft second mortgage (0%, deferred)
- Income Limit: 80% AMI
- Max Purchase Price: $250,000
- Target Areas: Priority neighborhoods
- Contact: memphistn.gov/housing
🏙️ Knoxville — KCDC DPA
- Amount: Up to $8,000
- Type: Deferred, forgiven after 10 years
- Income Limit: 80% AMI
- Max Purchase Price: $300,000
- Stackable with THDA: Yes
- Contact: kcdc.org
🏙️ Chattanooga — CDFI Program
- Amount: Up to $12,500
- Type: 0% second mortgage
- Income Limit: 120% AMI
- Max Purchase Price: $350,000
- Stackable with THDA: Yes
- Contact: chattanooga.gov/housing
3. THDA Income Limits by County (2026)
| County / Metro | 1–2 Person HH | 3+ Person HH | Max Purchase Price |
|---|---|---|---|
| Davidson (Nashville) | $115,400 | $134,633 | $475,000 |
| Williamson Co. (Franklin) | $115,400 | $134,633 | $475,000 |
| Shelby (Memphis) | $95,800 | $111,767 | $400,000 |
| Knox (Knoxville) | $98,400 | $114,800 | $415,000 |
| Hamilton (Chattanooga) | $93,200 | $108,733 | $375,000 |
| Sullivan (Tri-Cities) | $82,000 | $95,667 | $350,000 |
| Rutherford (Murfreesboro) | $115,400 | $134,633 | $475,000 |
| Rural Counties | $75,000–$85,000 | $87,500–$99,167 | $350,000 |
4. Homeownership for the Brave — Tennessee Veteran Program
THDA's Homeownership for the Brave program gives active military, veterans, and surviving spouses an exclusive rate reduction — typically 0.50% below the standard Great Choice rate. This stacks with VA loan benefits ($0 down, no PMI).
- ✅ Eligible: Active duty, veterans, National Guard/Reserve, surviving spouses
- ✅ Can be combined with VA loan ($0 down + below-market rate)
- ✅ Available with or without Great Choice Plus DPA
- ✅ No purchase price limits for VA loan combination
5. How to Apply for Tennessee First-Time Buyer Programs (Step-by-Step)
Check THDA Income & Purchase Price Limits
Visit thda.org/homebuyers and confirm your household income is below your county limit. Nashville buyers: up to $115,400 (2-person). If above limits, explore conventional loans with private DPA programs.
Take a HUD-Approved Homebuyer Education Course
Required for all THDA programs. Complete online via eHomeAmerica, Framework, or in-person with a THDA-approved counselor (~$99, takes 6–8 hours). Get your completion certificate before applying.
Choose a THDA-Approved Lender
Not all lenders offer THDA loans. Find a THDA-approved lender at thda.org. Ask specifically: "Do you offer Great Choice loans and Great Choice Plus DPA?" Major banks and local credit unions typically participate.
Get Pre-Approved
Provide: 2 years tax returns, 2 months bank statements, 2 months pay stubs, photo ID. The lender will pull your credit (640+ required). Pre-approval letter takes 24–72 hours and is valid 90 days.
Make an Offer & Apply for DPA
Once under contract, your lender applies for Great Choice Plus DPA simultaneously with your first mortgage. DPA is funded at closing — you don't receive cash directly.
Frequently Asked Questions
What are the best first-time home buyer programs in Tennessee in 2026?
The best Tennessee first-time home buyer programs in 2026 are: (1) THDA Great Choice Loan — 30-year fixed rate below market, available statewide. (2) Great Choice Plus — up to 6% of the purchase price in down payment assistance, deferred until sale or refinance. (3) Homeownership for the Brave — exclusive to veterans and active military with below-market rates. (4) Nashville (MDHA) BSDI — city-specific grants for Nashville buyers up to $30,000. (5) Memphis DAP — up to $10,000 for Memphis/Shelby County buyers. Income and purchase price limits apply. Minimum 640 credit score.
What is the income limit for THDA Great Choice in 2026?
THDA Great Choice 2026 income limits vary by county and household size. Examples: Nashville-Davidson County: $115,400 (1-2 person), $134,633 (3+ person). Shelby County (Memphis): $95,800 (1-2 person), $111,767 (3+ person). Knox County (Knoxville): $98,400 (1-2 person), $114,800 (3+ person). Hamilton County (Chattanooga): $93,200 (1-2 person), $108,733 (3+ person). Rural counties typically have lower limits around $75,000–$85,000. Check thda.org for your specific county.
How much down payment assistance can I get in Tennessee?
Tennessee down payment assistance in 2026: THDA Great Choice Plus — up to 6% of purchase price (max $30,000 on a $500K home). This is a deferred second mortgage at 0% interest with no monthly payments, due when you sell, refinance, or pay off your first mortgage. Nashville BSDI — up to $30,000 forgivable grant for Nashville buyers. Memphis DAP — up to $10,000 for Shelby County. Hardest Hit Fund — up to $15,000 for eligible homebuyers in targeted counties. Most programs require 3-year minimum occupancy to avoid repayment.
What is the purchase price limit for THDA loans in Tennessee?
THDA Great Choice 2026 purchase price limits by county: Nashville and surrounding counties (Williamson, Rutherford, Wilson, Sumner, Robertson): $475,000. Shelby County (Memphis): $400,000. Knox County (Knoxville): $415,000. Hamilton County (Chattanooga): $375,000. Most rural counties: $350,000–$375,000. Note: Nashville's hot market means many homes exceed the limit — in that case, consider conventional loans with separate DPA programs or city/non-profit grants.
Can I use THDA programs with FHA loans?
Yes. THDA Great Choice loans are available with FHA (3.5% down), VA (0% down), USDA (0% down), and conventional (3% down with PMI) loan types. The Great Choice Plus down payment assistance can be layered on top of any of these loan types to reduce or eliminate your out-of-pocket down payment. For FHA + Great Choice Plus: THDA covers the 3.5% FHA down payment requirement entirely with just 6% assistance on most home prices. This makes it possible to buy with $0 out of pocket in many Tennessee counties.
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Meet Sarah
Senior Mortgage Advisor & VA Loan Specialist
Sarah Mitchell brings over 12 years of mortgage industry expertise, specializing in VA loans and first-time homebuyer programs. As a certified NMLS professional, she has helped thousands of veterans and military families achieve homeownership through specialized loan programs. Her deep understanding of VA benefits and down payment assistance programs makes her a trusted advisor for service members transitioning to civilian life.
EXPERTISE:
KEY ACHIEVEMENT:
Helped 2,500+ veterans secure home loans