The Loan That Died Two Days Before Closing: What Every Homebuyer Should Know About THDA Loans
Friday, October 31, 2025
The Loan That Died Two Days Before Closing
A good friend of mine called me this week — a loan officer I’ve known for years. She’s sharp, organized, and never panics.
Except this time, she did.
Her client’s THDA loan fell apart two days before closing.
Now, if you’re in the business, you already know how bad that is.
If you’re not, here’s what happened — and what it means if you’re buying a home or helping someone buy one.
What Went Wrong
THDA stands for Tennessee Housing Development Agency. They offer a down payment assistance program for buyers who need help with their down payment.
It’s a great program in theory. The state gives you a small second mortgage to cover your down payment and sometimes even part of your closing costs. It’s helped a lot of people become homeowners.
But there’s one part that catches people off guard:
THDA re-pulls your credit right before closing.
That’s what killed this deal.
The buyer had a 640 credit score — exactly what THDA requires. The loan was approved, the moving trucks were ready, and everyone was celebrating.
Then, a Verizon collection suddenly appeared on his credit report.
His score dropped to 621.
THDA’s minimum is 640.
The deal died instantly.
The Human Side
The buyer was a single dad with three kids. He’d done everything right — took the required homebuyer education class, submitted every document, and stayed on top of everything.
Two days before closing, he’s told: you can’t buy the home.
The seller’s furious.
The agent’s scrambling.
The buyer’s crushed.
When I got the call, my friend was trying to figure out how to save it.
I told her — this isn’t rare. It happens once or twice a year, every year.
Same story every time: the borrower’s right on the edge, and a last-minute credit re-pull wipes everything out.
Why This Happens
To be clear, THDA’s heart is in the right place. Their mission is to help first-time homebuyers, and they’ve done that for decades.
But their system has two big tripwires:
1. They re-pull your credit at the end.
2.They re-underwrite the entire file right before closing.
That means if anything changes — your job, your debts, even a balance increase — the loan can be denied after you’ve paid for your inspection, appraisal, and moving expenses.
Most buyers lose over $1,000 when that happens.
How We Saved It
We switched the buyer into a lender-backed down payment assistance program.
These are different from the state’s THDA program. They’re run directly through the lender — and that changes everything.
• No income caps
• No last-minute re-pulls
• One underwriting process
• Faster, smoother closings
The rate’s a bit higher, but the reliability makes it worth it.
Where the Market’s Headed
This reminds me of 2003–2004. Back then, lenders started experimenting with programs to help buyers get into homes. We’re seeing that again right now.
Some lenders are testing 100% financing, others no-MI loans, and some are using AI underwriting to speed up approvals and lower costs.
It’s an interesting time in the mortgage world — but also one that demands a little caution.
Because not all “free” or “easy” programs are as simple as they sound.
The Takeaway
If your credit score is hovering around 640 or 641, you’re walking a tightrope.
Even a tiny change can drop your score and kill your deal.
So:
• Build in a cushion.
• Don’t max out your qualifications.
• If you can, save 3–3.5% for your own down payment.
You’ll get a better loan, fewer surprises, and more control.
Sometimes patience costs less than heartbreak.
If you’re a Realtor or another loan officer, help your buyers understand how these programs really work. It’s not about pushing one product — it’s about protecting them from last-minute fallout.
And if you’re a buyer who wants help comparing options side by side, just reach out. I’ll show you how each program looks on a spreadsheet — from THDA to lender-backed to saving up on your own — so you can make the best decision for your situation.
Until next time — stay smart, stay strategic, and keep your deals alive.
—Keith
Need help evaluating a property or planning your next purchase?
I can run the numbers for you, check the details, and help you decide what actually makes sense.
📞 Call or text: 615.955.0461
🏠 Learn more: www.keithgoeringer.com
TEMPLATE
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