Tennessee Has Money to Help You Buy a Home. Most People Don't Know It Exists.

I talk to buyers every week who have been saving for years trying to hit a down-payment number they think they need. They are sitting on $8,000 or $10,000 and feel like they are still not close. And I have to tell them: there is a state program that could cover most of what they are missing, and nobody told them about it.

That program is THDA — the Tennessee Housing Development Agency. It has been around for decades. It is not a gimmick. It is state money, and a lot of it goes unused because buyers do not know to ask.

What THDA actually is

THDA exists to help Tennessee residents buy homes. The main product is the Great Choice Home Loan: a 30-year fixed-rate mortgage. The rate is set by THDA. No adjustable rate. No balloon. No surprise in year five.

Most Great Choice loans are FHA or USDA-backed, which means you can put as little as 3.5% down. If you need help with that down payment, Great Choice Plus layers on top.

The down payment help: two options

Option 1 — deferred, no monthly payment. You can borrow up to $10,000 as a second loan at 0% interest. You make no payments. It is forgiven at the end of 10 years. If you sell or refinance before then, you pay it back in full.

Option 2 — amortizing, monthly payment. You can borrow up to 5% of the purchase price, maxing out at $15,000. This one has a monthly payment: a 30-year amortizing loan at the same rate as the first mortgage. If you need more money up front and can handle a slightly higher payment, this is how you get it.

Neither is free money in the strictest sense. The deferred option is about as close as it gets.

Who qualifies

Credit: everyone on the application needs at least a 640. Not just the primary borrower. If one person is at 620, the loan does not work. If you are close, THDA has approved counselors who can help before you apply.

Income: household income has to fall under the county limit. These limits were updated in May 2026. For the Nashville metro — Davidson, Williamson, Rutherford, Sumner, Wilson, and Robertson — the limit is $137,760 for 1 or 2 people, and $160,720 for 3 or more. You do not have to be low income to qualify.

Purchase price: $500,000 or under, statewide. In most of Middle Tennessee that still leaves options, especially Murfreesboro, Smyrna, Lebanon, Gallatin, and the outer Nashville suburbs.

First-time buyer: most THDA loans require that you have not owned a home in the last three years. Exceptions exist. Buying in one of Tennessee's 43 targeted counties, or in certain census tracts, waives that rule. Military and veterans get the waiver statewide. Williamson County is not a targeted county. Confirm the current list on THDA.org.

Homeownership for Heroes

If you are active-duty military, a veteran, a firefighter, an EMT, a law enforcement officer, or a K-12 teacher in a Tennessee public or private school, THDA has a separate track. You get a reduced rate on top of Great Choice. The first-time buyer requirement is waived everywhere in the state. And if you are using VA or USDA, you can borrow up to 100% of the purchase price. If you fall in those categories and you are not using this, you are leaving money on the table.

The homebuyer education class

To use Great Choice Plus, you complete a THDA-approved course. It costs $100, or $30 if your employer is in STEP In (state government employees qualify). Online or classroom.

Some buyers treat it as a hurdle. Push back on that. An independent study found buyers who complete the course are 42% less likely to go into foreclosure. It covers budgeting, loan documents, closing, and what to do if you hit trouble after you buy. The certificate expires after 12 months. Sign up early so you are not redoing it the week of closing.

How this looks on a real purchase

Say you are buying a $350,000 home in Murfreesboro. FHA down payment at 3.5% is $12,250. Great Choice Plus amortizing can go up to $15,000 — enough to cover the down payment and leave a little for closing costs. Out-of-pocket at closing can be close to zero, depending on how the deal is structured. That is what the program is designed to do. It is an example, not your quote.

What THDA does not cover

THDA loans are not the fastest to close. State agency plus a second loan means more paperwork. If the seller wants 21 days, THDA may not be the tool. It is better for buyers with a little more time.

Not every lender is THDA-approved. If you are working with someone who is not, they cannot offer this even if you qualify. I am approved. If you want to know whether you qualify, we can run it in about 10 minutes.

If your score is under 640, you have owned a home recently, or you need more than $15,000, THDA may not fit. There is another program worth knowing: The Housing Fund, a nonprofit that goes up to $35,000 and does not require first-time buyer status.