Tennessee Housing Development Agency (THDA) Down Payment Assistance Program

Tennessee Housing Development Agency (THDA) Down Payment Assistance Program: Your Roadmap to a $15,000 Head Start

You’ve budgeted, browsed listings, and binge-watched renovation shows—yet the down payment still feels like an unclimbable hill. Good news: the Tennessee Housing Development Agency (THDA) Down Payment Assistance Program hands eligible buyers up to $15,000 to conquer that hill and unlock the front door. This guide breaks the program into bite-sized, action-ready steps so first-time buyers across Tennessee can move from dreaming to closing.

Why THDA Matters in Tennessee’s Red-Hot Housing Market

Home prices across the Volunteer State jumped 32% between 2020 and 2023, according to data aggregated from regional MLS boards. Wages lagged. As a result, many renters feel like marathoners running on a treadmill—lots of sweat, no forward motion. That’s where the THDA program becomes a game-changer: it compresses years of saving into a single grant or second mortgage, clearing the gate for thousands of families each year.

• Up to $15,000 in down payment funds
• Can be paired with 30-year fixed THDA mortgage rates
• Geared toward first-time and repeat buyers in targeted counties
• Income and purchase-price limits that adjust by county and household size

How Does the THDA Down Payment Assistance Work?

The Tennessee Housing Development Agency (THDA) Down Payment Assistance Program comes in two main flavors:

1. Great Choice Plus – Second Mortgage
   A 0% interest, deferred second lien for up to $6,000. It’s forgiven entirely after 30 years—or whenever you pay off or refinance your first mortgage.
2. Great Choice Plus – Payment Assistance
   A forgiven-at-10-years second lien of up to $15,000 in select “targeted” zip codes (often rural or revitalization areas). Live in the home a decade and it evaporates like morning mist.

Both options pair exclusively with a THDA Great Choice Home Loan. That loan offers competitive rates, a standard 30-year term, and flexible underwriting designed for buyers with good—not perfect—credit.

Step-by-Step Funding Timeline

Timelines trip buyers up. Here’s a quick sequence so you can plan with precision:

1. Complete a HUD-approved homebuyer education course (8 hours, in-person or online).
2. Get pre-approved by a THDA-participating lender.
3. Find your house, sign the purchase contract, and lock in the THDA rate.
4. Lender submits your Great Choice and down payment assistance files to THDA.
5. THDA issues a commitment letter—typically within five business days.
6. You close, receive keys, and voilà: your assistance funds transfer at the table.

Who Is Eligible for THDA Down Payment Assistance?

Eligibility isn’t a single switch—it’s a panel of circuit breakers. Flip them all on, and the assistance flows.

• First-time buyer status (no ownership in past three years) or purchase in a federally designated targeted county.
• Minimum 640 credit score (some lenders may overlay a 660 requirement).
• Income caps that range from roughly $82,000–$119,000, depending on county and household size.
• Purchase-price limits, commonly $375,000 in urban areas and $320,000 in rural counties, but updated annually.
• Debt-to-income ratio below 45% in most scenarios.
• Completion of THDA-approved homebuyer education.

Tip: Some counties labeled “targeted” bump both income and price ceilings higher, dramatically expanding who qualifies. A Knoxville buyer making $95,000 might be over the limit for a non-targeted county but slide easily under Knox County’s caps.

Real-Life Story: How One Clarksville Family Leveled Up

Numbers are great, but stories stick. Meet Jasmine and Logan Ruiz, dual military veterans stationed at Fort Campbell. Their lease clock was ticking, and a two-point mortgage rate hike crushed hopes of buying in 2022. A savvy loan officer introduced them to the Tennessee Housing Development Agency (THDA) Down Payment Assistance Program. With a household income of $94,000 and a VA disability supplement, they sat just under Montgomery County’s income ceiling. Instead of draining their savings, they snagged $12,500 in Great Choice Plus assistance and closed on a $305,000 three-bedroom without touching their emergency fund. Jasmine calls it “the promotion we didn’t have to earn.”

Top PAA Question #1: What Credit Score Is Needed for THDA?

Google’s most common query cuts straight to the chase: What credit score do I need? THDA sets its baseline at 640 FICO. Some partner lenders layer on a 660 minimum, especially if your debt-to-income ratio hovers near the cap. The score must be verifiable with at least two repositories (Experian, Equifax, or TransUnion). If you’re at 630, consider a rapid-rescore strategy: pay revolving balances down to 10% utilization and correct reporting errors. A 10-point boost is often doable within 30 days—fast enough not to derail your purchase contract.

Top PAA Question #2: Do You Have to Repay THDA Down Payment Assistance?

The short answer: it depends on the type of assistance you choose. The standard Great Choice Plus second mortgage (up to $6,000) is deferred and due once you refinance, sell, or finish the 30-year term. The $15,000 variant in targeted areas is forgiven after 10 years at 0% interest, provided you remain in the home. Move out in year six, and the unforgiven balance plus prorated share becomes due at closing. Think of it like a fade-to-zero balance: the longer you stay, the lighter the repayment load.

Hidden Perks Most Buyers Miss

Beyond the cash infusion, THDA memberships unlock two under-the-radar benefits:

1. Discounted Home Warranty – Several Tennessee warranty providers rebate $100–$150 for THDA buyers, citing reduced claim risk after homebuyer education.
2. Energy Upgrade Rebates – THDA collaborates with TVA to offer up to $500 toward smart thermostats, attic insulation, and low-flow fixtures when installed within 12 months of closing.

Neither perk shows up on most lender flyers. Ask proactively, and you may pad your savings even further.

Cost Breakdown: THDA vs. Conventional 3% Down

*PMI estimate for 720 credit score. Your rate may vary.

How to Apply: Checklist You Can Copy-Paste

Print it, screenshot it, tattoo it—whatever keeps you organized:

• ☐ Pull free annual credit report & scrub errors.
• ☐ Complete THDA-approved homebuyer course.
• ☐ Gather last 60 days of pay stubs & two years of W-2s.
• ☐ Ask employers for written VOE (Verification of Employment) if 1099 or recently promoted.
• ☐ Compare at least three THDA-participating lenders; rates differ!
• ☐ Secure a fully underwritten pre-approval letter.
• ☐ Shop homes within county price limits.
• ☐ Submit contract and **THDA Loan Submission Package** within 45 days of closing date.

FAQ

Ready to Turn the Key? Let’s Talk Strategy.

The Tennessee Housing Development Agency (THDA) Down Payment Assistance Program puts an extra $15,000 within arm’s reach, but navigating guidelines, income caps, and ticking contract clocks can feel like assembling IKEA furniture without the instructions. Our team has closed more than 250 THDA loans in the past three years, translating acronyms and underwriting jargon into clear next steps.

Call us at (615) 555-HOME, or book a 15-minute strategy session online. We’ll map your eligibility, run payment scenarios, and connect you with a lender whose niche is THDA—not just mortgages. By this time next month, that house you saved on Zillow could show your name on the deed.

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