Great Choice Plus Down Payment Assistance First-Time Homebuyer Assistance Programs

Great Choice Plus Down Payment Assistance: Your Tennessee Home-Buying Shortcut

Buying a first home can feel like trying to summit Clingmans Dome in flip-flops—steep, slippery, and downright exhausting. The Great Choice Plus Down Payment Assistance program exists to swap those flip-flops for sturdy hiking boots by supplying the cash you need for a down payment and closing costs. If you plan to plant roots anywhere from Memphis blues country to the foothills of the Smokies, keep reading: this guide unpacks everything you must know about Tennessee’s flagship down-payment lifeline.

Why Down-Payment Help Matters in Tennessee Real Estate

The median sales price for an existing Tennessee home crossed $321,000 in early 2024, according to multiple listing data aggregated by local REALTORS®. At a minimum 3% down, a buyer still needs nearly $10,000 in cash—before counting inspection fees, title work, and prepaid taxes. Household savings, however, lag behind; the Federal Reserve’s most recent survey reports that 35% of renters have no emergency fund at all. That savings gap leads many would-be owners to stay locked in high-rent apartments even when a mortgage payment would be cheaper.

Enter Great Choice Plus: a program specifically designed by the Tennessee Housing Development Agency (THDA) to bridge that savings divide.

What Is the Great Choice Plus Down Payment Assistance Program?

Great Choice Plus is a second-mortgage product that piggybacks on a borrower’s main THDA Great Choice first mortgage. The “Plus” portion kicks in up to $6,000 toward the down payment and/or closing costs—enough to cover FHA’s entire 3.5% down payment on a $171,000 home or to slash conventional loan requirements.

Two Flavors of Help: Deferred vs. Amortizing Second Loan

• Deferred Option: 0% interest, no monthly payments, forgiven after 30 years—or earlier if you keep the home 15 years then pay the remaining balance at sale.
• Amortizing Option: 15-year term at the same fixed rate as your first mortgage; builds credit because you make small monthly payments.

Your lender will let you choose between the two once you meet the underwriting criteria.

How Does Great Choice Plus Down Payment Assistance Work?

This is one of the most-asked questions on Google, so let’s demystify it step by step.

1. Start with a THDA-approved lender. Not every bank or broker can originate this loan; the THDA maintains a statewide roster.
2. Qualify for the Great Choice first mortgage. That means meeting credit, income, and purchase-price guidelines (details below).
3. Choose your Plus option. Decide between deferred or amortizing assistance based on your monthly budget and long-term goals.
4. Complete the home-buyer education. A short online or in-person course is mandatory and costs roughly $99.
5. Close on your home. At the settlement table, the Great Choice Plus proceeds show up as a second lien, covering down-payment or closing-cost obligations so you can bring far less cash—or none at all.

Because the two loans are bundled, underwriting happens in tandem, saving you time compared to juggling multiple grant applications.

Who Can Qualify for Great Choice Plus?

Eligibility focuses on three pillars: first-time status, income, and credit.

First-Time or Targeted-Area Buyer

You must be a first-time buyer or purchase in a federally designated Targeted Area. These zones, scattered across 60 Tennessee census tracts, were chosen to stimulate homeownership and may waive the first-time requirement.

Income & Purchase-Price Caps by Region

THDA adjusts limits yearly and lists them by county groupings. As of 2024:

• Nashville MSA: $116,250 household income cap; $588,104 purchase-price ceiling.
• Memphis MSA: $101,520 income; $481,176 purchase price.
• Chattanooga & Knoxville: Caps hover near $92,000 income; $481,176 price.
• Rural Counties (e.g., Giles, Hancock): $79,680 income; $404,400 price.

Source: THDA 2024 program matrix, interpreted and rounded.

Credit Snapshot

• Minimum 640 FICO for FHA or USDA; 680 for conventional. • Debt-to-income ratio not to exceed 45% (some compensating factors allow 48%). • At least three trade lines reporting for 24 months—non-traditional credit (utilities, cell phone) may substitute.

How Much Money Can I Receive Through Great Choice Plus?

The program currently caps assistance at $6,000. While that number is fixed statewide, its impact varies dramatically by loan type and purchase price.

Real Numbers: Sample Purchase Scenarios

*Assumes seller pays remainder of costs.

Even when $6,000 doesn’t cover everything, it can slash the cash you need by 70–90%. That can be the difference between “someday” and “this spring.”

Step-by-Step Application Roadmap

Picture the process as a funnel—wide at the top, narrow by closing day.

1. Pre-qualify online or by phone. Lenders will review income, assets, and credit before issuing a pre-approval letter.
2. Finish THDA’s home-buyer education early. Graduates get a certificate valid for one year; completing it upfront prevents last-minute delays.
3. Go house hunting. Work with a buyer’s agent familiar with THDA guidelines—particularly useful for spotting Targeted Areas.
4. Lock your rate. THDA offers competitive, below-market fixed rates posted daily at 11 a.m. Central.
5. Undergo simultaneous underwriting. Your file flows to THDA after lender approval, cutting a second review timeline to 5-8 business days in most cases.
6. Close and celebrate. Expect to sign two sets of mortgage docs at the settlement table: one for the main loan, one for the Plus second lien.

Documents You’ll Need

• Two months of bank statements and pay stubs
• Last two federal tax returns (full 1040)
• Government-issued photo ID and Social Security card
• Proof of home-buyer education completion
• Gift letters if relatives contribute additional funds

Pros, Cons, and Pro Tips

• Pro: 0% or low-rate money beats credit-card or 401(k) withdrawals.
• Pro: Funds can also cover prepaid escrows—saving you from an empty wallet after closing.
• Con: Assistance is a lien; refinance or sell too soon and it must be repaid (unless deferred option meets forgiveness timeline).
• Con: Income limits may squeeze dual-earner households in hot metros.

Combining Great Choice Plus With Other Aid

THDA allows layering of local grants such as Chattanooga’s $7,500 HOMEfund or Memphis Dream Maker. The key is “no duplication of benefit”—translation: total aid cannot exceed actual cash needed. A savvy lender will structure credits so each dollar sticks rather than evaporates in guideline conflicts.

Tennessee First-Time Buyer Case Study

Carla R., a public-school music teacher in Jackson, had $2,900 in savings—barely enough to cover earnest money, let alone a down payment. Her lender pre-qualified her for FHA at 5.875% but required $6,400 down. By pairing the loan with Great Choice Plus, Carla needed only $400 more at closing (borrowed on payday, repaid the next week). Today she owns a three-bed ranch with a piano room, and her mortgage is $92 less than her old rent. A decade from now, that $6,000 will either be forgiven or nearly paid off, proof that small programs can create big life changes.

Frequently Asked Questions

Is the Great Choice Plus assistance forgivable?

The 0% deferred option is forgiven after 30 years or proportionally reduced between years 11–30. The amortizing option is not forgiven; you repay it over 15 years.

Can I use Great Choice Plus on a duplex?

Yes—if the property is one unit you will occupy. Two-unit homes (duplexes) are allowed under FHA or conventional financing, but income limits still apply.

Does the program work with VA loans?

No. Great Choice Plus pairs only with THDA’s proprietary Great Choice first mortgage, which mirrors FHA, USDA, or conventional pathways.

What happens if I refinance?

You must either pay off or subordinate the second lien. THDA may approve subordination for rate-and-term refinances but rarely for cash-out.

Ready to Turn the Key?

The Great Choice Plus Down Payment Assistance program has already helped more than 125,000 Tennesseans step over the threshold into homes of their own. If you’re tired of paying your landlord’s mortgage, talk with an approved THDA lender this week. Our team keeps a daily beat on rates, county-by-county limits, and hidden local grants that can stretch your budget even further. Reach out now, and let’s plot your unique path from apartment keys to housewarming parties.

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