First-Time Home Buyer Programs in Tennessee 2026

In Tennessee, first-time buyer loans come from the Tennessee Housing Development Agency (THDA) through approved lenders. The main product is the Great Choice Home Loan, a 30-year fixed mortgage that needs a 640 score from everyone on the application. Great Choice Plus adds a second loan: up to $6,000 or up to $10,000, forgivable after 10 years, or 5% of the price up to $15,000 repaid monthly.

What THDA means by “first-time,” and where the rule is dropped

THDA’s eligibility page defines a first-time homebuyer as “anyone who has not occupied a home they owned as their principal residence during the past three years.” It adds that “All borrowers obligated on the loan must be first-time homebuyers”, so one co-borrower’s recent ownership affects the whole application.

The rule is waived in three situations:

• Targeted areas. THDA’s 2026 limits chart marks 43 whole counties as targeted, among them Lauderdale and Lake. Its footnote reads “First–time homebuyer requirement is waived”. Another 21 counties, Davidson, Shelby, Knox and Hamilton among them, carry an asterisk: “some census tracts in county are targeted”. There the waiver depends on the exact tract, listed on THDA’s targeted areas page.
• Veterans and qualified military. THDA says “Veterans (with DD-214 honorable discharge or DD-4 re-enlistment form) do not have to be a first-time homebuyer to obtain a THDA mortgage.” Its Heroes program lists the waiver for “qualified military or veterans”, and its repeat-buyer list adds a “Qualified military and/or spouse” route.
• The Freddie Mac HFA Advantage loan. It carries “No first time homebuyer requirement” (details below).

Great Choice Home Loan: the fixed terms

Every THDA mortgage is a 30-year fixed-rate loan, and THDA forbids buying down the rate: “The borrower may not ‘buy down’ the mortgage rate by paying discount points.” Other conditions from THDA’s eligibility and program pages:

• Minimum credit score 640 for “everyone on your loan application”.
• Insurance: “All mortgages must be insured or guaranteed by VA, FHA, RD, or an acceptable private mortgage insurance company” when a conventional loan’s loan-to-value ratio is above 78%. THDA adds that “Most Great Choice Home Loans are insured by FHA or USDA-RD”, and says that means “a minimum of 3.5% for a down payment” on FHA; its Heroes program allows up to 100% financing with VA or USDA-RD.
• Principal residence only. Investment property, second homes and business use are excluded.
• Up to four units are allowed if you live in one, but “Rental income from the additional units will count as income towards the borrower’s household income limit.”
• Loans are assumable by a qualifying buyer and can be prepaid without penalty.
• Off-site manufactured homes qualify, and THDA handles de-titling the home.

THDA’s eligibility page says its mortgages are “subject to federal recapture provisions, if the home is sold within the first nine years.” THDA’s lender guide applies this to Great Choice and Heroes loans; it lists the Freddie Mac HFA Advantage loan as not subject to recapture.

Income and price limits on the August 2026 chart

THDA’s limits chart for the Great Choice and HFA Advantage programs is dated 08.01.2026. It sets the acquisition-cost (price) limit at $500,000 in all 95 counties. Income limits vary by county and household size:

The other counties are on the THDA first-time homebuyer page chart. Great Choice counts total household income. HFA Advantage uses a different test, covered next.

Freddie Mac HFA Advantage: THDA’s conventional option

THDA’s buyer page names Freddie Mac HFA Advantage as its “Conventional home loan product with Down Payment Assistance”. It is “an insured conventional mortgage loan” with its own rules:

• No first-time homebuyer requirement.
• “Qualifying income of the borrower(s) on the loan is used instead of household income limits.” The chart footnote says the 3+ person figure “is maximum allowed for HFA Advantage; 1-2 Persons does not apply.”
• “Flexibility for loan qualification for borrowers with student loan debt”.
• Down payment help as HFA Advantage Plus: “$6,000 in the form of a forgivable second mortgage loan” at 0%, forgiven after 10 years, or “up to 5% (maximum of $15,000) of the sales price” repaid monthly over 30 years.

For a repeat buyer outside a targeted area who is not a veteran or qualified military, HFA Advantage is the THDA route that remains. It is also how repeat buyers can use THDA financing for an off-site manufactured home.

Great Choice Plus: pick one of the second loans

THDA’s down payment page lists the choices:

THDA’s page does not say what decides the $6,000 versus $10,000 deferred amount, so ask the lender. The money can go to “any loan-related costs, including your down payment and/or closing costs.” THDA also warns that breaking the terms of either loan can bring “penalties”, “including immediate repayment.” The Tennessee down payment assistance guide goes deeper on the DPA side.

Homeownership for Heroes: a rate cut for listed jobs

Heroes is not separate money. It keeps “all the benefits of our Great Choice Home Loan” and adds a “Reduced interest rate”. THDA’s lender page puts the cut at “up to a ½% reduction”. On the buyer page the program is “only available on FHA, USDA, and VA Loans”. Eligible jobs:

• active-duty military, National Guard and veterans;
• EMTs and paramedics;
• firefighters;
• state and local law enforcement officers;
• K-12 teachers “employed in a full-time teaching position in a Tennessee Public or Private School”.

One detail trips people up. The first-time waiver in Heroes covers “qualified military or veterans”, not the other professions. A teacher or firefighter who owned and lived in a home in the last three years still needs a targeted area, or the HFA Advantage route.

The homebuyer class THDA accepts

“THDA requires homebuyer education for all borrowers applying for a THDA mortgage loan.” Timing matters too: “we strongly encourage you to complete the class at least four weeks before your closing date.”

• Classroom (virtual or in person): at least 6 hours on the “Realizing the American Dream” curriculum. The fee is set by the agency, between $25 and $100 per household.
• Online through eHome America: $100 per household, plus a required one-hour follow-up with a counselor by phone or in person.
• Certificate: valid 12 months, and “THDA does not issue refunds.”
• Not accepted: THDA names “CreditSmart, Home Ready, FrameWorks” as courses it does not accept.
• STEP IN discount: employees of participating employers, including State of Tennessee agencies, pay $30 instead of $100 for the online course.

Applying

You apply through a THDA-approved lender, found on THDA’s lender search. THDA suggests taking the class first. The lender checks your score, income and county limit. If you qualify for Great Choice, you can apply for Great Choice Plus with it. For a wider lender comparison, see our Southern lenders roundup, then get pre-approved. Closing costs in Tennessee covers what is due at closing.

Tennessee buyer FAQ

My co-borrower lived in a home they owned two years ago. Can we use Great Choice?

Not outside a targeted area, because THDA requires that “All borrowers obligated on the loan must be first-time homebuyers”. A veteran co-borrower is exempt. The HFA Advantage loan has no first-time requirement at all.

Can I pay points to lower a THDA rate?

No. THDA says the borrower “may not ‘buy down’ the mortgage rate by paying discount points.” The rate reduction THDA does describe is the Heroes discount for eligible jobs.

Is the $10,000 Great Choice Plus a grant?

No, it is a 0% second mortgage with no payments. It is forgiven only at the end of the 10-year term and is due in full if you sell or refinance before then.

I’m buying in Nashville. Do I have to be a first-time buyer?

Yes, unless the home sits in one of Davidson County’s targeted census tracts. The chart marks Davidson as only partly targeted, so check the tract on THDA’s list. If you are a veteran or qualified military, the waiver applies in all areas of Tennessee.

Does an online class from another provider count?

Only the curricula THDA names count: Realizing the American Dream, Finally Home, and eHome America online. It does not accept CreditSmart, Home Ready or FrameWorks.

Calculators: mortgage, down payment, affordability. Loan types: FHA requirements, VA loans, FHA vs. conventional. More on the state is in the Tennessee hub, and the national first-time buyer overview compares other states. Neighbors: Kentucky, Georgia, North Carolina.