Down Payment Assistance Programs in Tennessee

What Down Payment Help Is Available in Tennessee

Tennessee offers down payment assistance through state programs, local housing authorities, and nonprofit lenders—but which programs you can use depends on your income, the county you're buying in, and the type of property. The Tennessee Housing Development Agency (THDA) runs the main state program, but many counties and cities run their own funds alongside it. Some programs give you a grant (money you don't repay), others give you a second loan at low or no interest, and some combine both.

The fastest way to find what's actually open right now is to contact your county's housing authority or call 211 Tennessee. Both can tell you in one conversation which programs have money available, because many funds run out and reopen later in the year. A real estate agent or mortgage lender can also point you toward active programs, though they may not know about all of them.

Key Takeaways

• THDA's Homeownership Programs provide down payment grants and low-interest second mortgages, but income limits and property price caps vary by county.
• Many counties and cities run their own down payment programs alongside state programs, so you may have multiple options in your area.
• Your county housing authority or 211 Tennessee can tell you which programs currently have funding available, since many close when money runs out.
• Most programs require you to complete a homebuyer education course before you can receive funds.
• Down payment grants do not have to be repaid, but second mortgages (even at zero interest) are loans that appear on your credit report.

THDA Programs: The Main State Option

The Tennessee Housing Development Agency runs two main programs for down payment help. The THDA Homeownership Program provides a grant of up to 5 percent of the purchase price (in most counties) plus a second mortgage at 0 percent interest for another portion of the down payment. The grant is money you keep; the second mortgage is a loan you repay over time, usually 30 years.

Income limits depend on which county you're buying in. In rural and less expensive counties, the limit may be around $65,000 to $75,000 for a single person; in Nashville and Shelby County (Memphis), limits are higher. Property price caps also vary by county—you cannot buy a home above a certain price and still use THDA money. These numbers change, so you need to check the current limits for your specific county on the THDA website or by calling your lender.

You must be a first-time homebuyer (or meet other specific conditions) and have a mortgage loan already approved or in process. THDA does not give you money directly; instead, your mortgage lender processes the grant and second mortgage as part of your loan package. This means you need a lender who works with THDA programs—most banks and credit unions do, but it's worth confirming.

County and City Programs Beyond THDA

Many Tennessee counties and cities have their own down payment assistance funds, separate from THDA. Nashville's Metropolitan Development and Housing Agency (MDHA) runs programs for Davidson County residents. Shelby County (Memphis) has its own offerings. Knoxville, Chattanooga, and other cities often have local programs too. These may have different income limits, property price caps, and grant amounts than THDA.

Some local programs are more flexible—they may allow non-first-time buyers, accept higher incomes, or cover more expensive homes. Others are more restrictive. The only way to know what's available in your county is to contact the housing authority directly or ask your mortgage lender which programs they can access for you.

Nonprofit Lenders and Community Organizations

Nonprofits like Habitat for Humanity, local community development corporations, and credit unions sometimes offer down payment assistance separate from government programs. These organizations may have fewer income restrictions, lower credit score requirements, or more flexible terms than state or county programs. They often combine down payment help with homebuyer counseling and may require you to volunteer or participate in their programs.

Search online for "down payment assistance [your county name] Tennessee" or call 211 to ask about nonprofit options in your area. Your mortgage lender may also know of community programs they work with regularly.

The Homebuyer Education Requirement

Almost all Tennessee down payment programs require you to complete a homebuyer education course before you receive funds. These courses cover budgeting, credit, the mortgage process, home maintenance, and what to expect as a homeowner. Most are offered online and take 4 to 8 hours to complete. Some programs have a list of approved courses; others accept any HUD-approved course.

The course is free or low-cost through most housing authorities and nonprofits. Completing it before you apply can speed up the process, since you won't have to wait for a course slot to open up. Some programs require the course to be done within a certain time before closing (often 12 months), so timing matters.

How to Start: Steps and Timeline

First, contact your county housing authority, call 211 Tennessee, or speak with a mortgage lender about which programs are currently open. Ask specifically which programs have money available right now—this changes month to month. Get the name of each program, the income limit, the property price cap, and the maximum grant or loan amount.

Next, complete a homebuyer education course if you haven't already. Then, work with a mortgage lender who participates in the programs you're interested in. The lender will submit your information to the program as part of your mortgage application. You'll need to provide proof of income, employment, credit history, and a signed purchase agreement or letter of intent.

Approval typically takes 2 to 4 weeks once your mortgage application is submitted, though it can be faster or slower depending on the program and how quickly you provide documents. The grant and second mortgage are usually funded at closing, when you sign the final paperwork and receive the keys.

What Happens If a Program Runs Out of Money

Many Tennessee down payment programs have a fixed budget each year. Once the money is gone, the program closes until the next funding cycle. Some reopen in a few months; others wait until the next calendar year. If your program closes before you close on your home, you may be able to switch to a different program, or you may have to wait for funding to reopen.

This is why checking with your housing authority or 211 early matters—they can tell you how much money is left in each program and whether it's likely to last through your expected closing date. If a program is running low, ask about backup options before you commit to it.

Frequently Asked Questions

Do I have to repay a down payment grant?

No. A grant is money you keep and do not repay. However, some programs require you to repay the grant if you sell the home within a certain number of years (often 5 to 10). Check the terms of your specific program. A second mortgage, even at 0 percent interest, is a loan you must repay.

Can I use down payment assistance if I'm not a first-time homebuyer?

Most THDA programs require first-time homebuyer status, but some county and nonprofit programs do not. Ask your housing authority or lender which programs allow repeat buyers. Definitions of "first-time" vary—you may may have access to even if you owned a home years ago.

What if my credit score is low?

THDA and most government programs have minimum credit score requirements, often around 580 to 620. If your score is lower, nonprofit lenders and some community programs may be more flexible. Talk to a mortgage lender about your options; some can help you improve your score before applying.

Can I use down payment assistance to buy a mobile home or investment property?

Most programs are for primary residences only—the home you will live in. Mobile homes and investment properties are usually not covered. Ask your lender or housing authority to confirm what types of properties each program accepts.

How do I know if I make too much money to use these programs?

Income limits are set by program and county. Call your housing authority or 211 with your household income and family size, and they can tell you which programs you may use. Limits are usually based on area median income, so they're higher in expensive counties like Davidson and Shelby.