Tennessee First-Time Home Buyer Grants 2026

Tennessee Home Buyer Programs Compared (2026)

Tennessee buyers can choose from 3 Great Choice Plus options and 2 local programs in this guide. The THDA deferred option and Chattanooga's loan can both disappear entirely if you stay put; the others are repaid.

Sources: THDA program pages and acquisition cost and income limits (08.01.2026); City of Chattanooga program page and guidelines (revised 05.08.2026); The Housing Fund, Nashville 2026 DPA flyer. All checked November 3, 2026.

The honest summary: if you expect to stay at least 10 years, the deferred THDA option is close to a grant. If you might move in 4 or 5 years, it behaves like an interest-free loan you'll repay at the sale, and the amortizing option adds a second monthly payment from day one.

THDA Income and Acquisition Cost Limits by County (August 1, 2026)

THDA sets one $500,000 acquisition cost limit in all 95 counties and income limits that vary by county and household size. According to THDA's limits chart dated August 1, 2026, Davidson County's limit is $139,320 for 1 to 2 people, and the same table applies to Great Choice and to the Freddie Mac HFA Advantage product (for HFA Advantage, the 3+ person figure is the cap regardless of household size).

Source: THDA, "Great Choice and HFA Advantage Mortgage Loan Programs, Acquisition Cost and Income Limits by County," dated 08.01.2026, linked from the Great Choice page (opens in a new tab). Counties are listed by the Census Bureau's July 1, 2025 Tennessee population estimates. In targeted areas, the first-time buyer rule is waived.

Look at the Nashville-area numbers. A household of 3 in Davidson or Rutherford County can earn up to $162,540 and still qualify, so most middle-income Tennessee families fall under the limit. The binding constraint in Middle Tennessee is usually the price, not the income.

What THDA Help Covers in Tennessee's Biggest Counties

Set against Census Bureau QuickFacts median home values (2020-2024 ACS), Grantsights analysis shows the $6,000 deferred option covers just 2.1% of Tennessee's $286,700 median value, which leaves a buyer $4,035 short of a 3.5% FHA down payment. The amortizing option covers the down payment in every county below, but it's the one you pay back monthly.

Calculation: amounts from THDA's Down Payment Assistance page; FHA minimum down payment of 3.5% from HUD's loans page (opens in a new tab). Medians come from Census Bureau QuickFacts (2020-2024 ACS) for each Tennessee county. If you qualify for the $10,000 deferred amount, subtract $4,000 from each gap.

Two takeaways. In Williamson County, the median home is worth $751,900, so a typical home there is out of THDA's reach entirely. And in Davidson and Rutherford, the deferred option covers well under half of an FHA down payment, which is why Nashville-area buyers lean on the amortizing option or outside help.

City and Nonprofit Help in Chattanooga, Nashville, Memphis and Knoxville

Tennessee's 4 largest cities offer very different levels of help, and Grantsights could confirm current terms on an official page for only one of them.

Chattanooga: up to $15,000, forgiven after 30 years

According to the City of Chattanooga's down payment assistance page (opens in a new tab), the city offers up to $15,000 as a 0% deferred loan with no monthly payments. Through a partnership with THDA, eligible buyers may get up to $21,000 in total. The city's guidelines (revised May 8, 2026) say the full balance is forgiven at the end of a 30-year term, isn't prorated, and is due on a sale or a cash-out refinance; a rate-and-term refinance won't trigger repayment. The rules:

• No home owned in the past 3 years, and a home inside city limits priced at $400,000 or less.
• Household income at or below 120% of area median. FY2026 limits, effective June 1, 2026: $81,800 for 1 person, $93,500 for 2, $105,200 for 3, $116,900 for 4.
• At least $1,000 of your own money, a 620 minimum credit score and a homebuyer education course from a THDA-approved provider before closing.
• Funds only cover the verified gap between your resources and the cash needed to close, so not everyone gets $15,000.

Nashville: a nonprofit loan, not a city grant

The Housing Fund, a Nashville nonprofit lender, posts a 2026 down payment assistance flyer (opens in a new tab) offering $5,000 to $35,000 at a 5% fixed rate over 120 or 180 months, for buyers up to 120% of Nashville's area median income. Loans up to $10,000 need a 600 score, larger ones 620, and you need an FHA-approved first lender and THDA-approved education. It's real help, but it's a repayable loan with interest, so compare the monthly cost against THDA's amortizing option before choosing.

Memphis and Knoxville

The City of Memphis down payment assistance page returned a server error when Grantsights checked it on November 3, 2026, so this guide doesn't quote an amount. The City of Knoxville's former downpayment assistance page now returns "page not found." If you're buying in either city, call the city's housing department directly and ask whether a program is funded this year before you count on it.

FHA, VA and USDA Loans in Tennessee

According to THDA's Great Choice page, most Great Choice loans are FHA or USDA-insured, and FHA buyers can borrow up to 96.5% of the price, which is why the 3.5% figure drives the math above.

• FHA-insured Great Choice loans: let you borrow up to 96.5% of the price, so you bring at least 3.5%, which is the FHA minimum according to HUD's loans page (opens in a new tab).
• VA loans: allow no down payment when the price doesn't exceed the appraised value, according to the VA purchase loan page (opens in a new tab). Veterans also skip THDA's first-time rule, and Homeownership for Heroes can cut the rate by up to half a point.
• USDA-RD loans: allow 100% financing on eligible rural addresses through the Great Choice program, per THDA. Our USDA housing grants guide covers USDA's direct loans and repair grants too.

For a side-by-side of the loan types, see the national guide.

What THDA Doesn't Tell You on Its Program Pages

Grantsights compared THDA's homebuyer pages with its limits chart and found 4 gaps worth knowing about.

1. Who gets $10,000 instead of $6,000 isn't explained. The Down Payment Assistance page lists the deferred option as "up to $6,000 or up to $10,000" without saying which buyers get the higher amount. Ask your THDA lender which tier you're in before you write an offer.
2. "Forgiven" has an early-exit catch. The deferred loan is forgiven at the end of 10 years, but THDA says it's due in full if you sell or refinance before then. A refinance in year 9 costs you the whole amount.
3. The recapture tax isn't mentioned. THDA's targeted-areas page notes that Great Choice is funded by bond issues. According to IRS Form 8828 instructions (opens in a new tab), buyers with loans from tax-exempt bonds may owe a recapture tax if they sell within 9 years, capped at 50% of the gain and dependent on income in the year of sale. Ask your lender for the recapture notice at closing.
4. The "new construction" option isn't free money either. The $25,000 option for newly built homes is 0% interest, but it's a 15-year amortizing loan with monthly payments, not a forgivable one. On $25,000, that's about $139 a month for 15 years.

Common Mistakes and Red Flags for Tennessee Buyers

Tennessee buyers run into 4 recurring problems, and most of them come from misreading which option they picked.

• Choosing the amortizing option without pricing the payment. It's a common mistake to take the bigger $15,000 because it's bigger. At the first mortgage's rate over 30 years, it adds a second payment for the life of the loan.
• Underestimating the price problem in Middle Tennessee. Williamson's median is above the $500,000 limit, and Davidson's is $417,400, so many listings won't qualify at all.
• Booking the class too late. THDA strongly encourages finishing education at least 4 weeks before closing, and online students must also complete a follow-up session with a counselor.
• Paying for "grant help." A red flag is anyone charging a fee to unlock a Tennessee home buyer grant. The FTC's government grant scams page (opens in a new tab) says not to pay up-front fees for grants and that the government won't contact you out of the blue. THDA help only comes through approved lenders.

How to Apply for THDA Help, Step by Step

Getting a Great Choice loan with Great Choice Plus takes 6 steps, and THDA treats education as step one, not a box to tick at the end.

1. Take the homebuyer education course. It's required for THDA down payment assistance. Online it costs $100 ($30 through STEP IN), and THDA cites an independent study of its loans finding the course cut the odds of foreclosure by 42%.
2. Check your county limits and score. Use the table above and confirm everyone on the application has at least a 640 score.
3. Get pre-approved by a THDA lender. Ask which Great Choice Plus option you qualify for, and whether the $6,000 or $10,000 deferred tier applies.
4. Add city help if you qualify. In Chattanooga, the lender requests the city's assistance and the funds go straight to the closing agent.
5. Make an offer under $500,000 (and under $400,000 in Chattanooga if you're stacking the city loan).
6. Close and file your papers. Keep the second-mortgage documents so you know your forgiveness date and payoff terms.

For example, a couple in Chattanooga earning $90,000 and buying a $280,000 home with an FHA-backed Great Choice loan would need a $9,800 down payment. They're under both THDA's $101,854 Hamilton County limit and the city's $93,500 limit for 2 people. THDA's deferred option could add $6,000 and the city up to $15,000, which the city says can reach $21,000 combined; specifically, the city's share is limited to the verified gap after the couple puts in their own $1,000. If they stay 10 years, the THDA money is forgiven; the city's loan is forgiven after 30 years, or comes due if they sell first.

A buyer in Murfreesboro on a $380,000 home faces a different trade-off. The $6,000 deferred loan leaves her about $7,300 short of a 3.5% FHA down payment, while the amortizing option covers it with $15,000 but adds a 30-year payment. If she can save the difference, the deferred option is the better deal; if not, the amortizing loan is worth it only if the extra payment fits her budget.

If THDA Help Isn't Available or You're Denied

THDA doesn't post a funding status on its homebuyer pages, so your THDA lender is the only reliable source on current availability. Chattanooga's guidelines say its assistance is subject to funds and can be changed or suspended.

• If you're over the income limit: check whether the address is in a targeted area. Targeted rural counties allow $113,880 for 1 to 2 people, more than Shelby or Knox.
• If you've owned before: you can still qualify in the 43 targeted counties, in targeted tracts in 15 more counties, or as a qualified veteran.
• If your score is under 640: THDA points you to an approved counselor. Our guide on how to apply for grants as an individual explains how to spot real help.
• If you need to wait: our rental assistance programs guide and HUD income limits guide cover options while you save, and the home repair grants guide covers help after you buy.

Local programs in Tennessee are often funded with HUD's HOME money; the HUD HOME program guide explains how to find one near you.

For a quick check of which official programs might fit, the free eligibility checker points you to official routes. It doesn't give out grants or apply for you.

If you're buying in a metro that crosses a state line, compare the Georgia and Alabama guides.

Sources

• THDA, Great Choice Home Loan (opens in a new tab) (checked November 3, 2026)
• THDA, Down Payment Assistance (Great Choice Plus) (opens in a new tab)
• THDA, Acquisition Cost and Income Limits by County (opens in a new tab) (dated 08.01.2026)
• THDA, Repeat Homebuyers (opens in a new tab) and Targeted Areas (opens in a new tab)
• THDA, Advantages of Great Choice Home Loans (opens in a new tab)
• THDA, Homebuyer Education (opens in a new tab) and STEP IN Program (opens in a new tab)
• City of Chattanooga, Down Payment Assistance Program (opens in a new tab) and Program Guidelines (opens in a new tab) (revised May 8, 2026; income limits effective June 1, 2026)
• The Housing Fund, Nashville 2026 Down Payment Assistance (opens in a new tab)
• City of Memphis, Down Payment Assistance Program (opens in a new tab) (page returned a server error on November 3, 2026)
• IRS, Instructions for Form 8828 (opens in a new tab)
• HUD, Loans (FHA) (opens in a new tab)
• VA, VA purchase loan (opens in a new tab)
• U.S. Census Bureau, QuickFacts: Tennessee and its largest counties (opens in a new tab) and Williamson, Montgomery, Sumner and Wilson counties (opens in a new tab) (median value of owner-occupied homes, 2020-2024; population estimates July 1, 2025)
• FTC, Government Grant Scams (opens in a new tab)