With the ability to secure up to 96.5% of the home price through THDA loans, anyone can achieve their dream of buying a home in Tennessee.

For informational purposes only. Always consult with a licensed mortgage or home loan professional before proceeding with any real estate transaction.

4 Things to Know About the THDA Loan

• THDA offers 30-year fixed-interest rate loans for first-time homebuyers.
• Most loans are insured by FHA or USDA-RD, enhancing accessibility.
• Buyers can use the Great Choice Plus Program for down payment assistance.
• Homebuyer education is mandatory for THDA loan recipients.

THDA Loan Programs

The Tennessee Housing Development Agency (THDA) provides financial assistance to approved buyers, underscoring its mission to make homeownership dreams a reality for many Tennesseans. Great Choice and Homeownership for Heroes are the two main programs, each offering unique benefits to help you on your home-buying journey in Tennessee.

Great Choice Home Loan

The Tennessee Housing Development Agency (THDA) Great Choice Home Loan is a prominent program aimed at making homeownership more accessible and affordable for qualified residents in Tennessee. This primary loan program offers 30-year fixed-rate mortgages to eligible borrowers, focusing mainly on first-time homebuyers, though repeat homebuyers may also qualify under certain conditions.

A significant feature of the program is its down payment and closing cost assistance, available through the Great Choice Plus program. This assistance comes in two options: a deferred option providing $6,000 as a forgivable second mortgage with no required payments, and an amortizing option offering up to 6% of the home's purchase price as a repayable second mortgage. Additionally, the program sets income limits based on county and household size and purchase price limits that vary by county, ensuring that assistance targets those in need.

Eligibility for the Great Choice Home Loan also includes a minimum credit score requirement of 640 for all applicants and the completion of a homebuyer education course for those receiving down payment assistance.

Homeownership for Heroes

The Homeownership for Heroes program provides financial assistance and added benefits for qualified military personnel, veterans, law enforcement officers, EMTs, and firefighters. Through this program, individuals can take 0.5% off the usual interest rate and have the first-time homeowner requirements waived.

Qualified home buyers can borrow up to 100% of the home's purchase price with a VA loan or USDA-RD loan—or 96.5% with an FHA loan. Similar to the Great Choice program, Homeownership for Heroes is compatible with Great Choice Plus assistance for down payment or closing costs.

To access these benefits, home buyers can tap into the THDA network, which includes approved lenders and Realtors. By working with professionals, you can confidently navigate the homeownership process with ease.

THDA Loan Eligibility Requirements

To qualify for a Tennessee Housing Development Agency loan, you'll need to meet certain criteria related to your credit score and income, along with completing the mandatory Homebuyer Education program. What's more, the maximum home purchase price can vary depending on the county you're looking to buy in.

Credit Score & Income

Maintaining a minimum credit score of 640 is crucial for individuals seeking eligibility for a THDA loan, and there are also income limits based on county and household size that determine eligibility for this mortgage program. For instance, in Shelby County, there is an income limit of $81,000 for all household sizes. Conversely, the income limit in Davidson County is $102,500 for all household sizes.

Ultimately, THDA loans are designed to help people buy a house without excellent credit. By meeting these requirements, individuals can take advantage of competitive interest rates and down payment assistance options.

Mandatory Homebuyer Education Program

Completing the mandatory Homebuyer Education program is another key requirement for THDA loans. This program covers essential topics like budgeting, credit, and the home-buying process to equip participants with the knowledge and confidence needed to make informed decisions as homebuyers.

THDA aims to reduce the risk of default and increase successful homeownership among loan recipients, with one independent study showing a 42% reduction in foreclosure. After completing the Homebuyer Education course online or in a classroom setting, you'll receive a certificate that's good for 12 months, after which it will expire.

It's crucial to note that THDA requires all potential homebuyers, including repeat buyers, to complete this education program.

Maximum Home Purchase Price Varies by County

The maximum home purchase price allowed under THDA loans varies by county, reflecting the diverse housing markets across Tennessee. THDA loans implement county-specific purchase price limits to ensure homebuyers can find affordable housing options within their local market.

The current purchase price limit caps out at $400,000 in most counties, but this can change in the future. Certain counties are also “targeted,” meaning the first-time homebuyer requirement is waived.

Pros & Cons of THDA Loans

THDA loans provide financial assistance along with competitive interest rates, making them an appealing option for first-time homebuyers. Most of these loans are insured by FHA or USDA-RD, ensuring that borrowers can finance the majority of the home price, which can be beneficial for those with limited savings.

One of the advantages of THDA loans is that the interest rate never changes, providing borrowers with stability in their monthly payments. Additionally, THDA offers a second mortgage loan with no interest or monthly payments required, further assisting buyers in making a down payment.

However, borrowers may need to meet specific eligibility requirements and potentially navigate forgiveness processes for their second loan under certain circumstances. Understanding these pros and cons can help you determine if a THDA loan aligns with your homeownership goals and financial situation.

For informational purposes only. Always consult with a licensed mortgage or home loan professional before proceeding with any real estate transaction.

Secure Your First Home With a THDA Loan

If you're a first-time homebuyer in Tennessee looking for affordable financing options, consider the Tennesee Housing Development Agency's loan program. With competitive interest rates, down payment assistance, and homebuyer education, THDA loans provide the guidance needed to make homeownership a reality. Explore the benefits and eligibility requirements to see if a THDA loan is the right fit for you.