What First-Time Home Buyer Programs Are Available in Tennessee?

THDA Great Choice Home Loan

The Tennessee Housing Development Agency’s Great Choice program is the primary first-time buyer program in Tennessee. It offers a 30-year fixed rate mortgage at a below-market interest rate set by THDA, available through participating lenders across the state including lenders active in Rutherford County.

Great Choice can be paired with THDA’s Great Choice Plus down payment assistance, which provides up to 6 percent of the loan amount as a second mortgage with deferred payments. For many first-time buyers, this effectively eliminates the cash needed at closing beyond earnest money and inspection costs.

Income limits and purchase price caps apply and vary by county. Buyers must occupy the home as a primary residence and meet first-time buyer requirements, which the program defines as not having owned a home in the past three years. The full program details and current limits are available at thda.org.

VA Home Loan

The VA loan program is available to eligible veterans, active duty military, and surviving spouses. It requires no down payment, no monthly mortgage insurance, and typically offers competitive interest rates. For buyers who qualify, it is one of the strongest home purchase loan products available.

The VA does not set a minimum credit score, but most participating lenders require a minimum of 620. A VA funding fee is charged in most cases and can be financed into the loan. Disability-related exemptions from the funding fee may apply for veterans with a service-connected disability rating.

USDA Rural Development Loan

The USDA Single Family Housing Guaranteed Loan Program offers no-down-payment financing for buyers in eligible rural and suburban areas who meet income limits. Portions of Rutherford County outside the core Murfreesboro urban area may qualify. Buyers should verify property eligibility using the USDA eligibility map before assuming a specific address qualifies.

USDA loans typically require a credit score of 640 or above. Annual income cannot exceed 115 percent of the area median income for the household size. A guarantee fee is charged but can be financed into the loan.

FHA Loan

FHA loans are insured by the Federal Housing Administration and are available through most lenders. They allow down payments as low as 3.5 percent with a credit score of 580 or above, or 10 percent down with scores between 500 and 579. FHA loans are often the first step for buyers with limited credit history or lower scores who do not qualify for VA or USDA programs.

Mortgage insurance premium is required for the life of the loan in most cases when the down payment is below 10 percent. FHA loans can be paired with THDA Great Choice Plus assistance to cover the down payment requirement for qualifying buyers.