Tennessee’s down payment assistance programs run through the Tennessee Housing Development Agency, offering up to $15,000 in assistance through multiple structures — forgivable loans, amortizing second mortgages, and a reduced-rate program for military members and first responders. Nashville adds city-specific resources through The Housing Fund and the Barnes Housing Trust Fund that can provide up to $35,000 in additional assistance. For first-time buyers navigating Nashville’s competitive market, these programs create real pathways to homeownership that don’t require a massive savings account.
THDA State Programs
Great Choice Home Loan
The Great Choice Home Loan is THDA’s primary mortgage product — a 30-year fixed-rate loan insured by FHA or USDA Rural Development. The program is available to both first-time and repeat homebuyers with a minimum credit score of 640 and a maximum debt-to-income ratio of 45%. Completion of a THDA-approved homebuyer education course is mandatory before closing.
Income limits vary significantly by county and household size. Davidson County (Nashville) carries one of the state’s highest limits at $102,500, reflecting the higher cost of living in the metro. The surrounding counties — Williamson, Rutherford, Sumner, and Wilson — fall within the highest tier at $119,760 for one-to-two-earner households and $139,720 for three or more earners. Purchase price limits range from $250,000 to $375,000 depending on the county.
The Great Choice loan serves as the foundation — the down payment assistance programs below are add-ons that require a Great Choice first mortgage.
Great Choice Plus Down Payment Assistance
Great Choice Plus offers two distinct assistance structures, and the choice between them significantly affects your monthly budget and long-term costs.
Option 1 — Forgivable Second Mortgage: $6,000 as a forgivable second mortgage at 0% interest with no required monthly payments during the 30-year term. The loan forgives entirely if you retain the home through the end of the mortgage term. Selling or refinancing before the term ends triggers full repayment of the $6,000. This option works best for buyers who plan to stay in their home long-term and want the lowest possible monthly payment.
Option 2 — Amortizing Second Mortgage: Up to 5% of the sales price (maximum $15,000) as a repayable second mortgage with monthly payments at the same interest rate as your first mortgage over a 30-year term. This option provides more assistance upfront but adds a monthly payment. For a $300,000 home, 5% equals $15,000 in assistance — significantly more than the $6,000 forgivable option, but with the trade-off of ongoing payments.
The choice depends on your specific situation. If you need minimal cash at closing but can handle slightly higher monthly payments, the amortizing option provides more money. If you want the absolute lowest monthly payment and plan to stay put, the forgivable $6,000 is the better play.
Homeownership for Heroes
Tennessee’s Homeownership for Heroes program provides a 0.5% interest rate reduction below standard Great Choice rates for military members, veterans, firefighters, EMTs, paramedics, and state and local law enforcement officials. The program uses VA, USDA, or FHA-insured 30-year fixed-rate loans and does not require first-time homebuyer status — repeat buyers who qualify through their profession are eligible.
The rate discount is substantial. On a $300,000 mortgage, a 0.5% rate reduction saves approximately $90 per month and over $32,000 in interest over the life of the loan. Combined with the same Great Choice Plus down payment assistance options (either the $6,000 forgivable or up to 5% amortizing), Homeownership for Heroes creates one of Tennessee’s most valuable assistance packages. The program requires a 640 minimum credit score and completion of a homebuyer education course.
Federal Loan Programs in Tennessee
FHA Loans
FHA loans require a minimum 3.5% down payment and are the primary loan type used with THDA’s Great Choice program. The 640 credit score requirement through THDA is higher than the federal FHA minimum of 580, but the trade-off is access to Tennessee’s down payment assistance programs. Mortgage insurance premiums — 1.75% upfront and 0.15% to 0.75% annually — apply.
VA Loans
VA loans provide zero-down financing for eligible veterans and active-duty military, with no mortgage insurance required. When combined with THDA’s Homeownership for Heroes rate discount and Great Choice Plus DPA, VA-eligible buyers in Nashville can close with minimal out-of-pocket costs and below-market interest rates.
USDA Loans
USDA loans offer 100% financing in designated rural and suburban areas. While Davidson County itself has limited USDA eligibility, portions of surrounding counties — Williamson, Wilson, Rutherford, and Robertson — include USDA-eligible areas that offer access to Nashville’s job market with USDA financing.
Nashville-Specific Programs
The Housing Fund
The Housing Fund, based in Madison, Tennessee, provides up to $35,000 in down payment, prepaid, and closing cost assistance for buyers with household incomes up to 120% of the Area Median Income. This is one of the most generous local DPA programs in the state, and the income threshold at 120% AMI extends eligibility to middle-income earners who may not qualify for programs targeting lower-income households. The Housing Fund also operates Shared Equity programs that provide an alternative ownership model.
Affordable Housing Resources (AHR)
AHR provides up to $15,000 in down payment assistance to Nashville-area residents. The organization combines financial assistance with homebuyer education and counseling, providing support throughout the purchase process.
Barnes Housing Trust Fund
Nashville’s Barnes Housing Trust Fund — named after affordable housing advocate Reverend Bill Barnes — provides competitive grants to nonprofit housing developers focused on homeownership and rental affordability. While the fund operates through nonprofit sponsors rather than direct-to-buyer grants, organizations like Affordable Housing Resources, New Level CDC, The Housing Fund, and Habitat for Humanity receive funding that ultimately supports individual homebuyers. The program targets households at or below 80% AMI.
How to Apply
The THDA application process follows a specific sequence. First, complete a THDA-approved homebuyer education course — this is mandatory and must happen before closing. Second, find an approved THDA lender from the directory at thda.org. Not all mortgage lenders participate in THDA programs, so confirming approval status upfront avoids wasted time. Third, get pre-approved for a Great Choice Home Loan through your lender, who will assess your eligibility for down payment assistance options and submit the application to THDA.
For Nashville-specific programs, contact The Housing Fund directly for the $35,000 DPA program, and Affordable Housing Resources for the $15,000 program. These local programs may have separate application processes and timelines from THDA.
Stacking Programs for Nashville Buyers
The most effective approach for Nashville first-time buyers is combining state and local resources. A firefighter buying in Davidson County could potentially access Homeownership for Heroes’ 0.5% rate discount, Great Choice Plus DPA (up to $15,000 amortizing or $6,000 forgivable), and The Housing Fund’s $35,000 assistance — creating a combined package that dramatically reduces both the upfront cost and the ongoing monthly payment.
Even without profession-based eligibility, a standard first-time buyer can combine Great Choice Plus assistance with The Housing Fund or AHR programs. The key is working with a THDA-approved lender who understands how to layer state and local programs, and completing the required homebuyer education early in the process so it doesn’t delay closing.
Nashville’s housing market has become increasingly competitive, with median home prices pushing first-time buyers toward the edges of the metro. These assistance programs don’t eliminate the affordability challenge, but they do create a realistic path for buyers who have stable income and good credit but haven’t been able to save a conventional down payment.
For more on the Nashville housing market, explore our housing market update and how much house you can afford in Nashville guide.