Down Payment Assistance in Tennessee: 5 Programs That Put Homeownership Within Reach

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Buying a home in Tennessee can feel just out of reach when you’re looking at the down payment and closing costs. But you may not need to save every dollar on your own.

Several down payment assistance options can help qualified buyers reduce the cash needed at closing. Some offer $6,000 to $15,000. Others may provide more for specific buyers or newly built homes.

At CFC Mortgage, we help Tennessee homebuyers explore these programs and compare the details. We’re a local mortgage broker: not a bank: so we can shop more than 30 premium lenders for a solution that fits your situation.

Hendersonville, Tennessee community

A Quick Look at Your Options

Down payment assistance may be available through:

  • Tennessee Housing Development Agency programs
  • Programs for veterans, active-duty military, and community heroes
  • New-construction assistance
  • Statewide nonprofit programs
  • USDA loans that may require no down payment
  • Gift funds from eligible family members or other approved donors
  • City and county programs, depending on where you plan to buy

Each program has its own rules for income, credit, property type, occupancy, and repayment. The right option depends on your individual needs: not just the size of the assistance.

1. THDA Great Choice Plus Deferred Assistance

The THDA Great Choice Plus program offers a deferred second mortgage for qualified buyers using a Great Choice Home Loan.

With the deferred option, you may receive:

  • Up to $6,000 in assistance
  • Up to $10,000 in certain targeted areas
  • A 0% interest rate
  • No monthly payment on the second mortgage

The loan is forgiven at the end of a 10-year term, as long as you continue to follow the program requirements. If you sell the home or refinance before the 10-year term ends, the remaining balance may become due.

This option can be helpful if your biggest concern is the amount of cash needed upfront. You may be able to receive assistance without adding another monthly payment to your budget.

What to Know

Great Choice Plus must be paired with a THDA Great Choice Home Loan. THDA’s Great Choice program generally requires:

  • A minimum credit score of 640 for everyone on the application
  • Meeting county-specific income and purchase-price limits
  • Buying the home as your primary residence
  • Completing an approved homebuyer education course when required

You don’t have to guess whether you qualify. A knowledgeable lender can review your income, credit, household size, and planned purchase location.

2. THDA Great Choice Plus Amortizing Assistance

Some buyers need more help upfront and are comfortable with an additional monthly payment. For those borrowers, the Great Choice Plus amortizing option may provide up to 5% of the sales price, with assistance capped at $15,000.

This second mortgage:

  • Has a 30-year term
  • Uses the same interest rate as the first mortgage
  • Requires monthly payments
  • Can help with the down payment and eligible closing costs

The $15,000 option can be especially useful when your available savings are limited but your monthly budget has some flexibility.

The key difference is simple:

  • Deferred option: Less assistance, no monthly payment, potential forgiveness after 10 years
  • Amortizing option: More assistance, separate monthly payment, repayable over 30 years

We’ll help you compare both options so you can understand the effect on your cash needed at closing and your monthly payment.

3. THDA Assistance for Newly Built Homes

If you’re buying a newly built or proposed-construction home, THDA offers a separate assistance option of up to $25,000 for qualifying buyers.

This assistance is structured as a second mortgage with:

  • Up to $25,000 available
  • A 15-year amortizing term
  • A 0% interest rate on the second mortgage

The program is designed for eligible new construction financed through qualifying THDA programs, including Great Choice and Homeownership for Heroes.

New construction can come with additional costs, including upgrades, deposits, and closing expenses. This type of assistance may help preserve more of your savings for moving expenses, furnishings, and the normal surprises that come with owning a home.

Because construction timelines and program rules can change, it’s important to discuss this option early: before signing a contract or making decisions about builder incentives.

4. Homeownership for Heroes

Tennessee’s Homeownership for Heroes program is designed for eligible military members, veterans, first responders, and teachers.

Qualified participants may receive benefits such as:

  • A reduced interest rate
  • More flexibility around first-time homebuyer requirements
  • Access to Great Choice financing
  • Potential use of Great Choice Plus assistance

Eligible professionals may include:

  • Active-duty military members, National Guard members, and veterans
  • EMTs and paramedics
  • Firefighters
  • Law enforcement officers
  • Full-time K–12 teachers in Tennessee schools

This program can be a valuable path for buyers who serve Tennessee communities. Military and veteran buyers may also have access to VA financing, which can offer up to 100% financing for qualified borrowers.

Your lender can help determine whether the program fits your service history, profession, credit profile, and property goals.

5. The Housing Fund’s Statewide Assistance

The Housing Fund offers down payment assistance loans throughout Tennessee. Qualified buyers may be eligible for up to $35,000 toward:

  • Down payment
  • Prepaid expenses
  • Closing costs

The Housing Fund’s assistance is a loan, not a grant, and it must be repaid. It is available to eligible buyers purchasing a primary residence, and you do not necessarily have to be a first-time homebuyer.

Common requirements include:

  • Approval for a first mortgage through an FHA-approved Tennessee lender
  • Completion of homebuyer education before closing
  • A buyer contribution of at least 1% of the sales price
  • Meeting applicable income and underwriting guidelines

The Housing Fund also publishes county-specific income guidelines. This can be another option to explore if you need more assistance than a standard down payment program provides.

Homebuyer assistance resources in Tennessee

Don’t Forget Gift Funds

Down payment assistance is only one way to reduce the cash you need at closing. CFC Mortgage also offers flexibility for qualified borrowers using gift funds.

Gift funds may come from an eligible family member or another approved donor. They can potentially be used toward your down payment or closing costs, depending on the loan program and documentation requirements.

Gift funds usually require:

  • A signed gift letter
  • Verification of the donor’s relationship or eligibility
  • Documentation showing where the funds came from
  • Proof that the money was transferred properly

Gift funds cannot always be combined with every assistance program. The rules depend on the first mortgage, the down payment program, and the source of the funds. We’ll help you understand what is allowed before you rely on a gift for your purchase.

Other Options to Ask About

Depending on where you plan to buy, you may also qualify for:

  • USDA financing: Eligible rural and suburban properties may qualify for 100% financing.
  • FHA loans: Qualified buyers may purchase with a low down payment.
  • VA loans: Eligible veterans and active-duty service members may be able to buy with no down payment.
  • Local city or county programs: Availability and funding vary by location.
  • Conventional programs: Some options may allow a low down payment and flexible contributions.

The best strategy may involve comparing several programs: not choosing the first one you hear about.

How CFC Mortgage Can Help

Down payment assistance programs can be helpful, but the details can feel complicated. That’s where personal guidance matters.

At CFC Mortgage, we will:

  1. Review your income, credit, savings, and homeownership goals.
  2. Identify programs you may qualify for.
  3. Compare the monthly payment and long-term terms.
  4. Explain whether the assistance is deferred, forgiven, or repayable.
  5. Help document gift funds when they are part of your plan.
  6. Shop more than 30 premium lenders for competitive loan options.

We have more than 26 years of mortgage experience, and we work for you: not the bank. We also charge no broker fees, origination fees, discount points, or underwriting fees.

CFC Mortgage team member ready to help Tennessee homebuyers

Ready to Explore Down Payment Assistance in Tennessee?

You may have more options than you think. Whether you’re a first-time buyer, veteran, teacher, self-employed borrower, or repeat homebuyer, we’ll take time to understand your unique situation.

Contact CFC Mortgage to ask about down payment assistance, Great Choice Plus, gift funds, USDA, FHA, VA, and other Tennessee home loan options.

We’re Hendersonville-born, community-driven, and ready to help you find the right path home.

Important Note

Down payment assistance programs have specific eligibility, income, property, credit, and repayment requirements. Program amounts, rates, funding, and guidelines may change. This article is for general educational purposes and is not a commitment to lend or a guarantee of eligibility. Speak with a qualified mortgage professional for current program details.