Down Payment Assistance Programs in Tennessee

Tennessee’s housing market offers something for everyone, from the lively streets of Nashville and Memphis to the scenic small towns and rural communities spread across the state. Whether you’re planning to settle in a growing urban area or somewhere quieter, understanding what financial support is available can be just as important as finding the right home.

For many buyers, down payment assistance (DPA) programs can make homeownership far more attainable. In Tennessee, you’ll find both statewide options and locally administered programs offered through cities and counties. These often take the form of forgivable loans, grants, or low-interest second mortgages designed to help cover down payment and closing costs.

This guide highlights some of the most active and accessible DPA programs in Tennessee. While it may not include every local or specialized option, it focuses on programs with stable funding and broad reach. We’ll continue updating this page as new opportunities become available or existing ones evolve.

Understanding Area Median Income (AMI)

Down payment assistance programs often use area median income (AMI) as a metric for qualifying applicants. While some programs may have no AMI-related restrictions, others limit assistance to prospective homebuyers earning under a certain percentage of AMI.

You can search for area median income by address using Fannie Mae’s AMI Lookup Tool.

With the programs covered in this guide, that limit can range anywhere from 80% to 200% of area median income.

For example, the statewide Housing Fund Down Payment Assistance Loan requires applicants to earn no more than 120% of AMI in the location they’re planning to buy. If you’re purchasing in a locale where area median income is $85,000, you could earn as much as $102,000 and still qualify.

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Statewide Down Payment Assistance Programs

Tennessee offers several excellent statewide DPA programs that are open to many buyers across the state.

THDA Great Choice Plus Down Payment Assistance

The "Great Choice Plus" Program offers either a $6,000 deferred (no monthly payments) second mortgage at 0% interest or an amortizing second mortgage for up to 5% of the purchase price to help cover down payment and closing costs. This second loan is paired with a Great Choice home loan offered by the Tennessee Housing Development Agency (THDA).

Eligibility: You must have a credit score of at least 640, meet THDA’s income and purchase price limits, complete homebuyer education, and must be paired with a Great Choice home loan offered by THDA.

The Housing Fund Down Payment Assistance Loan

The Housing Fund provides second mortgage loans up to $35,000 to assist with down payment, closing costs, and prepaid items; these loans must be repaid and are not forgivable.

Eligibility: Buyers must contribute at least 1% of the home’s purchase price from personal funds, have household income under 120% of the Area Median Income, use a first mortgage from an FHA-approved lender, and complete a homebuyer education course. DTI back end ratio must not exceed 45%.

Tennessee Downpayment Partnership (Affordable Housing Resources, Inc.)

The Tennessee Downpayment Partnership offers deferred-payment, due-on-sale loans to help first-time buyers with down payment and closing costs across the state. There is no interest and no monthly payments, funds are repaid only when the home is sold.

Eligibility: You must not have owned a home in the last 3 years, earn no more than 80% of the HUD AMI for your area, and work with a participating mortgage lender.

Down Payment Assistance Programs by County

Some counties in Tennessee offer their own assistance to residents who want to buy homes locally.

Shelby County Down Payment Assistance Program

This Shelby County DPA Program provides up to $6,000 toward down payment and closing costs as a low-interest loan at 3% over a 15-year term for homes outside the City of Memphis but within Shelby County.

Eligibility: You must contribute at least $500 of your own funds, meet income limits, have stable employment, and qualify for a first mortgage through an approved program such as FHA, VA, or THDA.

Chattanooga Neighborhood Enterprise (CNE) Down Payment Assistance

Available in Hamilton County and surrounding Southeast Tennessee counties, Chattanooga Neighborhood Enterprise offers up to $25,000 as a second mortgage to cover down payment and closing costs.

Eligibility: You must meet income limits based on your household size and area, use the home as your primary residence, and repay the loan over 15 years at an interest rate matching your first mortgage.

Northeast Tennessee/Virginia HOME Consortium Downpayment Assistance

The Northeast Tennessee/Virginia HOME Consortium offers $1,000–$15,000 in deferred loans to buyers in Washington County, Sullivan County, and several nearby cities and towns.

Eligibility: You must not have owned a home in the last 12 months, earn under 80% of AMI, contribute at least $500 of your own funds, and complete HUD-approved homebuyer education.

Down Payment Assistance Programs by City

Several cities in Tennessee administer their own local programs to encourage homeownership within city limits.

City of Memphis Down Payment Assistance Programs

The City of Memphis operates several DPA options, including general citywide support for low-income buyers, and profession-specific programs for police officers, firefighters, and school staff, offering assistance up to (and occasionally beyond) $10,000.

Eligibility: Requirements vary by program, but income caps range from 80% to 200% of AMI depending on the program. Most require homebuyer education and residency within Memphis city limits.

Clarksville First Time Homebuyers Down Payment Assistance

The City of Clarksville offers up to $25,000 in assistance through HUD’s HOME program as a low-interest second mortgage for first-time buyers within city limits.

Eligibility: You must not have owned a home in the past 3 years, earn no more than $70,100 (2025) for a 4-person household, contribute at least 1% of the purchase price, and complete a HUD-approved education course.

Murfreesboro Affordable Housing Assistance Program

Murfreesboro Affordable Housing Assistance offers up to $10,000 as a deferred loan, repayable only upon sale or transfer of the home. For more details and terms and conditions, call 615-893-5210.

Eligibility: You must be a first-time buyer, purchase within Murfreesboro city limits, complete homebuyer education, and contribute at least 1% of the purchase price.

Additional Down Payment Assistance Programs in Tennessee

Here are other programs that were not mentioned above but may still be valuable options for eligible homebuyers.

Statewide Programs

• Chenoa Fund (Nationwide program available in Tennessee)

City Programs

• Knoxville Downpayment Assistance Program (limited to select nonprofit-built homes)

The Best Types of Loans for First-Time Homebuyers

Choosing the right type of mortgage can be nearly as important as choosing the right home. Loans come in all shapes and sizes, and an experienced lender can help you identify the best option for you.

In most cases, though, first-time homebuyers will want to consider one of these four options:

• Conventional 97: With a Conventional 97 loan, you'll only need a 3% down payment to buy, which can be covered partially or in full by down payment assistance. These mortgages tend to be best for borrowers with a high credit score and few existing debt obligations.
• FHA Loans: Designed for borrowers with less-than-perfect credit who may have trouble qualifying for a conventional mortgage, FHA loans typically allow for a credit score as low as 580 and can be approved with a debt-to-income ratio as high as 56.9%. The down payment required with an FHA loan is just 3.5% in most cases.
• VA Loan: If you're a veteran, active duty service member, or surviving spouse, you may qualify for a VA loan with 0% down payment needed. These loans typically come with some of the lowest interest rates out there and have no ongoing mortgage insurance costs. A VA loan is often the best choice for homebuyers who meet the eligibility requirements.
• USDA Loan: For buyers looking to purchase in less populated areas, USDA loans are another practical 0% down payment option. There are income limits for this program, and homes must be located within USDA-designated rural communities, but these loans can help alleviate down payment requirements. You may even be able to use DPA programs to help cover your closing costs instead

Buying a Home in Tennessee With Down Payment Assistance

The state of Tennessee offers access to a variety of down payment assistance programs. From statewide options to county and city initiatives, both first-time and eligible repeat buyers can find meaningful support to help reduce upfront costs. Make sure to stay informed about current mortgage rates and experiment with our loan calculators to understand how these programs might affect your monthly payment and upfront costs. With the right plan and support, finding your Tennessee home may be closer than you think.

Check with the organization directly for the most recent guidelines. While programs were fact-checked at the time of writing, requirements change often, and programs become unavailable when funds are exhausted.