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 two forms of assistance when paired with a Great Choice home loan. The deferred option provides $6,000 or up to $10,000 as a 0% second mortgage with no monthly payments. It is forgiven after 10 years but must be repaid if you sell or refinance sooner. The amortizing option provides up to 5% of the purchase price, capped at $15,000, as a 30-year second mortgage at the same interest rate as the first mortgage.
Eligibility: You must have a credit score of at least 640, meet THDA’s household income and purchase price limits, complete homebuyer education, and use a Great Choice home loan offered by THDA. First-time buyers, qualified military buyers, and repeat buyers purchasing in targeted areas may qualify.
THDA Freddie Mac HFA Advantage Plus Down Payment Assistance
The Freddie Mac HFA Advantage Plus program pairs an insured conventional mortgage with either $6,000 in deferred assistance or an amortizing second mortgage for up to 5% of the purchase price, capped at $15,000. The $6,000 option has no interest or monthly payments and is forgiven after 10 years, but must be repaid if you sell or refinance sooner. The amortizing option has a 30-year term and the same interest rate as the first mortgage.
Eligibility: You do not need to be a first-time homebuyer. You must have a credit score of at least 640, meet qualifying-borrower income and purchase price limits, complete homebuyer education, and work with a THDA-approved lender.
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 no more than 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%.
FHLB Cincinnati Welcome Home Program
The Welcome Home Program offers grants of up to $20,000 for down payment and closing costs through participating Federal Home Loan Bank of Cincinnati member lenders. Homes are subject to a five-year retention requirement, which may require repayment if the home is sold, refinanced, or transferred during that period.
Eligibility: Total income for everyone who will live in the home must be at or below 80% of the applicable Mortgage Revenue Bond limit. Buyers must contribute at least $500, have a signed purchase contract, and use the property as a primary residence. You do not need to be a first-time buyer, but first-time buyers must complete homebuyer education.
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. DPA amounts vary by lender, and the funds are repaid when the home is sold.
Eligibility: You must be a first-time homebuyer, 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 anywhere 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, THDA, or conventional financing.
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. Monthly repayment begins in the first year, the rate matches the first mortgage, and the loan has a maximum 15-year term. CNE’s RockPoint Bank partner program offers up to $50,000 as a 30-year second mortgage for single-family homes in Hamilton County.
Eligibility: Requirements vary by option. The in-house program uses household size and income to determine eligibility. The RockPoint program requires a $1,000 borrower contribution and completion of an eHome America homebuyer education course.
Northeast Tennessee/Virginia HOME Consortium Downpayment Assistance
The Northeast Tennessee/Virginia HOME Consortium offers $1,000–$15,000 in need-based, due-on-sale deferred loans to buyers in Bristol, Tennessee; Bristol, Virginia; Kingsport; Johnson City; Bluff City; Sullivan County; and Washington County.
Eligibility: You must be a first-time homebuyer, earn no more than 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 Chattanooga Down Payment Assistance Program
The City of Chattanooga Down Payment Assistance Program offers up to $15,000 as a 0% deferred second mortgage with no monthly payments. The full balance is forgiven after 30 years, with no prorated forgiveness. Repayment is required if you sell or transfer the home, complete a cash-out refinance, stop using the property as your primary residence, or violate other loan requirements.
Eligibility: You must be a first-time homebuyer, have household income no more than 120% of AMI, have a credit score of at least 620, keep your DTI at or below 45%, contribute at least $1,000 of your own funds, complete homebuyer education, and purchase an eligible Chattanooga home for $400,000 or less.
City of Memphis Down Payment Assistance Programs
The City of Memphis operates several DPA options, including general citywide support, assistance for qualifying Memphis Housing Authority residents, and profession-specific programs for police officers, firefighters, and Memphis-Shelby County Schools employees.
Eligibility: Requirements vary by program. The Citywide and Memphis Housing Authority programs limit income to 80% of AMI, while the HIPC program allows income up to 200% of AMI in designated areas. The police, firefighter, and school-employee programs have no income limit but have employment requirements.
Clarksville First Time Homebuyers Down Payment Assistance
The City of Clarksville offers up to $25,000 in assistance through HUD’s HOME program for first-time buyers within city limits. The first $15,000 is a 0% loan forgiven after five years of continuous occupancy. Any additional assistance, up to $10,000, is a 0% silent second mortgage with no monthly payments that becomes due if the home is sold, transferred, rented, or refinanced.
Eligibility: You must be a low-income, first-time homebuyer purchasing within Clarksville city limits and complete a HUD-approved education course. The amount awarded is based on the City’s assessment of your need.
Murfreesboro Affordable Housing Assistance Program
Murfreesboro Affordable Housing Assistance offers up to $50,000 based on need as a deferred, no-interest loan. The assistance is forgivable after the buyer completes the required owner-occupancy period, which the City describes as approximately five to 15 years depending on the assistance provided.
Eligibility: You must be a first-time buyer, purchase within Murfreesboro city limits, earn no more than 80% of AMI, 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.
