Many borrowers want to know how down payment help works in Tennessee. They are concerned that a small amount saved may affect their Tennessee home loan review. This guide explains what lenders may look for so you can move forward with confidence.
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How Does Down Payment Assistance Work in Tennessee?
SHORT ANSWER
Tennessee down payment assistance is a second mortgage called Great Choice Plus, in a forgivable version and a repaid version. The forgivable version runs up to $6,000 or up to $10,000 and is forgiven after 10 years. The repaid version runs up to 5% of the sales price with a $15,000 cap, and it adds a monthly payment.Smart Loan Savings Educational Content
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| Tennessee Down Payment Assistance and Home Loan Factor | Rule or Amount |
|---|---|
| Name of the Tennessee down payment assistance program | Great Choice Plus, offered through Tennessee Housing Development Agency |
| Tennessee forgivable down payment assistance amount | Up to $6,000 or up to $10,000 |
| When Tennessee forgivable down payment assistance is forgiven | At the end of a 10-year term |
| What triggers repayment of Tennessee forgivable assistance | Selling or refinancing before the 10-year term ends |
| Tennessee down payment assistance that is repaid monthly | Up to 5% of the sales price, capped at $15,000 |
| Repayment terms on Tennessee assistance that is repaid monthly | A 30-year term at the same rate as the first mortgage |
| What Tennessee down payment assistance can be used for | Down payment, closing costs, and prepaid items |
| Minimum credit score for a Tennessee Great Choice home loan | 640 for everyone on the application |
| Tennessee Great Choice income and purchase price limits | Vary by county |
| What counts as first-time in Tennessee | Not having lived in a home you own for at least 3 years |
| Homebuyer education for Tennessee down payment assistance | Required |
| Tennessee rate discount for military and first responders | 0.5% off through Homeownership for Heroes |
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| Tennessee Assistance Element | What It Means for Your Home Loan File |
|---|---|
| The 2 Versions of Great Choice Plus | Tennessee’s down payment assistance is a second mortgage called Great Choice Plus, and it comes in 2 versions. The forgivable version is a deferred second mortgage of up to $6,000 or up to $10,000, with no monthly payment, forgiven at the end of a 10-year term. The other version, which the agency calls amortizing, means you repay it monthly. The repaid version runs up to 5% of the sales price with a $15,000 cap, spreads across a 30-year term, and uses the same interest rate as your first mortgage. Both can go toward the down payment, closing costs, and prepaid items. Homebuyer education is required to use either one. |
| Why the Larger Amount Is Not Always Better | The larger amount is not automatically the better choice, and the difference shows up in your debt-to-income calculation. The repaid version adds a real monthly payment to your file, which raises the ratio the underwriter measures. The forgivable version adds nothing monthly, so the same income supports a larger first mortgage. A buyer stretching to qualify may do better with $10,000 forgivable than $15,000 repaid monthly. Our What Is Mortgage Debt-to-Income Ratio (DTI)? guide explains how that ratio is built. This page covers the Tennessee assistance side only. |
| The 10-Year Clock on the Forgivable Option | The forgivable option carries a 10-year clock, and selling or refinancing before it runs out makes the full amount due. Refinancing is the trigger buyers overlook. A homeowner who refinances in year 6 to capture a lower rate repays the assistance in full at that closing. That does not make refinancing wrong, and it does mean the payoff belongs in the decision. Tennessee also requires you to keep complying with the terms of both the first mortgage and the Great Choice Plus loan, and penalties including immediate repayment may apply if you do not. |
| What Assistance Does Not Solve | Down payment assistance solves the money you need at closing. It does not change what you owe every month afterward. Your monthly payment still carries principal, interest, property tax, and homeowners insurance. Tennessee applies the tax rate to 25% of a home’s appraised value rather than the full appraisal, which trips up buyers estimating from the rate alone. Our Tennessee property tax guide covers that calculation, the 2 recording taxes a buyer pays at closing, and why the seller’s current bill may not be yours. |
| The Insurance Piece of the Same Payment | Homeowners insurance is the other piece of the monthly payment, and it has to be in force before the loan can close. A Tennessee buyer using assistance is often working with a tight cash position, which makes an insurance delay more costly. Tennessee also sits on 2 seismic zones, and earthquake damage falls outside a standard homeowners policy. Our Tennessee home insurance guide covers what the loan requires, the flood zone determination on every file, and the coverage gaps a standard policy leaves. |
| You Do Not Apply to the Agency Yourself | Tennessee Housing Development Agency does not lend money to buyers directly. The assistance is submitted with your loan file, so it moves through the same application you were already making. That matters for timing, since the assistance is set up during processing rather than as a separate step you handle on your own. Homebuyer education is the one piece you complete yourself, and it is required before the assistance can be used. The broader picture of a home loan in this state sits on our Tennessee mortgage guide. |
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| What Lenders Check | How Tennessee Assistance Rules Affect Your Loan File |
|---|---|
| Minimum Credit Score | Everyone on a Great Choice home loan application needs a credit score of at least 640. A score below that moves the file to a different program. |
| Income and Purchase Price Limits | Tennessee Housing Development Agency sets both household income limits and purchase price limits, and both vary by county. Your file uses the figures in effect for the county the home sits in. |
| First-Time Buyer Status | The standard rule is not having lived in a home you own for at least 3 years. Qualified military and veterans have that requirement waived statewide. |
| Homebuyer Education | A homebuyer education class is required before down payment assistance can be used. The agency approves the counselors who teach and certify the class. |
| Military and First Responder Rate Discount | Homeownership for Heroes reduces the interest rate by 0.5% for veterans, active military, firefighters, emergency medical technicians, paramedics, K-12 classroom teachers, and state and local law enforcement. It applies on FHA, USDA, and VA loans. |
| Sources Used on This Page | Tennessee Housing Development Agency, Great Choice Home Loan program pages | Tennessee Housing Development Agency, Down Payment Assistance page | Tennessee Housing Development Agency, Advantages of Great Choice Home Loans | Tennessee Housing Development Agency, program FAQ |
| Tennessee Housing Development Agency program terms, income limits, purchase price limits, and interest rates are set by the agency and are subject to change. This page is provided for educational purposes only. Smart Loan Savings Educational Content | |
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| Main Loan Types | Primary Income & Target Qualification Fit |
|---|---|
| Conventional Loans | Standard W-2 income with strong credit profiles. |
| FHA Loans | Flexible down payments and lower credit score requirements. |
| VA Loans | Exclusive 100% financing for military veterans and families. |
| Jumbo Mortgages | High-balance luxury financing exceeding standard loan limits. |
| DSCR Loans | Real estate investor solutions qualifying purely on property cash flow. |
| HELOC Options | Borrowers leveraging existing home equity for flexible cash lines. |
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| People Also Ask | Why These Questions Matter |
|---|---|
| How much down payment assistance can you get in Tennessee? | Tennessee offers up to $6,000 or up to $10,000 as a forgivable second mortgage, or up to 5% of the sales price capped at $15,000 as a second mortgage you repay monthly. The forgivable version adds no monthly payment. |
| Do you have to pay back Tennessee down payment assistance? | The forgivable option is forgiven at the end of a 10-year term. Selling or refinancing before that term ends makes the full amount due. The version that is repaid monthly runs across 30 years at the same rate as your first mortgage. |
| What credit score do you need for a Tennessee Great Choice home loan? | Everyone on a Great Choice home loan application needs a credit score of at least 640. Income limits and purchase price limits also apply and vary by county. Homebuyer education is required before down payment assistance can be used. |
| Explore Our Learning Center | What You’ll Find Inside |
|---|---|
| Mortgage Basics Guide | Simple explanations of core terms like principal, interest, escrow, and PMI |
| Income and Employment Requirements | How income, self-employment, bonuses, and job gaps affect your approval |
| Credit & Approval | Credit score requirements, how to improve your score, and how lenders approve a file |
| Homebuying Tips | Preparing for a mortgage, choosing the right program, and avoiding common mistakes |
| Loan Comparisons | Side-by-side comparisons to help you see which loan program actually fits |
| Refinance Guides | Rate-and-term, cash-out, and streamline refinance options explained plainly |
| Loan Program Guides | In-depth guides to Conventional, FHA, VA, USDA, Jumbo, and more |
| State-Specific Mortgage Info | Local rules, programs, and agencies for your specific state |