Overview
Tennessee's typical home value runs around $312,000 statewide, though Nashville, Franklin, and the broader Williamson County area push well above that while Memphis and rural East Tennessee stay more affordable. The Tennessee Housing Development Agency (THDA) is the state's homebuyer resource, and it's a strong one. Tennessee's big advantage is its tax climate — no state income tax — which leaves more of your paycheck for housing. The challenge is that booming markets like Nashville have outpaced wage growth, so the down payment is the wall most first-time buyers hit. THDA's programs are designed specifically to get you over it.
THDA's foundation is the Great Choice Home Loan: a 30-year, fixed-rate mortgage (FHA, VA, USDA-RD, or conventional) for first-time buyers, with a minimum 640 credit score. Layered on top is Great Choice Plus down payment assistance, which comes in two flavors. The Deferred Option gives up to $6,000 as a 0%-interest second mortgage with no monthly payments — and here's the key mechanic: it's forgiven in full after 30 years if you stay. Sell or refinance before then and you repay it. The Amortizing Option instead lends up to 6% of the purchase price, repaid in monthly installments over 15 years. Most first-time buyers choose the deferred path for the lower monthly burden.
State Programs
Great Choice Home Loan
30-year fixed-rate first mortgage (FHA, VA, USDA-RD, or conventional)Great Choice Plus Down Payment Assistance
Deferred 0% second mortgage (forgiven after 30 years) OR amortizing second mortgage (15-year repayment)Homeownership for the Brave
Interest-rate discount on Great Choice loan; first-time requirement waived for qualified military/veterans; stackable with Great Choice Plus DPAFederal Programs Available in Tennessee
These nationwide programs can be combined with Tennessee state assistance for maximum benefit.
FHA Loan Program
Low down payment mortgageVA Home Loan
Zero down payment mortgageUSDA Rural Development Loan
Zero down payment mortgageTips for First-Time Buyers in Tennessee
Tennessee's standout special program is Homeownership for the Brave, built for military borrowers. It deducts 0.5% off the current Great Choice interest rate for active-duty service members, veterans, National Guard, and reservists — a meaningful lifetime savings. It also waives the first-time-buyer requirement statewide for qualified military and veterans and lets you borrow up to 100% of the purchase price with a VA or USDA-RD loan. Crucially, you can stack it with Great Choice Plus down payment assistance, so a veteran can combine a discounted rate with deferred down payment help. THDA also runs the related Homeownership for Heroes program, which extends benefits to first responders and other essential workers.
Tennessee's tax story is buyer-friendly. There's no state income tax — the old Hall income tax on interest and dividends was fully repealed effective January 1, 2021, so Tennessee now taxes zero personal income. Property taxes are also low: the effective rate is roughly 0.55%, well below the national average, though it varies by county (Williamson County sits higher). On a $312,000 home, that's about $1,700 a year. Tennessee doesn't offer a broad homestead exemption, but it runs a property-tax relief program for qualifying low-income seniors, disabled homeowners, and disabled veterans that can reimburse a portion of taxes paid. Sales tax is high, but that's separate from owning a home.
Local programs can stack on THDA's help. Metro Nashville's Barnes Housing Trust Fund and affordable-housing initiatives, Memphis and Knoxville down payment assistance funds, and regional nonprofits offer additional support — amounts and eligibility vary by city and funding cycle, so verify current figures locally. Military buyers near Fort Campbell (on the Kentucky-Tennessee line), Naval Support Activity Mid-South near Millington, or Arnold Air Force Base should pair Homeownership for the Brave with VA financing. Your next steps: complete THDA's required homebuyer education course, connect with a HUD-approved housing counselor, and apply through a THDA-approved participating lender rather than the agency directly.
Frequently Asked Questions
For educational purposes only -- not financial or tax advice. Program details, eligibility requirements, and benefit amounts are subject to change. Verify all information directly with the administering agency before applying. Last verified: June 15, 2026.