Down Payment Assistance in Tennessee

What is down payment assistance in Tennessee?

Tennessee pairs no state income tax with home prices that stay below the national average across most of the state, and with the right down payment assistance, buyers are finding homeownership more attainable than they’d expect.

Homebuyers may be able to use down payment assistance (DPA) programs to help them purchase a property. Down payment assistance is made up of national, state, local, and employer-sponsored programs designed to support homebuyers who can afford a monthly mortgage payment but need help coming up with the upfront cash needed for a down payment and closing costs.

Offered by government agencies, nonprofits, and some private organizations, DPA provides financial support to help homebuyers cover the down payment, closing costs, or both. It helps to bridge the gap between what buyers have saved and the funding they need to buy.

It may also provide homebuyers with a financial cushion, so they don’t have to drain all of their savings to afford homeownership.

From the Great Smoky Mountains in the east to the banks of the Mississippi in the west, Tennessee homebuyers can tap into statewide, local, and community-based programs that help cover the upfront costs of purchasing a home.

Assistance typically comes in one of three forms: a grant (money you don’t repay), a forgivable loan (which is gradually forgiven the longer you stay in the home), or a low-interest loan. The right option depends on the program and your individual situation.

Whether you’re a first-time homebuyer in Tennessee or returning to homeownership after years away, there may be money available to help make up the difference between how much you’ve saved and the amount you need to close on a home.  

How does down payment assistance work?

Every down payment assistance program has its own rules, but most follow a similar path from homebuyers researching their options to funding.

Research. The DPA landscape is larger than most people realize. In fact, there were more than 2,700 DPA programs as of July 2026, according to Down Payment Resource, a company that connects homebuyers to the programs. Assistance may be available at the state, county, city, or employer level, and different programs have different eligibility requirements. If one program doesn’t fit your situation, keep looking. There may be others that will.

Determine your eligibility. Common requirements include income limits, minimum credit scores, and property location restrictions. Understanding your financial profile, where you want to buy, and how long you plan to live in the home will help you identify which programs are worth pursuing.

Apply. Once you find a down payment program that fits your criteria and eligibility, you’ll submit an application and supporting documents. Expect to provide proof of income, personal identification, credit information, and details about the property you intend to purchase.

Get approved and receive funding. If your application is approved and your information verified, you’ll receive the assistance at closing. It’s typically applied directly toward your down payment, closing costs, or both, depending on the program’s terms.

It is important to note that most DPA programs have their own conditions, which may include having to repay the loan in part or full if you move early, sell, or refinance the home. Make sure to always review and understand the terms and conditions of any loan you use.

Additionally, some programs may run out of funding. That’s why it’s important to check availability and stay on top of deadlines.

Who qualifies for down payment assistance?

Many people don’t realize they may be able to qualify for down payment assistance. DPA isn’t just a tool for first-time and first-generation homebuyers or those with lower incomes.

The assistance is available for a wide variety of people in a range of financial situations. Nearly two-thirds, 62%, of current DPA programs serve homebuyers earning more than $100,000 a year and 11% have no income limits, according to Down Payment Resource.

Additionally, more than a third, 38%, of DPA programs don’t have a first-time homebuyer requirement.

There are DPA programs for: First-generation homebuyers, Native American homebuyers, veterans, educators, law enforcement, first responders, municipal employees, those who earn less than a certain threshold, and more. Some programs also exist for buyers who purchase properties in certain communities.

Some organizations also offer homeownership assistance programs for their employees, so make sure you check with your employer as well.

Types of down payment assistance

The majority of DPA programs fall into two categories: Second mortgages and grants.

Second mortgages are by far the most common form of down payment assistance, making up 56% of all programs, according to Down Payment Resource. This is a separate loan running alongside your primary mortgage, with its own monthly payment.

Second mortgages are often set up to be a deferred or forgivable loan to reduce the upfront cost. If you have a deferred loan, it means that it doesn’t have to be repaid until you sell, refinance, or move out. A forgivable loan is gradually forgiven if you live in the home for a set amount of time.

Grants make up 9% of DPA programs and are the most straightforward form of assistance. They’re a gift, with no repayment required under any circumstances. As always, read the terms carefully to make sure you understand any conditions attached.

Finding down payment assistance

Down Payment Resource offers an interactive search feature that allows you to search available DPA programs by location as well as by things like your occupation, military status, or disability status.

New American Funding (NAF) also offers a down payment assistance program called Pathway to Homeownership. Specifically available to first-time homebuyers, eligible borrowers may receive up to $6,000* in financial assistance. This money can be used to help with your down payment, closing costs, or other costs. It can also be combined with other DPA programs.

National down payment assistance programs

While there is not national database of nation-wide DPA programs available, there are several main ones that are notable. They include:

The Chenoa Fund

The Chenoa Fund is administered by CBC Mortgage Agency (a federally chartered tribal housing finance authority). It is one of the most accessible national DPA programs available because it drops two of the most common barriers to qualification. It has no income limits and no first-time homebuyer requirement.

The program covers the required 3.5% down payment on Federal Housing Administration (FHA) loans. The aid is structured either as a forgivable second mortgage or a repayable second mortgage, depending on the option selected.

Borrowers need a minimum 600 credit score to qualify. The program is available in all states except New York.

Since it works through a network of participating lenders nationwide, buyers can access it through their mortgage lender rather than applying directly.

The National Homebuyers Fund

The National Homebuyers Fund (NHF) is a nonprofit organization that provides down payment and closing cost assistance of up to 5% of the loan amount. It’s administered as a grant, meaning no repayment is required.

It has no first-time homebuyer requirement, making it available to repeat buyers who may not qualify for programs with that restriction. It works with FHA, U.S. Department of Veterans Affairs (VA), U.S. Department of Agriculture (USDA), and Conventional loans.

The credit score and debt-to-income requirements are flexible.

The NHF is available in most states and is accessed through a network of participating lenders rather than through a direct application to the fund itself.

Many of the national DPA programs are offered by various lenders and private non-profit organizations like the Homeownership Council of America.

Down payment assistance programs in Tennessee

The Tennessee Housing Development Agency (THDA) is the state’s housing finance agency and the central source for statewide DPA programs. THDA doesn’t lend directly to buyers. Homebuyers apply through a THDA-approved participating lender, which will combine the assistance with the mortgage.

THDA Great Choice Plus DPA

Homebuyers who qualify for a THDA Great Choice Home Loan can also apply for down payment assistance through the Great Choice Plus second loan. There are two options for down payment assistance:

Deferred Option (no payments):

• Down payment assistance of up to $10,000 in the form of a forgivable second mortgage loan
• Loan has 0% interest rate
• Loan is forgiven at the end of the 10-year term
• Must be repaid if the home is sold or refinanced before the 10-year term

Amortizing Option (payment):

• Down payment assistance of up to 5% of the sales price with maximum assistance of $15,000
• Loan is 30-year amortizing second loan
• Interest rate is the same as the first mortgage

Great Choice Home Loans have the following requirements:

• 30-year term loan
• Fixed-interest rate
• Minimum credit score of 640
• Must meet household income and purchase price limits
• Down payment assistance equal to 4% of the sales price, up to $10,000
• Assistance paired with a 30-year, fixed-rate first mortgage
• Assistance structured as a 10-year second mortgage
• Repeat buyers can participate if buying in one of 43 targeted areas or 15 additional counties

Beyond THDA statewide programs, several Tennessee cities and counties have established their own DPA programs. Many of these can be stacked with THDA assistance. That means some eligible buyers may be able to combine multiple programs and significantly increase their total help.

This can help them to cover their down payment, closing costs, or simply have a little left over as a financial cushion.

The Housing Fund DPA programs

The Housing Fund, a Nashville-based nonprofit community development financial institute, provides several programs to homebuyers needing assistance to purchase a home in the state.

The Down Payment Assistance loan is available to eligible buyers throughout the state. The DPA offers up to $35,000 for down payment, prepaids, and closing costs. The funds are structured as a 5% fixed interest rate with a 180- or 120-month term.

Program details and requirements include:

• Minimum credit score of 600 required for loans up to $10,000
• Minimum credit score of 620 required for loans of $10,000 or more
• Home must be primary residence
• Buyer must be approved with a first mortgage lender, and that lender must be FHA-approved in Tennessee
• Completion of homebuyer education course
• Borrowers must contribute at least 1% of sales price toward the purchase
• Household income must be at or below 120% of Nashville area median income (AMI). This is the midpoint of local earnings for an area, calculated by the U.S. Department of Housing and Urban Development.

The Shared Equity program is available to eligible buyers throughout the state. The program covers most of a home’s purchase price, with homeowners only required to provide 1% of the purchase price. THF covers 25% of the purchase price, and 74% comes from a loan through THF’s first-mortgage lending partner.

Program details and requirements include:

• Must be first-time, income-eligible homebuyer
• Household income limit must be at or below 120% of AMI
• Buyer must secure a 30-year fixed-rate mortgage with an approved shared equity lending partner
• Completion of first-time homebuyer education class
• Contribute a minimum of 1% of the home’s sale price
• Occupy the home as a primary residence
• Minimum credit score varies by first-mortgage lender
• Must purchase available property in THF’s portfolio
• When the home is sold, THF gets back its 25% contribution at 0% interest

Southeast Tennessee down payment assistance programs

Southeast Tennessee stretches across the Cumberland Plateau and down into the Tennessee River Valley near the Georgia and Alabama borders, anchored by Chattanooga’s outdoor-focused energy. Smaller communities throughout the region offer a quieter pace and some of the lowest home prices in the state, with easy access to whitewater rivers, hiking trails, and the Appalachian foothills.

The Chattanooga Neighborhood Enterprise offers two down payment assistance programs, which are administered through Chattanooga Neighborhood Lending:

CNE in-house down payment assistance: This program offers up to $25,000 in assistance to buyers in southeast Tennessee. The funds are structured as a second mortgage loan with the same rate as the first mortgage. The loan begins amortizing in year one and would be paid off in a maximum of 15 years.

Program details and requirements include:

• DPA is available in Bledsoe, Bradley, Grundy, Hamilton, Marion, McMinn, Meigs, Polk, Rhea, and Sequatchie counties
• Meet household income eligibility requirements

RockPointBank’s partner down payment assistance: This program offers up to $50,000 to buyers in Hamilton County. The funds are structured as a second mortgage amortizing over 30 years at the same rate as the first mortgage.

Program details and requirements include:

• Minimum borrower contribution of $1,000
• Completion of homebuyer education course
• Must meet all financial qualifications

City of Chattanooga DPA program: This program offers up to $15,000 in down payment assistance to first-time homebuyers. The DPA is structured as a 0% interest, deferred loan, with no monthly payments required

Program details and requirements include:

• The assistance must be repaid if the home is sold or refinanced
• Must be first-time homebuyer
• Household income must be at or below 120% of AMI
• Completion of homebuyer education course
• Home must be located within Chattanooga city limits with a maximum price of $400,000 or less
• Minimum borrower contribution of $1,000
• Must work with participating lender

Shelby County down payment assistance program

Shelby County anchors southwest Tennessee, home to Memphis and its deep roots in blues, soul, and barbecue culture. A strong logistics and healthcare job base, paired with some of the lowest home prices among major metro areas, makes it a strong pick for buyers wanting affordability alongside big-city amenities. (Counties like this are typically part of a larger metropolitan area — in this case, Greater Memphis.)

Shelby County down payment assistance program includes:

Shelby County Down Payment Assistance Program: The program provides up to $6,000 in down payment and closing cost assistance for income-eligible buyers within the boundaries of Shelby County. The assistance is structured as a 3% fixed-rate loan with repayment terms extending up to 15 years.

Program details and requirements include:

• Maximum purchase price of $300,000
• Buyer must invest minimum of $500 of their own funds
• Must qualify for THDA, FHA, VA, or conventional financing
• Completion of homebuyer education course
• Must meet household income limits

These are the main down payment assistance programs available across Tennessee. However, there may be more programs available to you based on your location in the state or your occupation.

For instance, some towns or cities may offer down payment assistance specifically for first responders or teachers. Make sure to do your own research to see if there is a program that may be right for you. And be aware that certain programs may only be available until all of the funding is used.

How to apply for Tennessee down payment assistance

The application process for different DPA programs may change. However, some general application steps include:

1. Check your eligibility. Review income limits, credit requirements, and first-time buyer status at thda.org. For local programs, contact the relevant city or county housing office.  
2. Find a participating lender. THDA programs are only available through approved lenders in their network.
3. Get pre-qualified. Your lender reviews your income, credit, and debts to determine which programs you may qualify for to receive funding.
4. Complete homebuyer education. Enroll in an approved homebuyer education course and keep your completion certificate for closing.
5. Find your home. Work with a licensed agent to locate a qualifying Tennessee property. Your lender will confirm if it meets program requirements.
6. Close on your home. Your lender packages your first mortgage and DPA together. Assistance funds are applied at settlement.

Tennessee down payment assistance FAQs

^{Program details reflect August 2026 information. Down payment assistance programs are subject to change and depend on current funding availability. Always confirm income limits, eligibility requirements, and program details with your lender or the applicable program administrator before applying.}

^{*Credit up to $6,000 maximum. Due to maximum seller concession rules applicable to purchase loan transactions, this credit could be less than $6,000 in some cases where other concessions have been made to the consumer.}