First-time homebuyers in Tennessee: steps and assistance

Most of what gets written about first-time buying is encouragement. This page is not that. It is the list of things that are true regardless of how the market is behaving, plus — and this matters more — where to check the things that are not stable enough to print.

Assistance programmes are the clearest example. Tennessee's programmes are real, they are administered by named public bodies, and their terms reset. Income caps, purchase price limits, assistance amounts and the counties a programme applies to are all revised, sometimes more than once a year. A figure quoted on a guide like this one is a figure that will be wrong before you use it. So this page names the programme, names who runs it, and tells you exactly which page to read for the number.

"First-time buyer" is not one definition

The phrase means different things to different programmes, and you can qualify for one while failing another. The common federal-style definition is not having held an ownership interest in a principal residence during the previous three years, which means a former owner can become a first-time buyer again. Some programmes waive the requirement entirely in designated targeted areas, and some waive it for eligible veterans and service members.

Do not assume. Before you build a plan around a programme, find its own eligibility page and read the definition it uses. If you are unsure whether you meet it, the administering agency will tell you — that conversation costs nothing and it happens before you have spent money on anything.

Prepare the money and the paperwork

Three numbers govern what you can do, and two of them are not the price of the house.

• What you can borrow, which a lender determines from income, debts and credit history, and which changes when a car loan or a student loan changes.
• What you have to bring on the day, which is the down payment plus settlement costs, less any credits — a larger number than the down payment alone, and the one that most often catches first-time buyers out.
• What you can carry monthly, which includes property tax and insurance, and, in a condominium or a homeowners association, an assessment that can be raised.

Assemble the documents early: two years of tax returns in most cases, recent pay records, bank statements, and a written explanation for any large recent deposit. Then ask more than one lender for a Loan Estimate and compare them against each other rather than against your expectations. Tennessee has no state income tax on wages, which affects what you take home but does not change what a lender will advance.

Homebuyer education

The Tennessee Housing Development Agency requires homebuyer education for its loans. It is delivered through THDA-approved housing counselling agencies, in a classroom or online, and it produces a certificate that your loan officer needs with your application. Certificates expire, and online courses may carry a follow-up requirement with a counsellor, so confirm the current rules and timing with THDA or your chosen counselling agency rather than assuming a course you took last year still counts.

Take it early, not as a box to tick in the final fortnight. The point of the course is the questions it makes you ask while there is still time to act on the answers.

THDA and the official assistance routes

The Tennessee Housing Development Agency is the state's housing finance agency and the starting point for state-level assistance. It does not originate loans itself; you apply through a THDA-approved lender, and the list of those lenders is published on THDA's own site.

The programmes THDA names for homebuyers include the Great Choice Home Loan, down payment assistance offered alongside it, financing for off-site construction and manufactured homes, the New Start Loan Program, and a route for repeat buyers purchasing in targeted areas. Which of these you can use, on what terms, and in which counties, is programme-by-programme and year-by-year. Read the current page for each on thda.org before you plan around it.

Four questions are worth asking about any assistance offer, from any source:

1. Is it a grant, a forgivable loan or a second mortgage? These are not the same obligation, and the difference shows up when you sell or refinance.
2. If it is repayable, when and how? Ask whether repayment is triggered by sale, by refinancing, or by moving out, and whether any part is forgiven over time.
3. What does it do to the rest of the deal? Some assistance comes attached to a specific loan product whose rate may differ from what you would otherwise be offered. Compare the whole package, not the assistance in isolation.
4. Does it restrict the property? Purchase price limits, occupancy requirements and property type restrictions are common, and they can rule out a house you have already viewed.

Check the city and county as well as the state

State programmes are not the only ones. Cities, counties and local nonprofits administer their own down payment and rehabilitation assistance, often funded through federal HOME or Community Development Block Grant money and usually restricted to specific boundaries or income bands. These do not appear in a single directory, they are frequently small, and they run out.

Find them by asking the right office directly: the city or county community development department for the jurisdiction the property is actually in, and a HUD-approved housing counselling agency serving that area. Check the property's jurisdiction before you ask, because a mailing address is not a jurisdiction — being inside or outside the city limits changes both the programme and how the property is assessed and who bills you.

Want to see what is actually listed? This site has no listings. Recently sold homes in Memphis on Zillow — sold prices, not asking prices, are the ones worth calibrating a budget against, and any automated estimate you see there is a model output rather than a price.

What to do next

Work through the purchase in order rather than programme-first: the Tennessee buying sequence from budget to possession sets out where financing, touring, disclosure and closing actually fall. Get the cash-to-close figure right early, because it is the number first-time buyers most often underestimate — what appears on a Tennessee closing statement breaks it into its line items.

If you are buying in a specific city, the local offices matter more than any general advice; buying in Memphis, county by county is one worked example of what that looks like. And before you sign anything with an agent, read how to interview and compare agents — since August 2024 the written agreement comes early in the process, not late.