THDA Down Payment Assistance Programs

Since 1973, the Tennessee Housing Development Agency, or THDA, has been the state’s agency proactively working towards increasing home ownership.

In addition to what is already provided as support through federal programs behind traditional mortgage loans, the THDA focuses efforts on low- and moderate-income buyers who might otherwise be sidelined from a traditional home loan due to income, credit history, employment or cash flow issues.

Instead, the THDA makes it possible for more state citizens to secure a home loan for a purchase, increasing the ability to settle into communities and lay down roots versus living in high-density apartment housing. The result is strong communities with families, and more people in Tennessee achieving home ownership.

THDA Down Payment Assistance Options

Two programs sponsored and administered by the THDA can help with home buying. The THDA down payment assistance is specifically aimed at helping people overcome the common purchasing hurdle many fall short on, the down payment.

Via two specific THDA down payment loan programs, buyers can obtain the additional help to get past the required amount challenge, and allow the purchase process to go through, especially if they are able to otherwise qualify for financing for the rest of the purchase.

The Great Choice Home Loan

The first of the two programs run by THDA, the loan technically works a second mortgage on a home. As a result, the home becomes collateral for two loans versus one, but it reduces the out of pocket cash for the buyer making the purchase possible.

When complete, the buyer will then have two mortgage payments the original loan and the down payment loan. Fortunately, the second mortgage has no interest charge and no monthly repayment. Instead, the second is not paid back until there is a change in title of the home (resale, transfer, etc.).

The Great Choice Plus Loan

The second THDA program is a down payment assistance second loan worth up to 5 percent of the original home purchase price. That’s a huge benefit, especially when most down payment requirements are as much as 10 percent, making up half of the challenge.

This is particularly useful as a buying tool if someone is trying to get to 20 percent of a down payment to avoid private mortgage insurance costs that lenders often apply to protect their loan risk.

The HHF-DPA Loan

In some specific zip codes of Tennessee, borrowers who are already approved for the Great Choice Home Loan can also get access to a third loan benefit, the HHF-DPA program assistance. This provides up to $15,000 towards a down payment requirement. Borrowers have to pass the state’s criteria, but the benefit can literally make up most of the down payment needed to make a purchase go through.

If you’re a Tennessee homebuyer, make sure to look at all your options versus just a traditional home loan. The THDA benefits can easily make the buying process a lot easier for many buyers, but it’s not taken advantage of due to a lack of awareness.