First-time home buyer programs in Tennessee: assistance, loans and real costs
Tennessee is unusual in customarily placing both the transfer tax and the mortgage tax on the buyer; THDA’s Great Choice Plus exists partly to cover exactly that half-percent of surprise. Everything else on this page — the agency programs, the tax credit, the closing costs — sits on top of that fact.
| State housing agency | Tennessee Housing Development Agency (THDA) |
|---|---|
| Median home price (approx.) | $320,000 — statewide order of magnitude; metros differ |
| 3.5% / 5% / 20% down | $11,200 / $16,000 / $64,000 on the median |
| Property tax (effective) | about 0.64% — roughly $2,048 a year on the median |
| Mortgage credit certificate | Not consistently offered — ask a lender |
| Transfer tax | Tennessee’s realty transfer tax is $0.37 per $100 (0.37%), customarily paid by the buyer, plus a mortgage tax of $0.115 per $100 of the loan amount above $2,000, also paid by the borrower. |
What the state offers in Tennessee
The Tennessee Housing Development Agency’s Great Choice Home Loan offers FHA, VA, USDA and conventional 30-year fixed loans with Great Choice Plus down payment assistance; Homeownership for Heroes adds a rate reduction for military, first responders and teachers. Programs are open to repeat buyers within limits.
The down payment help, and how it must be repaid
Great Choice Plus offers either a $6,000 deferred second at 0% forgiven after 30 years (due on sale or refinance) or 6% of the price as an amortizing second repaid over 15 years; both cover down payment and closing costs.
Every assistance dollar comes in one of four shapes — grant, forgivable, deferred or repayable — and the shape decides what it costs you over ten years. Get it in writing before you apply. See how down payment assistance programs work.
The MCC: a federal tax credit for the life of the loan
THDA discontinued its Mortgage Credit Certificate program; ask a THDA-approved lender about any current tax credit option.
Limits and requirements
THDA income and purchase price limits vary by county and household size (higher in targeted areas where first-time status is waived); a 640 minimum credit score and homebuyer education are required.
What closing costs look like in Tennessee
Tennessee’s realty transfer tax is $0.37 per $100 (0.37%), customarily paid by the buyer, plus a mortgage tax of $0.115 per $100 of the loan amount above $2,000, also paid by the borrower.
Because both the transfer and mortgage taxes fall on the buyer, Tennessee closing costs run a bit higher than its neighbors — about 2.5% to 3.5% of the price including title and lender fees. For the line-by-line, see closing costs explained and seller concessions limits.
The numbers on a typical Tennessee home
The numbers below assume Tennessee’s approximate median price of $320,000 and a 6.5% rate chosen for illustration, not quoted. Property tax is estimated from the state’s effective rate of about 0.64% — $2,048 a year at this price — and will differ by county. Add homeowners insurance and, below 20% down, mortgage insurance.
| Structure | Down payment | Loan amount | P&I at 6.5% (30 yr) | Property tax / mo (est.) |
|---|---|---|---|---|
| FHA, 3.5% down | $11,200 | $308,800 | $1,952 | $171 |
| Conventional, 5% down | $16,000 | $304,000 | $1,921 | $171 |
| Conventional, 20% down (no PMI) | $64,000 | $256,000 | $1,618 | $171 |
Illustrative rate and approximate state figures — not an offer or a quote. Full payment tables cover $150,000 to $800,000 at 5% to 8%; the affordability guide explains how lenders size the loan.
Frequently asked questions
Does Tennessee have down payment assistance for first-time buyers?
Great Choice Plus offers either a $6,000 deferred second at 0% forgiven after 30 years (due on sale or refinance) or 6% of the price as an amortizing second repaid over 15 years; both cover down payment and closing costs. Funding rounds open and close; ask a participating lender what is available today rather than relying on last year’s cap.
Is there a first-time home buyer tax credit in Tennessee?
THDA discontinued its Mortgage Credit Certificate program; ask a THDA-approved lender about any current tax credit option. MCCs reduce federal income tax owed each year for as long as you keep the loan and live in the home; they are applied for through the lender at purchase.
What are typical closing costs when buying a house in Tennessee?
Because both the transfer and mortgage taxes fall on the buyer, Tennessee closing costs run a bit higher than its neighbors — about 2.5% to 3.5% of the price including title and lender fees. Tennessee’s realty transfer tax is $0.37 per $100 (0.37%), customarily paid by the buyer, plus a mortgage tax of $0.115 per $100 of the loan amount above $2,000, also paid by the borrower.
Read next
- Gift funds for a down payment: the rules, the letter, the paper trail
- Debt-to-income ratio limits by loan type — and how to lower yours
- Credit score needed to buy a house: minimums by loan type, and what it costs to be average
- Twelve first-time home buyer mistakes — and the cheap fix for each
Also for this state: hard money rules in Tennessee · foreclosure in Tennessee.