Buying your first home is exciting, but saving enough money for the down payment and closing costs can feel overwhelming. Even buyers who can comfortably afford a monthly mortgage payment may struggle with the upfront expense of purchasing a home.
The Tennessee Housing Development Agency, commonly called THDA, offers mortgage and down payment assistance programs designed to make homeownership more accessible for qualified Tennessee buyers.
If you are considering buying a home in Clarksville, Montgomery County, or another part of Tennessee, here is what you should know about THDA down payment assistance in 2026.
What Is THDA?
The Tennessee Housing Development Agency is Tennessee’s state housing finance agency. THDA works with approved mortgage lenders to provide qualifying buyers with affordable, 30-year fixed-rate mortgages and assistance with certain upfront homebuying costs.
THDA does not lend money directly to buyers. Instead, buyers apply through a THDA-approved lender who determines whether they qualify for the mortgage and available assistance.
THDA’s primary mortgage program is called the Great Choice Home Loan. Buyers using a Great Choice mortgage may also qualify for Great Choice Plus, which provides money that can be applied toward a down payment, closing costs, or other eligible loan-related expenses.
How Much THDA Down Payment Assistance Is Available in 2026?
As of 2026, Great Choice Plus offers multiple forms of down payment and closing-cost assistance. The option available to you will depend on your mortgage, qualifications, purchase price, and current THDA guidelines.
Amortizing assistance: Up to $15,000
Qualified borrowers may receive assistance equal to as much as 5% of the home’s sales price, up to a maximum of $15,000.
This assistance is structured as a 30-year second mortgage. It has the same interest rate as the Great Choice first mortgage and requires a monthly payment.
For example, 5% of a $250,000 purchase price is $12,500. A buyer approved for this option could potentially receive up to $12,500 toward eligible down payment or closing expenses.
On a $300,000 or higher purchase, the maximum assistance would be $15,000.
Deferred assistance: Up to $6,000 or $10,000
Depending on the Great Choice loan selected, buyers may also have access to a deferred second mortgage of up to $6,000 or $10,000.
These options generally have:
- A 0% interest rate
- No monthly payment on the assistance
- A 10-year term
- Forgiveness after the 10-year term when all program requirements are satisfied
If you sell the home, refinance the first mortgage, or otherwise trigger repayment before the required term has ended, the outstanding assistance may become due.
The $10,000 option may also be paired with a different first-mortgage interest rate than another THDA option. Your lender should compare the total payment and long-term cost of each choice—not simply the amount of assistance you can receive.
Is THDA Assistance Free Money?
Not necessarily. THDA down payment assistance is generally provided as a second mortgage, not an unrestricted cash grant.
With the amortizing option, you repay the assistance through monthly payments over the loan term.
With a deferred option, you do not make monthly payments, and the loan may be forgiven after the applicable term. However, repayment may be required if you sell or refinance too early or fail to meet the program’s conditions.
Before choosing an option, ask your lender to explain:
- The amount of assistance you will receive
- Whether the assistance has a monthly payment
- The interest rate on both mortgages
- When the second mortgage will be forgiven
- What could cause the balance to become due
- How the option affects your total monthly payment and closing costs
This allows you to compare the immediate benefit with the program’s long-term obligations.
Who May Qualify for a THDA Great Choice Loan?
THDA programs are intended to help qualifying low- and moderate-income Tennesseans purchase a primary residence. Requirements can vary by program and loan type, but buyers should generally expect the following:
A minimum credit score
THDA’s current Great Choice guidance requires a minimum 640 credit score. Meeting the minimum does not automatically guarantee approval because your complete credit and financial history will also be reviewed.
Household income limits
Your household income must fall within THDA’s limit for the county where you are purchasing. Income limits can vary according to county and household size.
For a home in Clarksville, the lender will use the applicable limits for Montgomery County. Because these limits may change, buyers should have a THDA-approved lender verify the current number rather than relying on an older chart found online.
Purchase-price limits
The home must also fall within THDA’s maximum purchase or acquisition-price limit for the applicable county and program.
An acceptable debt-to-income ratio
Your lender will compare your monthly debts with your gross monthly income. Even with adequate credit and income below the program limit, you must still demonstrate that you can reasonably afford the mortgage and your other obligations.
Homebuyer education
THDA requires applicable borrowers to complete a THDA-approved homebuyer education course. The course covers topics such as:
- Preparing a realistic homebuying budget
- Understanding mortgage financing
- Working with a lender and real estate agent
- Reviewing purchase contracts
- Home inspections and appraisals
- Property taxes and homeowners insurance
- Maintenance and the responsibilities of homeownership
- Avoiding delinquency and foreclosure
Although it is a requirement, the education course can be especially helpful for first-time buyers who have never been through the mortgage and closing process.
What Does “First-Time Homebuyer” Mean?
Being a first-time homebuyer does not always mean that you have never owned a home.
For many mortgage programs, you may be considered a first-time buyer if you have not owned and occupied a principal residence during the previous three years. Program-specific requirements and exceptions may apply, so a THDA-approved lender should confirm your status.
THDA also has options for certain repeat buyers, military members, veterans, and eligible public-service professionals. Active-duty military buyers and veterans should ask about the current Homeownership for Heroes program and whether it provides a more favorable interest rate.
Can You Use THDA Down Payment Assistance With FHA, VA or USDA Financing?
The Great Choice program may be used with several common mortgage types, including:
- FHA loans
- VA loans
- USDA Rural Development loans
- Certain conventional loans
This can be helpful for first-time buyers because the assistance may cover part of the cash needed for the down payment, closing costs, or prepaid expenses.
Even VA and USDA buyers, who may qualify for zero-down financing, can still have closing costs and prepaid expenses. THDA assistance may help reduce the amount they need to bring to closing, subject to the applicable loan and program rules.
Can You Rent Out a Home Purchased With THDA Assistance?
No—not as an investment or rental property.
A home purchased through THDA’s homeownership programs must be acquired and occupied as the borrower’s primary residence. You cannot use THDA down payment assistance to purchase a home that you plan to immediately rent to someone else, operate strictly as an investment property, or use solely as a vacation home.
This is particularly important for military buyers and anyone who expects to relocate.
If you later move out and want to convert the property into a rental, do not assume that you can simply begin leasing it. Moving out or changing the home’s occupancy may violate the loan requirements or cause some or all of the down payment assistance to become due. FHA, VA, USDA, conventional financing, insurance, and local rental requirements may also impose additional rules.
Before moving out or renting the property, contact the mortgage servicer and THDA to obtain written confirmation of:
- Whether renting is permitted
- Whether a minimum occupancy period applies
- Whether the second mortgage must be repaid
- Whether refinancing is required
- Whether any exception applies to your circumstances
The safest way to think about THDA is that it is a homeownership program, not an investment-property program.
What Are the Benefits of THDA for First-Time Buyers?
You may need less money at closing
The most obvious benefit is reducing the amount of cash needed for the down payment and eligible closing costs. This may allow buyers to purchase sooner instead of spending several additional years saving.
You can keep more of your savings
Even when assistance does not cover every expense, it may allow you to retain more money for moving costs, utility deposits, immediate repairs, or an emergency fund.
Owning a home comes with maintenance expenses, so having money left after closing can be valuable.
The primary mortgage has a fixed rate
Great Choice mortgages generally have a 30-year fixed rate. The principal-and-interest portion of the mortgage payment remains predictable, although property taxes, homeowners insurance, mortgage insurance, and association fees can change.
It can work with several popular mortgage programs
Compatibility with FHA, VA, USDA, and certain conventional financing gives qualified buyers more than one possible path to homeownership.
Homebuyer education helps buyers prepare
The required education course can help first-time buyers understand both the buying process and the financial responsibilities that continue after closing.
Are There Any Disadvantages?
THDA can be an excellent resource, but it is not automatically the least expensive choice for every buyer.
Possible considerations include:
- Household income and purchase-price limits
- A minimum credit-score requirement
- Required homebuyer education
- A second lien placed against the property
- An additional monthly payment with the amortizing option
- Possible repayment if you sell, refinance, or move out too soon
- Owner-occupancy restrictions that can affect future rental plans
- A first-mortgage rate that may differ from other loan options
- Possible federal recapture-tax provisions in limited circumstances
Buyers should compare a THDA mortgage with other available programs using the same estimated purchase price, down payment, interest-rate assumptions, and closing date.
Is THDA Down Payment Assistance Worth It?
THDA may be worth considering if the biggest obstacle between you and homeownership is the upfront cost of the down payment and closing.
However, the largest assistance amount is not automatically the best financial option. A program that provides more money upfront could also include a higher monthly payment, a different interest rate, or repayment conditions that affect your future plans.
A knowledgeable lender should provide side-by-side estimates showing:
- A THDA loan with amortizing assistance
- A THDA loan with deferred assistance
- A mortgage without down payment assistance
- Any VA, USDA, FHA, or conventional alternatives for which you qualify
Comparing the total cash required, monthly payment, interest rate, and long-term cost will help you make an informed decision.
How to Get Started With THDA in Clarksville
If you are considering a THDA loan, begin before you start touring homes.
Your first steps should include:
- Speaking with a THDA-approved lender
- Reviewing your credit, income, debts, and available savings
- Confirming the current Montgomery County income and purchase-price limits
- Comparing all available assistance options
- Completing the required homebuyer education course
- Obtaining a full mortgage preapproval
- Working with a local real estate agent to find homes that fit your approved price range
Getting preapproved early can prevent you from falling in love with a home that does not meet the financing or program requirements.
Ready to Buy Your First Home in Clarksville?
Buying your first home can feel complicated, but you do not have to figure out every step alone.
I help first-time buyers in Clarksville and the Fort Campbell area understand the process, connect with experienced lenders, compare homes, and move from preapproval to closing with greater confidence.
If you would like to explore THDA down payment assistance or other first-time homebuyer options, contact me to begin building a homebuying plan based on your finances, timeline, and future goals.
Program terms, interest rates, income limits, purchase-price limits, assistance availability, and eligibility requirements are subject to change. This article reflects THDA information available as of August 2026 and is intended for general educational purposes. Buyers should confirm current requirements with THDA and a participating mortgage lender before making financial or occupancy decisions.