The state of Tennessee has made many important contributions to the history of the United States, including providing a large number of soldiers to fight during the battle of 1812. Hence the "Volunteer State" nickname. Yet despite some of her unique characteristics there's one thing that Tennessee has in common with most other US states: the need for affordable and sustainable housing.
First time home buyers in the Volunteer State will be happy to know that there are quite a number of first time home buyer programs available to assist with securing mortgages and coming up with money for down payment and closing costs. As with any state, the place to start looking for first time home buyer programs is the agency responsible for affordable housing. In Tennessee's case that agency is known as the Tennessee Housing Development Agency.
About the Tennessee Housing Development Agency
The THDA was established by the state's General Assembly in 1973 to promote safe and affordable housing in Tennessee. They revised the agency's vision in 2006 to declare that every Tennessean should have access to a safe and affordable home in a sustainable neighborhood. The agency fulfills their mission by providing low-cost mortgages and assistance with the various costs of home buying. For first time home buyers the state currently offers three programs.
Great Rate Mortgage Program
This mortgage program is available to all first time home buyers who meet the state's definition, as well as repeat buyers who are eligible as low income earners. For first time home buyers, the program offers a 30 year, fixed rate mortgage with an interest rate substantially lower than the Prime Rate.
In order to be eligible for a Great Rate Mortgage, first time buyers must have a fairly good credit rating, sufficient income to make monthly payments, and be purchasing a home that meets minimum state requirements. Those requirements will vary throughout the state with some targeted areas being a bit more generous than others. It must be noted that the agency does not directly lend money for one of these mortgages; it comes from a participating lender approved by the state.
Great Advantage Program
This first time home buyers program combines a Great Rate mortgage along with secondary assistance for down payment and closing costs. The mortgage itself comes with a slightly higher interest rate in exchange for assistance of up to 2% of the total purchase price. A similar program, known as Great Start offers virtually the same type of assistance except for the fact that it can be as high as 4%. Like Tennessee's mortgage program, there are certain income conditions that apply as well as restrictions on properties that can be purchased.
New Start Loan Program
The New Start Loan program is one that offers first time assistance to those building a new home. Tennessee is one of the few states that will assist first time buyers with new home construction. They do so in order to promote such construction in the needy parts of the state.
The program is administered through nonprofit organizations approved by the state for such purposes. Each of these organizations is responsible for determining the eligibility of the participants and monitoring construction of the home. The New Start program has its own restrictions including the requirement to seek homeowner education prior to securing a loan. Furthermore, some organizations may offer down payment and closing cost assistance while others may not.
Other Sources of First Time Home Buyer Programs
Perhaps your real estate agent or mortgage lender is aware of other first time home buyer programs you might be eligible for. If so, that's probably because cities, counties, and nonprofit organizations offer their own programs from time to time. These programs are not always funded year-round, so their availability may be in question at the time you're ready to apply for your mortgage. Below is a list of such programs as provided by HUD.
- Chattanooga Neighborhood Enterprise Inc. Affordable Housing Assistance Program
- Davidson County Home Ownership Metro Employee Program (HOME)
- Hamblen County Area Housing Opportunities Committee Gift Program (GIFT)
- Jackson Affordable Housing Community Development Corporations SMART To Live in Jackson Program (SMART)
- Knoxville Community Development Corporation Home Ownership HOPE VI Program (HOPEVI)
- Knoxville County Knox Housing Partnership Down Home
- Memphis City-Wide Down Payment Assistance Program (CWDPA)