Tennessee Great Choice Program for Veterans

The Tennessee Housing Development Agency (THDA) was created by the state government in 1973 to promote affordable housing options for low and moderate-income home buyers. It also exists to promote the rehabilitation of existing construction homes and stabilize the local housing market.

This program is funded through bonds, but THDA is not a lender or a financial institution; instead, the agency purchases “qualified home loans originated through its private-sector lending partners,” according to the official site.

THDA mortgage loans feature 30-year terms with fixed interest rates and down payment assistance.

THDA Homeownership for Heroes

Homeownership for Heroes is part of the THDA Great Choice Home Loan program. This is specifically offered to military borrowers who meet the qualifying criteria. Loans issued to vets under this program include:

• Reduced interest rate by half a percentage point (0.5%)
• No requirement to be a first-time home buyer
• The ability to apply for 100% financing (using a VA mortgage) or make a 3.5% down payment (using USDA or FHA loans)

Who qualifies for this program?

• Active Duty
• National Guard
• Reservists with 180 days or more of active service
• Qualifying military spouses

All veterans who qualify are welcome to apply, provided they were discharged under conditions other than Dishonorable.

Great Choice Home Loan Program Restrictions

These loans are offered as 30-year, fixed-rate loans, and applicants must have a minimum credit score of 640. Income and purchase price limits apply; these limits may vary by county.

Occupancy is required–you cannot purchase investment properties with a VA, FHA, or USDA loan in any case, and when using government-backed loans as part of this program, those rules will apply. You cannot purchase a commercial enterprise, hotel, bed-and-breakfast, or other transient-occupancy (rentals under 30 days) property.

Homeownership for Heroes allows borrowers to apply for financial assistance with closing costs, down payments, and other loan expenses.

Borrowers who make down payments on VA mortgages may be entitled to a reduced VA loan funding fee, so be sure to ask about this option when discussing your home loan needs. Keep in mind, if you are receiving VA disability compensation, then you may be exempt from paying the VA funding fee.

Borrowers who apply for down payment assistance are required to attend homebuyer education classes as a condition of loan approval — you will need to contact THDA to learn approved sources for housing counseling.

Great Choice Loan Down Payment Assistance

Those applying for Great Choice loans (including Homeownership for Heroes) who want to explore their down payment assistance options can apply for this help, offered as a second Great Choice loan intended to cover both down payment and closing costs.

Restrictions apply:

• Home loans for houses selling for under $150,000 qualify for assistance up to $6,000
• Homes with a purchase price at or over $150,000 qualify for a maximum down payment assistance loan of $7,500

The numbers you see above are current as of fiscal year 2020 and are subject to change. We include them here as a reference.

This down payment assistance is considered a second mortgage, paid monthly over a 15-year term (regardless of the term of your first mortgage) at the same interest rate as your first mortgage.

Homebuyer education classes are required to apply for this assistance. These classes may be taken online or in person — contact THDA to learn which providers are approved for your course.

Buying a home is just one way Tennessee supports its veterans. Explore our full guide to Tennessee veteran’s benefits to learn about additional state programs, education assistance, tax breaks, and more.