Buying your first home in Rutherford County can feel exciting and overwhelming at the same time. You want a smart plan, a clear budget, and a way to bring your upfront costs down. In this guide, you will learn how Tennessee’s most common first-time buyer programs work, what basic eligibility looks like, and how to start pre-approval with confidence. Let’s dive in.
Best first-time buyer programs in Tennessee
If you are purchasing in Tennessee, you will likely see a mix of state, federal, and lender-based options. The statewide anchor is the Tennessee Housing Development Agency (THDA). THDA typically pairs below-market mortgage rates with down payment assistance through approved lenders. You can explore current program details and participating lenders on the THDA website.
Federal loan programs are also common. FHA loans allow low down payments and more flexible credit standards, though mortgage insurance is required. You can review FHA basics on HUD’s site. VA loans offer zero down for eligible service members and veterans, with a VA funding fee but no private mortgage insurance. Learn more through the VA Home Loan Program. USDA Rural Development loans may provide zero-down financing in eligible areas based on location and income; check addresses using the USDA eligibility tools.
Conventional options include low-down programs like Fannie Mae HomeReady and Freddie Mac Home Possible, which allow down payments as low as 3% and include program-specific income and credit guidelines. For product details, visit Fannie Mae and Freddie Mac.
Many lenders also offer incentives, such as temporary rate buydowns, lender credits, or reduced fees. Seller-paid closing costs are possible within each program’s limits. Your lender can explain how these tools affect your monthly payment and cash to close.
Who qualifies and what to expect
“First-time buyer” definitions vary. Often, it means you have not owned a principal residence in the past three years. Some programs provide exceptions for certain buyers or areas. Always check the specific rules for THDA and any loan program you are considering.
Across programs, you will see common standards:
- Income limits and purchase price or loan limits that vary by county.
- Primary residence requirement. Most assistance applies only to owner-occupied homes.
- Minimum credit scores and a debt-to-income limit set by the lender and program.
- Homebuyer education for certain programs, especially when using down payment assistance.
- Property rules that may vary for condos, manufactured homes, and multi-unit properties.
If you are unsure where you fit, a THDA-approved lender or a HUD-approved housing counselor can review your budget, credit, and location to clarify options.
Down payment and closing cost help
Down payment assistance (DPA) can lower your upfront cash requirement. The most common structures include:
- Deferred second mortgage. No monthly payment until you sell, refinance, or transfer. This preserves cash flow but places a lien on the property.
- Forgivable grant. Assistance that is forgiven after you live in the home for a set time. Program rules explain the forgiveness schedule.
- Repayable second mortgage. A second loan with a set payment. This is less common for lower-income buyers.
- Closing-cost credits or grants. May be used for closing costs only.
DPA can pair with FHA or conventional loans, subject to each program’s rules on subordinate liens and mortgage insurance. VA and USDA have specific requirements for any secondary financing. Your lender will confirm compatibility before you write an offer.
Key tradeoffs to weigh:
- Monthly cost vs. cash to close. DPA reduces upfront cash, but a second lien can affect future refinance or sale proceeds.
- Mortgage insurance or fees. Low-down conventional loans require PMI until you reach about 20% equity. FHA uses mortgage insurance. VA uses a funding fee.
- Occupancy and timing. Many DPAs require you to live in the home for a minimum period and finish homebuyer education before closing.
For the latest THDA DPA structures, amounts, and education requirements, review the THDA program pages or speak with a THDA-approved lender.
How to start and get pre-approved
Follow this simple path to move from research to keys in hand:
- Map your options. Compare THDA, FHA, VA, USDA, and conventional programs against your goals and budget.
- Complete homebuyer education early if you expect to use DPA. Many programs require it before funds are issued.
- Get pre-approved. A lender will verify income, assets, credit, and identity to provide a conditional commitment.
- If using THDA, choose a THDA-approved lender. They will confirm program fit, DPA structure, and timelines.
- Shop homes and write an offer. Make sure your offer reflects the loan type and any DPA timing needs.
- Close. Underwriting, appraisal, title work, and final approvals lead to closing and recording.
Typical timelines:
- Pre-approval: a few days to 1–2 weeks, depending on documentation.
- Contract to close: often 30–60 days, depending on appraisal and underwriting.
- DPA processing: can add steps or documents. Your lender will give you a specific timeline.
Document checklist for pre-approval
Have these ready to speed things up:
- Government ID and Social Security number
- Most recent 30 days of pay stubs
- Last 2 years of W-2s, or 1099s and full tax returns for self-employed
- Recent federal tax returns if requested
- Two to three months of bank statements for all accounts
- Statements for retirement or investment accounts if needed
- Gift letter and proof of funds if using a gift
- Rental history or landlord contact if applicable
- Divorce decree or child support documentation if relevant
Questions to ask your lender
- Are you a THDA-approved lender and can you process THDA Great Choice with DPA if I qualify?
- Which loan types best fit my credit, income, and location in Rutherford County?
- What are today’s rates, my estimated monthly payment, and all fees? Can I see a Loan Estimate?
- How is DPA structured and how could it affect my equity and future refinance?
- What homebuyer education do I need and where do I take it?
- What seller concessions are allowed for my loan type?
For neutral mortgage-shopping advice, you can also review the CFPB’s guides.
Rutherford County tips and local resources
Rutherford County blends suburban hubs with less dense areas. USDA RD eligibility depends on the exact address, so do not assume a property is eligible just because it is outside the city center. Always verify on the USDA eligibility tools.
Income limits, purchase price caps, and loan limits are often county based. Check the most current figures on the THDA site and with your lender. If you want additional coaching, HUD-approved counseling agencies offer education and budgeting help listed on HUD.gov.
When you are ready to shop, align your offer timeline with any DPA requirements. Ask your lender for a pre-approval that clearly states your loan product and any assistance you plan to use, so your agent can write an accurate financing contingency.
Buying your first home is a big milestone, and you do not have to navigate it alone. If you want calm, clear guidance from search to closing in Rutherford County, reach out to Christian Carroll-Moag. We will align your budget and timeline, coordinate with your chosen lender, and help you move forward with confidence.
FAQs
What is THDA’s Great Choice in Tennessee?
- THDA’s Great Choice is a statewide first-time buyer mortgage offered through approved lenders, often paired with down payment assistance; see current details on the THDA site.
How do FHA, VA, and USDA loans differ for first-time buyers?
- FHA allows low down payments with mortgage insurance; VA offers zero down for eligible service members and veterans; USDA may offer zero down in eligible locations with income limits.
Can I combine down payment assistance with my loan in Rutherford County?
- Often yes, but it depends on the program; FHA and conventional loans commonly pair with DPA, while VA and USDA have specific rules your lender must approve.
What counts as a first-time buyer for Tennessee programs?
- Many programs define it as not owning a principal residence in the past three years, with possible exceptions for specific buyers or areas; check program rules.
How do I check if a property is USDA-eligible in Rutherford County?
- Use the address lookup on the USDA Rural Development site to confirm eligibility for a specific property.
Do I need homebuyer education to use DPA in Tennessee?
- Many DPA programs require an approved education course before closing; confirm the requirement and timing with your lender or on THDA’s site.
