Pairing Tennessee down payment assistance with a VA loan
Program figures verified July 2026, details change; confirm your scenario with us.
VA loans don't require a down payment, so why add Tennessee down payment assistance? One reason: closing costs and prepaids. THDA assistance can cover most of what a VA buyer still brings to the table.
Note that THDA assistance is delivered with a THDA Great Choice first mortgage. If you take a VA-guaranteed first mortgage instead, you generally use THDA's assistance with THDA's own first loan rather than layering it onto a separate VA first; we will tell you which structure is actually cheaper for your situation.
What THDA assistance is
The Tennessee Housing Development Agency (THDA) pairs a fixed-rate Great Choice Home Loan with down payment and closing-cost assistance called Great Choice Plus.
| Program | Assistance |
|---|---|
| Great Choice Plus (flat) | Up to $6,000 (up to $10,000 for qualifying borrowers) as a forgivable second at 0% (forgiven at the end of a 10-year term; due in full if you sell or refinance earlier) |
| Great Choice Plus (percentage) | Up to 5% of the sales price (maximum $15,000) as an amortizing second, confirm current structure in THDA's program guide |
| Homeownership for Heroes | A Great Choice option for military and Veterans: a reduced rate and the first-time-buyer requirement waived statewide |
How it works for a Veteran buyer
For a full-entitlement Veteran, a VA loan already delivers $0 down and no monthly mortgage insurance, often the cheapest path on its own. THDA's value for a Veteran is usually the Homeownership for Heroes reduced rate on a Great Choice loan, or Great Choice Plus assistance when you want help with closing costs. We compare the VA-only path against the THDA path and show you the real numbers.
Only one down payment assistance program applies per transaction.
Things to watch
- Forgivable vs repayable. The deferred option is forgiven at the end of a 10-year term; the percentage option is a repayable 30-year second that adds a payment.
- Education is required. THDA requires a homebuyer education course before closing.
- Limits. THDA sets income and purchase-price limits by county; plan on about a 640 credit score.
- Structure. THDA assistance rides with a THDA first mortgage; we confirm whether VA-only or THDA is cheaper for you.
The rule behind this
VA does not set a county loan limit for a Veteran with full entitlement; Public Law 116-23 removed them effective January 1, 2020. What VA does require is set out in 38 CFR § 36.4340, which covers underwriting standards, processing procedure and lender responsibility. VA Lender’s Handbook (Pamphlet 26-7), Chapter 4 carries the regional residual-income tables, and residual income is a standalone test rather than a footnote to debt-to-income, above 41% DTI the residual requirement rises 20% over the table minimum. Tennessee’s Comptroller, Division of Property Assessments administers the state-level benefits that sit on top of the federal loan, and those are set by state law rather than by VA.
Frequently asked questions
What down payment assistance is available for Veterans in Tennessee?
Tennessee's THDA offers Great Choice Plus down payment assistance, either a $6,000 forgivable second or up to 5% of the price (maximum $15,000), plus Homeownership for Heroes, which reduces the Great Choice rate and waives the first-time-buyer requirement for military and Veterans.
Can I combine THDA assistance with a VA loan?
THDA assistance is designed to ride with a THDA Great Choice first mortgage. For a full-entitlement Veteran, VA-only is often cheaper; when THDA helps, it is usually the Homeownership for Heroes rate reduction. We run both ways.
What is Homeownership for Heroes?
It is a THDA Great Choice option for active military and Veterans that reduces the Great Choice rate and waives the first-time-buyer requirement anywhere in Tennessee.
Is THDA assistance a grant I don't pay back?
The Great Choice Plus deferred option (up to $6,000, and up to $10,000 for qualifying borrowers) is a forgivable second at 0% interest, forgiven at the end of its 10-year term (repaid in full if you sell or refinance sooner). The percentage option is a repayable second mortgage. We confirm which you are getting.
What do I need to qualify for THDA?
Plan on about a 640 credit score, meeting THDA's county income and purchase-price limits, and completing a homebuyer education course before closing.