First-Time Home Buyer Mortgage Guide

Who qualifies as a first-time buyer

For most programs, a "first-time buyer" is anyone who has not owned a primary residence in the past three years. This means someone who owned a home five years ago but has been renting since qualifies as a first-time buyer for program purposes. It also means married couples where one spouse has owned before but the other hasn't may still qualify, depending on the program.

Tennessee's THDA programs use the three-year lookback definition. Some programs have no first-time buyer requirement at all — FHA, VA, and USDA are available to any eligible borrower regardless of prior homeownership.

Best programs for first-time buyers in Tennessee

• FHA: 3.5% down with 580+ credit score. The most flexible credit requirements of any standard program. Available statewide with no first-time buyer requirement.
• USDA: Zero down in eligible rural and suburban areas. Income limits apply. Available in many Tennessee communities outside major metro cores.
• VA: Zero down for eligible veterans and active-duty military. No mortgage insurance. The best terms available for those who qualify.
• THDA Great Choice: Tennessee's first-time buyer program with below-market rates and optional down payment assistance. Income and purchase price limits apply.
• Conventional 97: 3% down for first-time buyers with strong credit (620+). No upfront MIP; PMI can be removed when equity reaches 20%.

Down payment assistance in Tennessee

Tennessee's THDA Great Choice Plus program provides down payment assistance as a second mortgage, deferred until the home is sold or refinanced. The assistance is paired with the Great Choice Home Loan first mortgage. The specific assistance amount and terms are set by THDA and are subject to change — verify current program details with Morgan Hardy before making decisions based on THDA assistance.

Local programs may also be available in some Tennessee counties and cities. Morgan Hardy can identify which assistance programs are available for a specific purchase location and price point.

Credit and income requirements

Minimum credit scores vary by program: FHA requires 580 for 3.5% down (500–579 with 10% down), conventional requires 620+, USDA requires 640+, and VA has no official minimum (though most lenders require 580–620). Income must be documented and stable — two years of W-2 history is the standard, with additional documentation required for self-employment or variable income.