Down Payment Assistance in Knoxville, Tennessee

THDA Great Choice Home Loan

The Tennessee Housing Development Agency's Great Choice program is the primary down payment assistance resource for Knoxville buyers. It provides a 30-year fixed-rate first mortgage (FHA, VA, USDA, or conventional) combined with a second mortgage of up to 6% of the purchase price for down payment and closing cost assistance.

The second mortgage is a deferred loan — no monthly payments are required. It becomes due when you sell, refinance, or pay off the first mortgage. Income and purchase price limits apply and vary by county and household size.

THDA programs are available statewide, including Knox County. Eligibility requirements, income limits, and purchase price caps change periodically. Morgan Hardy can verify current THDA terms and determine whether you qualify.

Who qualifies for THDA in Knox County

THDA programs are generally available to first-time home buyers (defined as not having owned a primary residence in the past three years) who meet income and purchase price limits. Some THDA programs are available to repeat buyers in targeted areas or for buyers in specific professions.

Income limits are based on household size and county. Knox County limits are higher than many rural Tennessee counties due to higher area median income. A household that doesn't qualify in a rural county may qualify in Knox County, and vice versa.

Other down payment assistance sources

• Lender-specific programs: Some lenders offer their own down payment assistance grants or forgivable second mortgages, particularly for buyers in lower income brackets or specific census tracts. Availability varies.
• Employer assistance: Some large Knoxville employers — including healthcare systems and the University of Tennessee — have offered homebuyer assistance programs for employees. Check with your HR department.
• Gift funds: FHA and most conventional programs allow the down payment to come entirely from a gift from a family member, with proper documentation.
• USDA and VA: Both programs require no down payment for eligible buyers, eliminating the need for assistance entirely.

Important considerations

Down payment assistance programs often come with tradeoffs: slightly higher interest rates on the first mortgage, income and purchase price caps that limit which homes qualify, and deferred second mortgages that must be repaid when you sell or refinance. These tradeoffs are often worth it for buyers who need the assistance to purchase, but they're worth understanding before you commit.

Not all lenders participate in THDA programs. Morgan Hardy works with THDA-approved lenders and can structure a loan that layers assistance with the right first mortgage program for your situation.