Tennessee pays you back for the work you do
If you serve Tennessee as a firefighter, EMT, paramedic, police officer, K–12 teacher, or in the military, the state’s Homeownership for Heroes program can cut your mortgage rate and cover most of what you’d owe at closing.
- Firefighters
- EMTs & Paramedics
- State & Local Law Enforcement
- K–12 Teachers
- Active Duty & National Guard
- Veterans
Christian Penna · Realtor® · Castillo Realty · Knoxville and East Tennessee · Se habla español
Homeownership for Heroes is a Tennessee Housing Development Agency (THDA) Great Choice Home Loan that gives Tennessee firefighters, EMTs, paramedics, state and local law enforcement officers, full-time K–12 teachers, and active-duty military, National Guard members and veterans a half-percent reduction on their mortgage interest rate, plus down payment assistance of up to $15,000. Christian Penna, a Realtor® with Castillo Realty in Knoxville, Tennessee, works with buyers across Knox, Blount, Loudon, Anderson and Sevier counties who want to use it.
Program details verified against thda.org. Income and purchase price limits below are THDA’s figures effective August 1, 2026.
What the program actually gives you
Four things, and they stack.
A lower interest rate for 30 years
Heroes get a half-percent (0.5%) discount off the current Great Choice rate. THDA estimates that saves a buyer roughly $125 a month — and the rate is fixed, so it never moves.
Money for the down payment
Great Choice Plus is a second loan that covers your down payment, your closing costs, or both. Three structures are available; the right one depends on how long you plan to stay in the house.
Little or nothing out of pocket
You can borrow up to 100% of the purchase price with a VA or USDA-RD loan, or 96.5% with FHA. Pair that with down payment assistance and the cash you need to close gets very small.
No first-time buyer rule for military
Qualified military members and veterans are exempt from the first-time homebuyer requirement anywhere in Tennessee. Everyone else can still qualify if they haven’t owned a home in three years, or if they’re buying in a targeted area.
Who counts as a hero
THDA’s official eligibility list, as published by the agency.
- Firefighters
- EMTs and paramedics
- State and local law enforcement officers
- K–12 teachers Must hold a full-time teaching position at a Tennessee public or private school. Teachers were added to the program in May 2026.
- Active-duty military, National Guard, and veterans Discharge under conditions other than dishonorable.
Serving in a volunteer or reserve capacity, or in a role adjacent to one of these categories? THDA’s approved lender makes the eligibility call on the specific job title and employer. Ask on the form below and we’ll get you a straight answer before you spend time on it. Homeownership for Heroes is only available on FHA, USDA-RD, and VA loans.
The three down payment assistance options
All three are second mortgages through Great Choice Plus. You pick one.
$6,000 — forgiven
- 0% interest, no monthly payment
- Forgiven completely after 10 years in the home
- Due in full if you sell or refinance before year 10
$10,000 — forgiven
- 0% interest, no monthly payment
- Forgiven completely after 10 years in the home
- Comes with a slight bump to your first mortgage rate
- Due in full if you sell or refinance before year 10
Up to 5% — repaid
- 5% of the sales price, capped at $15,000
- 30-year term at the same rate as your first mortgage
- You make a monthly payment on it, counted in your debt ratio
- Nothing is owed back early if you move
The assistance can go toward your down payment, your closing costs, or your buyer’s representation fee. Which option is cheapest for you depends almost entirely on how long you expect to stay in the house — that’s the first thing Christian will walk through with you.
2026 income and price limits in East Tennessee
THDA caps household income and purchase price, and both vary by county. These are the current figures for the counties Castillo Realty serves.
| County | Max purchase price | Max income, 1–2 people | Max income, 3+ people |
|---|---|---|---|
| Knox | $500,000 | $103,700 | $119,255 |
| Blount | $500,000 | $103,700 | $119,255 |
| Anderson | $500,000 | $103,700 | $119,255 |
| Loudon | $500,000 | $103,700 | $119,255 |
| Roane | $500,000 | $102,514 | $117,892 |
| Sevier | $500,000 | $102,000 | $119,000 |
| Jefferson Targeted | $500,000 | $113,880 | $132,860 |
| Grainger Targeted | $500,000 | $113,880 | $132,860 |
| Monroe Targeted | $500,000 | $113,880 | $132,860 |
| Campbell Targeted | $500,000 | $113,880 | $132,860 |
| Union Targeted | $500,000 | $124,440 | $145,180 |
Source: THDA Acquisition Cost & Income Limits, effective August 1, 2026. In a targeted county the first-time homebuyer requirement is waived entirely. Knox, Blount and Anderson counties each contain targeted census tracts where it’s waived too — so a repeat buyer can qualify depending on the address. Ask us to check a specific street.
What you’ll need to qualify
- 640 credit score. Every borrower on the application has to hit it.
- Debt-to-income under 45%. Some files need to come in tighter than that.
- A homebuyer education course. Required for down payment assistance. Runs about $99 in person or $100 online per household, every borrower takes it, and the certificate is good for 12 months.
- You live there. The home has to be your primary residence for the life of the loan. Deployed active-duty military are the one exception.
- An eligible property. 1–4 units, five acres or less, not for business use. Houses, condos, townhomes, and multi-wide manufactured homes on permanent foundations all work.
The three-year rule
THDA counts you as a first-time buyer if you haven’t held an ownership interest in a primary residence for the last three years. A non-purchasing spouse counts too.
Three ways around it:
- Military and veterans. The requirement is waived statewide.
- Targeted areas. Waived in 43 full counties and parts of 15 more.
- Mobile home owners. If your home wasn’t taxed or titled as real property, you may still count as a first-time buyer.
Past credit trouble doesn’t automatically end the conversation. THDA looks for three years past a foreclosure, two past a Chapter 7, and one past a Chapter 13. If you’re close to one of those lines, it’s worth a call.
How this goes
Four steps. Most buyers are done with the first two inside a week.
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Tell us where you stand
Fill out the form below. Christian reviews your role, your county, and roughly where your income lands, then tells you honestly whether THDA is your best path or whether something else beats it.
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Get matched with a THDA-approved lender
Only approved lenders can originate these loans. We’ll introduce you to one who actually does volume in this program, and they’ll run your numbers and issue a pre-approval.
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Knock out the education course
One class, taken online or in person, good for 12 months. Do it early so it never holds up your closing.
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Go find the house
This is the part we’re built for. Christian handles the search, the offer, and the negotiation, and keeps the deal inside THDA’s price and property rules so nothing blows up at underwriting.
Not on the hero list?
The rate discount is only for the five service categories above. Everything else on this page — the Great Choice Home Loan, the $6,000 and $10,000 forgivable assistance, the 5% option, the 96.5% and 100% financing — is open to any Tennessee buyer who meets the credit, income, and price limits.
Most of the buyers we help with this are first-time buyers with steady jobs and solid credit who simply haven’t stockpiled $20,000 in cash. That’s the exact gap the program was built to close.
There’s also a conventional path. THDA’s Freddie Mac HFA Advantage product pairs the same down payment assistance with a conventional loan, which can beat FHA outright once your credit score climbs past the mid-700s.
And THDA isn’t automatically the cheapest option for everyone. A straight FHA or conventional loan sometimes wins. We’ll tell you when that’s the case, even though it makes for a shorter conversation.
Ask about your situation
Send this over and Christian will come back to you personally with what you’d qualify for, what it would cost to get into a house, and what your next step is. No obligation, no automated drip, and nothing gets sold to a call center.
In a hurry? Call or text (865) 748-8542.
Christian Penna
Realtor® · Castillo Realty · Knoxville, Tennessee
Christian is a Realtor® with Castillo Realty, a boutique full-service brokerage in Knoxville. He came to real estate from the mortgage side, which is why buyers using down payment assistance tend to end up working with him — he can explain what the second mortgage does to your monthly payment before you’re sitting at a closing table finding out.
He serves buyers across Knox, Blount, Loudon, Anderson and Sevier counties, including Farragut, Bearden, Hardin Valley, Karns, Powell, Halls, Fountain City, Maryville, Alcoa, Lenoir City and Oak Ridge. Castillo Realty’s agents bring 25+ years of combined real estate experience and serve clients in English and Spanish.
- Call or text: (865) 748-8542
- Email: [email protected]
- Office: Castillo Realty, 200 Prosperity Dr., Suite 234, Knoxville, TN 37923
- TN License: 379959 · Firm License #343999
Questions we get every week
Who qualifies for THDA Homeownership for Heroes in Tennessee?
Firefighters, EMTs and paramedics, state and local law enforcement officers, full-time K–12 teachers at Tennessee public or private schools, and active-duty military, National Guard members and veterans. All of them get a 0.5% reduction on the Great Choice Home Loan interest rate. The program runs on FHA, USDA-RD, and VA loans only.
How much down payment assistance can I get in Knox County?
Up to $15,000. THDA offers three Great Choice Plus structures: $6,000 forgiven after 10 years at 0% interest, $10,000 forgiven after 10 years at 0% interest with a small increase to your first mortgage rate, or up to 5% of the sales price capped at $15,000, repaid monthly over 30 years at your first mortgage rate.
What is the THDA income limit for Knox County?
As of August 1, 2026, household income can’t exceed $103,700 for a one- or two-person household, or $119,255 for a household of three or more. The maximum purchase price in Knox County is $500,000. THDA updates these figures periodically, so confirm the current number with an approved lender before you write an offer.
Do I have to be a first-time homebuyer?
Usually, but there are three exits. Qualified military members and veterans are exempt anywhere in Tennessee. Buyers purchasing in one of 43 targeted counties, or in a targeted census tract inside 15 more counties, are exempt as well. And THDA counts you as a first-time buyer again if you haven’t held an ownership interest in a primary residence for three years.
What credit score do I need for a THDA loan?
640, and every borrower on the application has to meet it. If you’re under that today, a THDA-approved housing counselor can help you build the score up. It’s a common reason buyers start the conversation six months before they buy rather than the week they start looking.
Can I use THDA to buy a manufactured home?
Yes, with conditions: multi-wide only, set on a permanent foundation, with at least 30 years of remaining economic life. THDA’s rates on manufactured homes are typically lower than standard manufactured-home financing, and THDA handles the de-titling at no fee.
Is Christian a lender?
No. Christian is a licensed Realtor®, not a loan officer, and Castillo Realty doesn’t originate mortgages. He’ll explain how the program works and introduce you to THDA-approved lenders who do this every day. Your loan terms, approval, and eligibility are determined by that lender and by THDA.
What does the homebuyer education class cost?
Up to $99 per household in person, or $100 per household online. Every borrower and co-borrower has to take it, the certificate is good for 12 months, and it’s required in order to use down payment assistance.
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