What first-time home buyer programs can I use in Knoxville, Tennessee?
Tennessee’s first time home buyer programs run through the Tennessee Housing Development Agency (THDA). Its Great Choice Home Loan pairs a 30-year fixed rate with up to $15,000 in down payment assistance for qualified Knoxville buyers.
If you’re renting in Knoxville and doing the math on a down payment, the number can feel like the whole wall between you and a home of your own. Here’s what most first-time buyers I work with don’t realize until we sit down together: you may not need to save the full down payment yourself. Tennessee has a state program built specifically to bridge that gap.
I’m Hilmar Castillo with Castillo Realty, and I help first-time buyers across the Knoxville metro — from Karns and Hardin Valley to Fountain City and Oak Ridge — actually use these programs instead of just hearing about them. Let me walk you through how the main one works, who qualifies, and where the real money is.
What are the first-time home buyer programs in Tennessee?
The center of Tennessee’s first-time buyer support is the THDA Great Choice Home Loan. It’s a 30-year fixed-rate mortgage designed for buyers who need help getting in the door. Two features make it worth your attention in Knoxville.
First, the loan itself is usually insured by FHA or USDA-RD, so you can finance up to 96.5% of the home’s price. That means a minimum down payment of 3.5%. Second — and this is the part that changes the equation — you can pair the loan with down payment assistance to cover that 3.5% and some of your closing costs.
So a program that looks like “you still need 3.5% down” can become “most of your upfront cash is covered.” For a first-time buyer in Knoxville, that’s often the difference between buying this year and waiting another two.
How much down payment assistance can you get?
THDA’s down payment assistance comes in two forms, and you choose the one that fits your situation. Here’s the plain-language version:
| Option | How much | How you repay it |
|---|---|---|
| Amortizing second mortgage | Up to 5% of the sales price (maximum $15,000) | Monthly payments over a 30-year term at the same interest rate as your first mortgage |
| Deferred second mortgage | Up to $6,000 or up to $10,000 | No monthly payment — repaid only if you sell or refinance before completing the 10-year term |
The deferred option is the one that surprises people. You take up to $10,000 toward your down payment and closing costs, make no monthly payment on it, and if you stay in the home past the 10-year mark, you don’t repay it at all. For a Knoxville buyer planning to put down roots, that’s real help — not a gimmick.
The amortizing option gives you more money up front (up to $15,000), but you do make a monthly payment on it. Which one is smarter depends on your price point, how long you plan to stay, and your monthly budget. That’s exactly the kind of trade-off I’ll run the numbers on with you before you commit.
Who qualifies for THDA down payment assistance in Knoxville?
The rules are more reachable than most renters assume. To qualify for the Great Choice Home Loan and its down payment assistance, you generally need to meet these core requirements:
- A minimum credit score of 640 for everyone listed on the loan application
- A down payment as low as 3.5% (which the assistance can cover)
- The home is your primary residence
- You meet THDA’s household income and purchase-price limits for your county — these change over time and vary by household size
Income and purchase-price limits are the piece most buyers guess wrong on, in both directions. Some assume they earn too much to qualify and never apply; others assume they’re fine and get surprised. Because THDA updates these limits and adjusts them by county and household size, I always confirm the current numbers with a THDA-approved lender before you fall in love with a house. I’ll connect you with one.
The Homeownership for Heroes discount
If you serve the community, Tennessee gives you more. Through Homeownership for Heroes, THDA offers up to a ½% reduction in your interest rate on top of the Great Choice loan.
The program covers firefighters, state and local law enforcement officers, EMTs and paramedics, K–12 teachers, and veterans or active-duty military — including Reservists, National Guard members, and surviving spouses. For qualified military and veterans, it also waives the first-time buyer requirement statewide. Over a 30-year loan, half a percentage point off your rate adds up to real money kept in your pocket.
Knoxville has a large community of teachers, first responders, and veterans, so this one comes up often in my buyer consultations. If it applies to you, we build it into your plan from day one.
What to do first as a first-time buyer in Knoxville
The order matters more than most people think. Do these three things before you start touring homes:
- Check your credit. You need a 640 minimum, so know your number now. If you’re close, small fixes can get you there.
- Get pre-approved with a THDA-approved lender. Not every lender offers THDA loans. Working with one who does confirms your price range and locks in your assistance option.
- Map your budget to a real Knoxville price point. Knowing what your monthly payment actually looks like — including the assistance structure you choose — keeps your search grounded.
That’s where I come in. As a first-time buyer, you shouldn’t be piecing this together from scattered websites. I’ll connect you with a THDA-approved lender, help you decide between the deferred and amortizing assistance, and walk your budget out to a real payment on a real Knoxville home. Castillo Realty is a boutique, full-service brokerage, and I work with buyers in both English and Spanish.
Frequently asked questions
What credit score do you need for a THDA loan in Tennessee?
Everyone listed on the loan application needs a minimum credit score of 640 to qualify for THDA’s Great Choice Home Loan. If you’re close, targeted steps in the months before you buy can often lift you over the line.
How much money do you need to buy your first home in Knoxville?
With a THDA Great Choice loan, your minimum down payment is 3.5%, and the program’s down payment assistance can cover most or all of that upfront cost. You should still budget for items like an inspection, appraisal, and moving expenses, which a pre-approval will spell out.
Do you have to be a first-time buyer to use THDA down payment assistance?
The Great Choice program is built for first-time buyers, but there are exceptions. Qualified military members and veterans using Homeownership for Heroes can have the first-time requirement waived statewide, and some targeted areas also allow repeat buyers.
Ready to see what you qualify for?
You may be closer to owning a home in Knoxville than you think. Call or text Hilmar Castillo, Realtor®/Broker at Castillo Realty, at (865) 437-9539 or visit castillorealtytn.com to get started. I’ll connect you with a THDA-approved lender and map your path to your first home — in English or in Spanish.
Talk soon,
Hilmar
This post is for general information. THDA program amounts, income and purchase-price limits, and eligibility rules change over time — confirm current figures with a THDA-approved lender before making decisions.