The down payment is the wall that stops most first-time buyers before they even start. In Gallatin's $250K-$450K market, a conventional 5% down payment on a $320,000 home is $16,000 out of pocket before you even touch closing costs. That's a significant hurdle, and it's exactly the problem Tennessee's THDA program is designed to help you clear.

This post explains how the program actually works, what buyers in Sumner, Macon, Wilson, and Trousdale Counties can expect to qualify for, and what steps you need to take to access the money.

WHAT IS THE THDA GREAT CHOICE PROGRAM?

THDA stands for Tennessee Housing Development Agency, the state's housing finance authority. The Great Choice Home Loan is a 30-year fixed-rate mortgage backed by either FHA or USDA Rural Development, offered through a network of THDA-approved lenders across the state.

The fixed rate never changes for the life of the loan. Monthly payments are spread over 30 years to keep them manageable. And unlike some state assistance programs, THDA has a broad network of approved lenders in Middle Tennessee, which means you have real options when shopping for the best fit.

The Great Choice program is specifically designed for buyers in the moderate-to-middle income range. It is not a grant; it is a mortgage product. The down payment assistance piece (called Great Choice Plus) is a second loan that either defers payment or amortizes alongside your first mortgage, depending on which option you choose.

Who qualifies as a first-time buyer under THDA? Anyone who has not owned and occupied a home as their primary residence within the past three years. If you owned a home before but have been renting for the past three or more years, you likely qualify. There is also an exception for homes in federally designated "Targeted" areas, where the first-time buyer requirement is waived entirely.

HOW MUCH DOWN PAYMENT HELP CAN YOU GET?

THDA's Great Choice Plus program offers two options:

Option 1: Deferred Second Mortgage ($6,000)

A second loan of $6,000 at 0% interest, deferred for the life of your first mortgage. You make no payments on it. At the end of 30 years, it is forgiven. The catch: if you sell or refinance before the 30-year term ends, you repay the $6,000 in full at that time. For most buyers planning to stay in their home for at least 5-10 years, this is straightforward and cost-free assistance.

Option 2: Amortizing Second Mortgage (Up to 5% / Max $15,000)

A second loan equal to up to 5% of the purchase price, capped at $15,000, with the same interest rate as your first mortgage. This amount is paid off over the loan term alongside your first mortgage. The monthly payment is spread out, which keeps it manageable.

For a $300,000 purchase, Option 2 provides up to $15,000. Combined with an FHA loan requiring only 3.5% down ($10,500), the assistance more than covers your down payment, leaving extra to apply toward closing costs.

For a $350,000 purchase, 5% equals $17,500, but the cap holds at $15,000. That still covers the FHA down payment of $12,250, with $2,750 left over for closing cost credits.

You can use our full closing costs breakdown for Gallatin buyers (https://www.nashvilleareapropertyfinder.com/blog/closing-costs-buyers-gallatin-tn-2026) to see exactly how to stack THDA assistance against your total cash need.

INCOME AND PURCHASE PRICE LIMITS

This is where a lot of buyers assume they won't qualify and stop reading. Don't do that. The income limits are higher than most people expect, especially in Sumner and Wilson Counties.

Sumner County and Wilson County income limits (1-2 person household): up to $119,760

Sumner County and Wilson County income limits (3+ person household): up to $139,720

These are among the highest caps in Tennessee, reflecting the Nashville metro cost-of-living adjustment. A household earning $100,000 or even $115,000 can still qualify.

Macon and Trousdale Counties have lower limits, which are updated annually. Check the current numbers at GreatChoiceTN.com before assuming you're out.

Purchase price cap: $500,000 in all 95 Tennessee counties. This is  meaningful in Gallatin's current market, where the median sale price is around $439,000. However, there are plenty of homes in the $280K-$395K range across Portland, Westmoreland, Bethpage, Lafayette, and Hartsville that also fall comfortably within the limit.

OTHER ELIGIBILITY REQUIREMENTS

Beyond income and purchase price, here's what THDA checks:

Credit score: All borrowers on the application must have at least a 640 credit score. If one applicant is below 640, that person generally cannot be on the loan.

Debt-to-income ratio: FHA-backed loans through THDA typically allow up to 43-50% DTI, depending on the lender and your compensating factors.

Primary residence only: The home must be your primary residence. Investment properties and vacation homes do not qualify.

Property type: Single-family homes, condos, and some manufactured homes qualify. The property must be in Tennessee.

Homebuyer education: This is required, no exceptions. The course can be completed online through HUD-approved providers and takes approximately 6-8 hours. Budget time for this before you start shopping.

HOW TO APPLY: THE STEPS IN ORDER

The THDA process runs through an approved lender, not through THDA directly. Here is the sequence:

1. Complete homebuyer education. Do this first. Some lenders require the certificate before they will issue a pre-approval. It also sets you up to make smarter decisions throughout the process.

2. Find a THDA-approved lender. THDA maintains a list at GreatChoiceTN.com. Not every lender is approved. Ask specifically about Great Choice loans and Great Choice Plus, and ask whether they can pair DPA with your loan type.

3. Get pre-approved. Bring pay stubs, W-2s or tax returns (two years), bank statements (two to three months), and a government-issued ID. The lender will pull your credit and confirm your income against the county limits.

4. Go under contract on a home. Once you have an accepted offer, your lender submits the file with the THDA loan and DPA request. For a full picture of what happens after your offer is accepted, see our step-by-step guide to the Tennessee under-contract process (https://www.nashvilleareapropertyfinder.com/blog/what-happens-after-offer-accepted-tennessee).

5. Close. THDA-backed loans close at a title company, the same as any Tennessee residential purchase. The second loan funds at closing alongside your first mortgage.

The full timeline from pre-approval to closing typically runs 35-50 days for THDA-backed FHA loans, slightly longer than a conventional purchase due to the additional file review.

WHAT THDA DOES NOT COVER (AND WHAT FILLS THE GAP)

THDA assistance reduces your cash-to-close, but it doesn't eliminate it. You will still need:

- Your portion of the down payment (after DPA is applied)

- The homebuyer education course fee (usually $0-$75 online)

- Appraisal fee ($500-$800, paid before closing)

- Home inspection ($300-$500, paid before closing)

- Remaining closing costs not covered by THDA or seller concessions

In the current Gallatin market, where homes are averaging 34 days on market and sellers are negotiating, it is often possible to request seller-paid closing cost credits of $3,000-$7,000 on top of THDA assistance. Stack the two together and your total cash-to-close on a $300,000 home can come down dramatically.

Your specific number depends on your income, the home price, your loan type, and what you negotiate with the seller. That is a 30-minute conversation with a lender and an agent who knows this market.

IS THDA WORTH IT, OR SHOULD YOU USE A CONVENTIONAL LOAN?

This is one of the most common questions we hear from buyers in Gallatin, and the answer depends on your situation.

THDA's Great Choice loan is FHA-backed, which means you'll pay mortgage insurance (MIP). FHA MIP includes an upfront premium of 1.75% of the loan amount (added to the loan balance) plus an annual premium of 0.55-0.85% depending on your loan-to-value ratio. On a $285,000 loan, that's roughly $1,568 upfront and around $130-$200/month ongoing.

A conventional loan with 5% down and a credit score above 720 may carry lower mortgage insurance costs than FHA, and PMI on a conventional loan falls off once you reach 20% equity. FHA MIP has different rules and may last the life of the loan depending on your down payment amount.

That said: if the THDA assistance is the difference between buying this year and waiting another two or three years to save more, the program's value is substantial. Especially in a market where prices have been rising year over year.

Run the side-by-side comparison with a THDA-approved lender before you decide. The numbers tell you more than any general advice.

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FREQUENTLY ASKED QUESTIONS

What is the income limit for THDA in Sumner County, TN?

For Sumner County, the THDA Great Choice income limit is up to $119,760 for households of 1-2 people and up to $139,720 for households of 3 or more. These are among the higher limits in Tennessee, adjusted for the Nashville metro area. Limits are updated annually; confirm current figures at GreatChoiceTN.com before applying.

How much down payment assistance does THDA offer in Tennessee?

THDA's Great Choice Plus program offers either a $6,000 deferred second mortgage at 0% interest, or up to 5% of the purchase price (maximum $15,000) as an amortizing second loan. Both options can be applied toward your down payment, closing costs, or both. The deferred option requires no monthly payments and is forgiven after 30 years unless you sell or refinance first.

Do you have to be a first-time buyer to use THDA in Tennessee?

Generally, yes. THDA defines a first-time buyer as someone who has not owned and occupied a home as their primary residence in the past three years. If you previously owned a home but have been renting for three or more years, you likely qualify. The first-time buyer requirement is waived for homes in federally designated Targeted areas.

What credit score do I need for a THDA loan in Tennessee?

All borrowers on the loan application must have a minimum 640 credit score. If any applicant is below 640, they generally cannot be included on the loan. You can work on improving your credit score before applying; most buyers can see meaningful improvement within 3-6 months of focused effort.

Can THDA assistance be combined with seller concessions in Gallatin, TN?

Yes. THDA down payment assistance and seller-paid closing cost credits are separate and can be stacked in the same transaction. In Gallatin's current market, where homes are averaging 34 days on market, many sellers are willing to contribute $3,000-$7,000 toward buyer closing costs. Combining that with THDA assistance can significantly reduce how much cash you need to bring to the closing table.

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THDA is not a magic solution, and it is not right for every buyer. But for first-time buyers in Gallatin, Portland, Lebanon, Westmoreland, Lafayette, and the surrounding counties who have a solid income but haven't had years to accumulate a large down payment, it is one of the most practical tools available in Tennessee right now.

If you want to know whether you qualify and how to stack it with seller concessions in your target price range, we can walk through it together. We work with buyers using THDA financing regularly and can connect you with approved lenders in Sumner County who know the program well.

Schedule a free 30-minute call at https://calendly.com/melodykaelinrealtor/30min and we'll walk through your options together.

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About Melody Kaelin Uhls & Rickie Uhls

The Uhls-Kaelin Team is a Middle Tennessee real estate team serving Sumner, Macon, Wilson, and Trousdale Counties, with over $10 million in total sales volume since 2020. Specializing in first-time buyers, relocation, move-up homes, and residential listings in Gallatin, Hendersonville, Portland, Westmoreland, Lafayette, Castalian Springs, Bethpage, Hartsville, and Lebanon, they combine local expertise with a relationship-driven approach.