THDA Great Choice Home Loan

A buyer purchasing a $340,000 home in Chattanooga with a Great Choice FHA loan needs 3.5% down, or $11,900, and borrows a base amount of $328,100 at THDA's fixed 30-year rate. Chattanooga sits in Hamilton County, where THDA's August 2026 limits are $101,854 for one or two people and $117,133 for three or more. Hamilton has targeted census tracts, so a repeat buyer may still qualify in the right neighborhood.

Estimated closing costs in Chattanooga run $7,000 to $10,000. Added to the $11,900 down payment, the buyer needs $18,900 to $21,900 at closing before prepaid taxes and insurance. THDA lets the seller pay closing costs, so a seller credit written into the contract can shrink that number. A veteran using a VA Great Choice loan would skip the $11,900 down payment entirely.

Adding Great Choice Plus Amortizing provides 5% of the price, but 5% of $340,000 is $17,000, so the $15,000 cap applies. That covers the $11,900 down payment and $3,100 of closing costs, leaving $3,900 to $6,900 out of pocket. The $10,000 Deferred option would leave $8,900 to $11,900, with no monthly payment and full forgiveness after 10 years.

Great Choice Plus, THDA's own down payment and closing cost second loan, requires this first mortgage. One version is repaid monthly: it lends 5% of the sales price, capped at $15,000, over a 30-year term that carries the same rate as your Great Choice loan. The other is a $6,000 or $10,000 zero-interest loan with no payments that THDA forgives once 10 years pass. New construction can draw $25,000 interest free over 15 years. Eligible heroes also get a 0.50% rate discount through Homeownership for Heroes.

Great Choice cannot be combined with THDA's Freddie Mac HFA Advantage, because both are first mortgages and a buyer picks one. HFA Advantage Plus, the conventional loan's own assistance, offers $6,000 deferred or 5% up to $15,000 amortizing, with no $10,000 tier. Selling the home or refinancing the first mortgage early makes any unpaid Great Choice Plus balance payable at that sale or refinance. Call THDA at 800-228-THDA to confirm a combination before you sign.

THDA allows closing costs to be paid by the seller or with gift funds where the loan type permits. Veterans using VA financing need no down payment, which frees the full Great Choice Plus amount for closing costs. In Memphis, where the median is $220,000, FHA's 3.5% down is $7,700 and estimated closing costs run $4,500 to $6,500, so the $10,000 Deferred option leaves $2,200 to $4,200 to bring.

The THDA Great Choice Home Loan locks a fixed rate for 30 years and works with FHA, VA, USDA-RD and conventional financing, so most buyers keep the loan type they already qualify for. The $500,000 price cap applies in every county, above Nashville's $475,000 median and Chattanooga's $340,000. Great Choice Plus adds up to $15,000, or a forgivable $6,000 to $10,000. THDA lets borrowers prepay without penalty or pass the loan to a qualified buyer by assumption. Buyers of a duplex, triplex or fourplex can live in one unit and still use the program.

The biggest limitation is the three-year first-time rule outside targeted areas. A Knox or Shelby County repeat buyer qualifies only in a targeted census tract or as qualified military. Household income counts everyone in the home, the 640 floor applies to every borrower, and points cannot be used to buy the rate down. Hendersonville and Spring Hill buyers face a squeeze, since typical prices of $595,000 and $530,000 sit above the cap. Selling within nine years can trigger federal recapture tax. Repeat buyers should compare THDA's HFA Advantage, which drops the first-time rule, or Homeownership for Heroes.