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About the THDA Homeownership for Heroes
THDA Homeownership for Heroes cuts the interest rate on a Tennessee Housing Development Agency Great Choice Home Loan by 0.50% for military members, veterans, first responders and K-12 teachers. THDA estimates the discount saves buyers about $125 per month. The loan is a 30-year fixed rate mortgage available only with FHA, VA or USDA-RD financing, and buyers can still add Great Choice Plus down payment assistance of up to $15,000.
Eligible buyers include active-duty military, National Guard members and veterans, EMTs and paramedics, firefighters, state and local law enforcement officers, state and local public safety emergency dispatchers, and K-12 teachers and principals employed full time at a Tennessee public or private school. Household income limits effective August 1, 2026 run from $94,900 for one or two people and $109,200 for three or more in the lowest counties to $139,320 and $162,540 in Davidson, Williamson, Rutherford and other Nashville-area counties. The purchase price cap is $500,000 in every Tennessee county, and every borrower needs a 640 credit score. The stricter rule is the first-time buyer test: only qualified military and veterans get a statewide waiver. Teachers, firefighters and other heroes who owned a principal residence in the past three years must buy in a targeted county or census tract.
The rate cut is not a loan, so there is nothing to repay or forgive. Optional Great Choice Plus assistance is a second mortgage: the Deferred option of $6,000 or $10,000 is forgiven after 10 years, while the Amortizing option of 5% up to $15,000 is repaid over 30 years at the first-mortgage rate. Compared with a standard Great Choice loan, Heroes adds the rate discount. Compared with THDA's HFA Advantage conventional loan, it allows VA and USDA-RD financing at 100% of price.
How much assistance
Eligibility
- Income limits: Household income limits by county and household size, effective 08.01.2026: from $94,900 (1-2 persons) / $109,200 (3+) in the lowest counties to $139,320 / $162,540 in Davidson, Williamson, Rutherford, Sumner, Wilson and other Nashville-area counties. Targeted counties: $113,880 / $132,860.
- Purchase price limit: $500,000
- First-time buyer required: Yes — No borrower may have occupied a home they owned as a principal residence in the past three years. Waived statewide for qualified military and veterans, and for any eligible hero buying in a THDA targeted county or targeted census tract.
- Credit score minimum: 640
- Geographic restrictions: Must purchase within Tennessee.
- Homebuyer education required: Yes
How to Apply for THDA Homeownership for Heroes
Step 1: Confirm your profession and the county limits
Check that you fit one of THDA's Heroes categories, such as a veteran, firefighter, emergency dispatcher, or full-time K-12 teacher or principal at a Tennessee school. Then compare your total household income with THDA's county chart effective August 1, 2026. Limits run from $94,900 to $139,320 for one or two people, and the purchase price cap is $500,000 statewide. Call THDA at 800-228-THDA with questions.
Step 2: Check the first-time buyer rule
Qualified military and veterans can skip the first-time buyer rule anywhere in Tennessee. Other heroes must not have occupied a home they owned as a principal residence in the past three years, and every borrower on the loan must pass that test. The rule is waived in THDA's 43 targeted counties and in designated census tracts in 15 more counties, which are marked on the income chart.
Step 3: Complete THDA homebuyer education
THDA requires a homebuyer education course for every Homeownership for Heroes loan. Take it online through eHomeAmerica for $100 per household, followed by a session with a housing counselor, or in a classroom with an approved agency. The certificate is valid for 12 months, and THDA suggests finishing at least four weeks before closing. Find classes at thda.org/homebuyers/homebuyer-education.
Step 4: Choose a THDA-approved lender
Only lenders trained and approved for Great Choice can originate Homeownership for Heroes loans. THDA lists them by West, Middle and East Tennessee at thda.org/homebuyers/find-a-lender, along with a PDF of every approved lender. Tell the loan officer you want Heroes pricing, and ask which proof of military service or employment THDA accepts for your profession before you apply.
Step 5: Get pre-approved on FHA, VA or USDA-RD
Heroes pricing is available only on FHA, VA and USDA-RD loans, so the lender will pre-approve you for one of those three. Everyone on the application needs at least a 640 credit score. VA and USDA-RD loans can cover 100% of the purchase price, while FHA covers 96.5%, leaving a 3.5% down payment that Great Choice Plus can fund.
Step 6: Add Great Choice Plus and close
Decide whether to add Great Choice Plus: the Deferred option of $6,000 or $10,000 at 0% with no payments, or the Amortizing option of 5% of the price up to $15,000. Make an offer on a home priced at $500,000 or less that will be your principal residence, since THDA does not finance investment property or second homes. You sign the first mortgage and any second mortgage at closing.
Real Cost Example
A veteran buying a $305,000 home in Clarksville, near Fort Campbell, can use a VA loan through Homeownership for Heroes with no down payment. The same buyer using FHA would need 3.5%, or $10,675. Clarksville sits in Montgomery County, where THDA's income limits are $102,574 for one or two people and $117,961 for three or more. The $500,000 price cap leaves room above the city's $305,000 median.
Estimated closing costs in Clarksville run $6,000 to $9,000. On the VA loan, that is the buyer's main cash need besides prepaid taxes and insurance. On the FHA loan, total cash to close would be $16,675 to $19,675 before any seller credits. THDA estimates the 0.50% rate discount saves about $125 per month on either loan.
The Great Choice Plus Amortizing option tops out at $15,000 here, because 5% of $305,000 is $15,250. For the FHA buyer, $15,000 covers the $10,675 down payment and $4,325 of closing costs, leaving $1,675 to $4,675 out of pocket. The tradeoff is a second 30-year loan at the first-mortgage rate. The Deferred option instead gives $6,000 or $10,000, forgiven after 10 years.
Combining With Other Programs
Homeownership for Heroes includes all Great Choice Home Loan benefits, so it stacks with THDA's own Great Choice Plus second mortgage. Heroes buyers can pick the Deferred option, $6,000 or $10,000 at 0% and forgiven after 10 years, or the Amortizing option, 5% of the sales price up to $15,000 at the first-mortgage rate over 30 years. The Amortizing option for newly built or proposed construction goes up to $25,000 at 0% over 15 years.
Heroes pricing cannot be used with THDA's HFA Advantage conventional loan, because the discount applies only to FHA, VA and USDA-RD first mortgages. You also cannot take Great Choice Plus without a Great Choice first mortgage. Any Great Choice Plus balance comes due if you sell or refinance before its term ends. For questions about a combination, call THDA at 800-228-THDA or its homeownership hotline at 615-815-2100.
Veterans can lower cash to close further with a VA loan, which needs no down payment, so the full Great Choice Plus amount can go toward closing costs. Buyers can also negotiate seller credits toward closing costs in the purchase contract. THDA homebuyer education counselors can help raise a credit score before you apply, which matters because every borrower needs a 640.
Pros and Cons
The biggest advantage is a 0.50% rate cut on a 30-year fixed loan, which THDA estimates saves about $125 per month for the life of the loan. Veterans and service members also skip the first-time buyer rule anywhere in Tennessee, which standard Great Choice borrowers get only in targeted areas. Heroes buyers keep access to Great Choice Plus, up to $15,000 amortizing or $6,000 to $10,000 forgivable. VA and USDA-RD loans can finance 100% of the price, and the $500,000 cap applies in every county, well above Clarksville's $305,000 or Knoxville's $315,000 median.
The biggest limitation is the first-time buyer rule for heroes outside the military. A teacher, dispatcher or firefighter who owned a principal residence in the past three years qualifies only in a targeted county or census tract. The loan must be FHA, VA or USDA-RD, so buyers who want conventional financing lose the discount. Income caps stop at $139,320 for one or two people even in Nashville-area counties, and the $500,000 cap rules out much of Franklin, where the median is $830,000. The main alternatives are THDA's standard Great Choice loan and its HFA Advantage conventional loan.
Frequently Asked Questions
Do teachers qualify for THDA Homeownership for Heroes?+−
How much does Homeownership for Heroes lower my interest rate?+−
Do I have to be a first-time homebuyer for THDA Homeownership for Heroes?+−
Can I get down payment assistance with Homeownership for Heroes?+−
What are the income and price limits for THDA Homeownership for Heroes?+−
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Program details last verified: October 13, 2026