Tennessee Home Loans 2026 — Complete Guide
Tennessee offers up to $15,000 in THDA down payment assistance, plus why its 'homestead exemption' is actually a bankruptcy protection, not a tax break.
The number people miss: Tennessee's "Homestead Exemption" (Tenn. Code §26-2-301) has nothing to do with property tax — it's a bankruptcy and creditor protection law that shields a set amount of home equity from being seized in a lawsuit. If you're searching for a property tax break, you want the state's Tax Relief Program instead, aimed specifically at elderly, disabled, and disabled veteran homeowners.
Tennessee Down Payment Assistance — THDA Programs
The Tennessee Housing Development Agency (THDA) offers down payment assistance through Great Choice Plus, paired with a Great Choice first mortgage.
Great Choice Plus — Two Flat-Dollar Options
Flat dollar amounts, not a percentage: Unlike most states' DPA programs, which scale with your loan amount, Tennessee offers a fixed choice between $6,000 (no payment, deferred) or $15,000 (with a modest monthly payment). On a higher-priced home this can cover less of your total down payment than a percentage-based program would — do the math against your specific purchase price before assuming either option covers what you need.
HFA Advantage is open to repeat buyers, with a quirk: If you'd rather use a conventional loan with just 3% down, THDA's HFA Advantage program is available to first-time and repeat buyers statewide, and income eligibility is calculated using only the borrower's income — not the full household's — which can help buyers whose spouse earns significantly more.
Buying in Nashville and THDA isn't enough? The Housing Fund, a Nashville-area nonprofit lender, offers up to $35,000 in deferred down payment assistance for buyers with a 600+ credit score and income up to 120% AMI — often the better fit for Nashville-metro buyers whose purchase price exceeds what THDA's flat-dollar assistance can meaningfully cover.
Eligibility & Income Limits
Great Choice generally requires first-time buyer status (waived for veterans and targeted areas), a minimum 640 credit score, a 1% minimum cash contribution, and completion of THDA-certified homebuyer education. Income limits vary by county and household size.
Confirm your exact county limit and current program terms at THDA.org before applying.
Current Rates
| Product | Rate | Source |
|---|---|---|
| 30-yr Conventional | 6.55% | Freddie Mac PMMS, week of July 16, 2026 |
| 15-yr Fixed | 5.93% | Freddie Mac PMMS, week of July 16, 2026 |
| THDA Great Choice first mortgage | Below market | Confirm current rate with a THDA-approved lender |
2026 Loan Limits by County
Nashville-area counties and other growing metros carry elevated FHA limits, while rural and lower-cost counties like Shelby (Memphis) and Knox (Knoxville) use the standard floor.
| Area | FHA Limit |
|---|---|
| Standard counties (Shelby, Knox, Hamilton, Sevier, and most others) | $541,287 |
| Nashville-area cluster (Davidson, Rutherford, Sumner, Wilson, Cheatham) | ~$694,450 |
| Williamson County | Up to $1,029,250 — verify current figure |
Williamson County needs individual verification: Sources disagree on whether Williamson County shares the Nashville-area cluster limit (~$694,450) or sits at a much higher figure closer to the national ceiling. Given the county's rapid price growth in Franklin, Brentwood, and Nolensville, confirm the current exact number at HUD.gov before relying on either figure. Conforming limits run $832,750 in standard counties, up to $1,249,125 in the highest-cost counties.
Property Tax in Tennessee
What Buyers Should Budget For
Tennessee assesses residential property at 25% of market value before local rates apply, and combined with no state income tax, the overall tax burden is genuinely low — but there is no general homestead exemption for property tax the way many other states offer. Instead, the state-funded Tax Relief Program (Tenn. Code Title 67, Chapter 5, Part 7) reimburses the tax owed on the first $30,000 of a home's market value for homeowners 65 or older, or totally and permanently disabled, with combined household income at or below roughly $37,530 — note that in some counties this arrives as a credit on your bill, and in others as a separate reimbursement check, so you may need to pay the full amount upfront either way. Veterans with a 100% service-connected disability, and qualifying surviving spouses, receive relief on the first $175,000 of value with no income test. Some counties, including Nashville-Davidson, separately offer a locally adopted Tax Freeze Program that locks in your bill at the amount owed when you first qualify at 65, regardless of later reappraisals.
Pick Your Loan Type
Are you a teacher, nurse, firefighter, police officer, EMT, or veteran? THDA's Homeownership for Heroes offers a 0.5% rate reduction for military, veterans, law enforcement, EMTs, paramedics, and firefighters on top of the general options covered here. Browse the Hero Home Loan Programs hub and select Tennessee for profession-specific options.
Frequently Asked Questions
Bottom Line: Tennessee combines no state income tax with genuinely low property tax and flat-dollar THDA down payment assistance that's straightforward to plan around, if modest for higher-priced homes. Skip the confusion around the "homestead exemption" name and look directly to the Tax Relief Program if you qualify by age, disability, or veteran status.
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