First-Time Buyer Programs in Nashville

Buying your first home in Nashville can feel exciting and overwhelming at the same time. You might be wondering how to cover the down payment, which loan fits your situation, or where to even start. The good news is that Davidson County buyers have real options that can lower upfront costs and make monthly payments more manageable. In this guide, you will learn the main first-time buyer programs available in Nashville, how eligibility works, what the process looks like, and smart next steps to take. Let’s dive in.

First-time buyer programs in Nashville

State programs from THDA

The Tennessee Housing Development Agency, or THDA, is the statewide hub for first-time buyer help. THDA partners with approved lenders to offer low-rate mortgages, down payment assistance options, and Mortgage Credit Certificates. Many Nashville buyers use these programs because they can reduce cash needed at closing and may offer flexible underwriting. If you plan to use THDA, be sure your lender is on the THDA-approved list.

Metro Nashville local assistance

Metro Nashville’s Office of Housing and Community Development sometimes offers down payment or closing cost assistance, plus homebuyer education and counseling. These funds are usually income qualified and may target Davidson County residents or certain areas. Local assistance often runs on set funding cycles, so availability can change. In some cases, buyers pair Metro assistance with a THDA loan to boost affordability.

Federal loan options many first-time buyers use

Several federal-backed mortgages are popular with first-time buyers in Nashville:

• FHA loans require a low minimum down payment and have flexible credit guidelines.
• VA loans offer zero down payment for eligible veterans and active service members.
• USDA loans offer zero or low down payment for eligible properties in qualifying areas outside the urban core, with income and location limits.

These loan types can sometimes be combined with down payment assistance. Your lender will confirm which combinations fit your situation.

Mortgage Credit Certificates

An MCC is a federal tax credit that lets eligible buyers claim a portion of mortgage interest as a direct credit on their federal taxes. This can improve your monthly cash flow over time. MCCs are typically administered through THDA or local issuers. They are not cash at closing, but they can create meaningful long-term savings if you owe federal income tax.

Nonprofit and lender options

Local nonprofits, community development groups, and some banks offer grants, zero-interest loans, or closing cost credits for first-time buyers. These can help if state or local funds are limited or if you need an extra boost to close. Each program sets its own rules and application process, so plan to compare options.

Who qualifies and what to expect

First-time buyer definition

Most programs define a first-time buyer as someone who has not owned and occupied a primary residence in the past three years. Some programs make exceptions for veterans, displaced homemakers, or long-time owners of modest properties. Always verify the definition for the exact program you plan to use.

Income and purchase price limits

State and local programs usually have household income limits and maximum purchase prices that vary by family size and location. These limits can change during the year, so confirm the current numbers for Davidson County before you apply. Your lender or housing counselor can help you check.

Credit, debt ratio, and savings

Credit requirements depend on the loan type. FHA may allow lower scores than conventional loans, while assistance programs can add their own minimums. Lenders also review your debt-to-income ratio and may look for some reserves in savings. Pre-approval is the best way to see where you stand and what you can afford.

Occupancy and property rules

Most first-time buyer programs require you to live in the home as your primary residence. Many allow single-family homes and some condos or townhomes, and some have special rules for manufactured homes. Your lender will confirm whether the property type is eligible for the program you choose.

Homebuyer education

Many programs require a homebuyer education course from a HUD-approved or state-approved provider. Complete the course early and keep your certificate. You may need it to apply for down payment assistance or to finalize your loan.

Repayment and resale rules

Down payment assistance can be a grant, a deferred second mortgage that is forgiven over time, or a repayable second that is due at sale or payoff. Some benefits also come with resale restrictions or potential recapture rules. Ask for the program documents so you know exactly how repayment works.

How the process works in Nashville

Timeline at a glance

Here is the typical sequence many Davidson County buyers follow when using assistance:

1. Research programs and check basic eligibility for THDA, Metro Nashville options, and federal loans.
2. Take a required homebuyer education course and save the certificate.
3. Contact a THDA-approved lender or a lender experienced with local programs.
4. Get a pre-approval that reflects your loan type and any assistance options.
5. Shop, make an offer, and, once accepted, apply for DPA or MCC as needed.
6. Complete underwriting for the first mortgage and any second mortgage assistance, then close.
7. Meet any post-closing requirements, such as occupancy or follow-up counseling.

Program approvals can add some administrative time, so build in buffer days. A standard purchase might close in 30 to 60 days, and assistance can add extra steps.

Combining programs smartly

Buyers often pair THDA assistance with an FHA or conventional loan. Some may add an MCC to reduce tax liability. In certain cases, local Metro assistance can be layered with state programs. The exact combination depends on program rules and your lender’s guidelines. Ask your lender to outline all compatible options, plus any tradeoffs in rates, fees, or mortgage insurance.

Documents you will need

Gather these items early to keep your file moving:

• Government ID
• Social Security number or ITIN for all borrowers
• Recent pay stubs for 30 days
• W-2s for the last 2 years and tax returns if self-employed
• Bank statements for the last 2 months
• Rental history and landlord contact if requested
• Homebuyer education certificate if required
• Executed purchase contract and property details once under contract

Organizing these documents up front can save days during underwriting.

Common tradeoffs and pitfalls

• Funding windows: Local assistance often has limited funds. Apply early and track deadlines.
• Rate and fees: Some assistance ties to a specific first mortgage rate or adds program fees. Compare total costs.
• Mortgage insurance: If you put less than 20 percent down, PMI or FHA mortgage insurance may apply. Ask how this affects your payment.
• Repayment terms: Not all assistance is forgivable. Understand if a second mortgage is deferred, forgiven over time, or due at sale.
• Property fit: Confirm the home type is eligible. Some condos or manufactured homes have extra steps.
• Offer strength: In a competitive Nashville market, a clean, well-documented pre-approval from a lender who knows these programs helps your offer stand out.

Local resources to contact next

• Tennessee Housing Development Agency (THDA): Program overviews, lender lists, and details on down payment assistance and MCC.
• Metro Nashville Office of Housing and Community Development: Local assistance announcements, income guidelines, and counseling resources.
• HUD-approved housing counseling agencies: Education certificates, budgeting help, and one-on-one guidance.
• FHA, VA, USDA program pages: Loan eligibility and property rules for federal-backed mortgages.
• Local nonprofits and CDFIs: Grants or gap financing when available, plus counseling and education.

Ask your lender and counselor for the current income limits, purchase price caps, and any open funding windows for Davidson County.

Action plan for your first 30 days

• Confirm your first-time buyer status and any veteran or rural eligibility that could open up VA or USDA options.
• Complete a HUD-approved homebuyer education course and save the certificate.
• Interview a THDA-approved lender and ask about THDA loans, down payment assistance, and MCC.
• Get a full pre-approval that reflects all assistance you might use, not just a pre-qualification.
• Map a budget that includes mortgage insurance if applicable, plus estimated closing costs and reserves.
• If Metro assistance is available, note application steps and deadlines so your timing aligns with your home search.
• Team up with a local agent who understands financing hurdles and can structure competitive offers across Nashville neighborhoods like 12 South, The Gulch, East Nashville, and beyond.

Buying your first home in Nashville is very achievable when you put the right pieces in place. With the mix of THDA programs, possible Metro assistance, and federal loan choices, you can tailor a path that fits your income, savings, and timeline. If you want a seasoned partner who blends local market insight with financing know-how, reach out to Angela McAndrew. Together, we will refine your options, connect you with the right lender, and guide you from pre-approval to keys in hand.

FAQs

What counts as a first-time buyer in Nashville?

• Most programs define it as not owning and occupying a primary residence in the past three years, with some exceptions for specific situations.

Can I combine THDA down payment help with FHA or conventional loans?

• Often yes, but it depends on program rules and lender guidelines. Your lender will confirm compatible combinations.

Are down payment assistance funds taxable or repayable?

• It varies. Some are grants, others are deferred or forgivable second mortgages, and some are repayable at sale or payoff.

Will using assistance slow down my closing timeline?

• Assistance can add steps for approval and documentation, so plan extra time and coordinate closely with your lender and program office.

Do I have to use a THDA-approved lender for THDA programs?

• Yes, THDA programs are offered through approved lenders. Ask for the current approved list before you apply.

Can I use assistance to buy a condo or townhome in Davidson County?

• Many programs allow them, but some have added requirements. Confirm eligibility for the specific property type early.

Does using assistance mean I will pay mortgage insurance?

• If your down payment is under 20 percent, PMI or FHA mortgage insurance often applies. Your lender can estimate the impact on your payment.