THDA Housing Trust Fund | Tennessee Housing 2025

THDA Housing Trust Fund is one of Tennessee's flagship initiatives targeted at closing the homeownership

gap for first‑generation and moderate‑income families. The program is administered by the Tennessee Housing

Development Agency (THDA) in coordination with a statewide network of HUD‑approved lenders and

housing‑counseling agencies. Qualified borrowers receive a fully amortizing 30‑year first mortgage paired with

varies (gap financing) that may be structured as a forgivable second lien, a deferred‑payment loan, or a grant

depending on the product tier. The program is intentionally flexible—borrowers can layer USDA 502 guarantees,

VA benefits, or local down‑payment grants to further reduce out‑of‑pocket costs.

THDA’s underwriting recognizes alternative credit histories, permitting borrowers with thin files to submit

on‑time utility bills or rental history in lieu of traditional revolving credit. Closing costs may be financed

when combined loan‑to‑value (CLTV) does not exceed 105 %. Borrowers who purchase ENERGY STAR‑certified or

zero‑energy‑ready homes may qualify for a 0.125 percentage point interest‑rate reduction. All applicants

receive a complimentary post‑closing “Homeowner Success Kit” that includes budget worksheets, maintenance

checklists, and access codes for THDA’s foreclosure‑prevention portal.

Program funding is subject to annual Tennessee General Assembly appropriations and the availability of

tax‑exempt bond proceeds. Once funds are reserved, lenders have 90 days to close. Borrowers who sell or

refinance within five years must repay a pro‑rated portion of assistance unless covered by a federal recapture

tax waiver.

• U.S. citizen, permanent resident, or lawful non‑citizen with valid Social Security number.

• Household income ≤ county median (e.g., $104,900 for 1‑4 person household in Davidson County, 2025). Limits updated annually in April.

• Purchase price ≤ FHA 203(b) county limit (currently $472,030 for most counties; higher in urban areas).

• Minimum 620 FICO (no non‑traditional credit overlays for USDA/RD loans).

• Debt‑to‑income ratio ≤ 45 % (DTI up to 50 % with 680+ score and 6 months reserves).

• Completion of THDA/THHC eight‑hour homebuyer education delivered online or in‑person.

• Property must be owner‑occupied within 60 days; manufactured homes must be double‑wide, 1976 or newer.

• Varies (gap financing) applied to down payment or closing costs; forgivable after 5 years for HHF DPA.

• Below‑market 30‑year fixed rate first mortgage; optional 15‑year term for faster equity build.

• Eligible for Mortgage Credit Certificate tax credit ($2,000 annual cap).

• Energy‑efficient homes qualify for 0.125 % rate discount.

• Free post‑purchase counseling, quarterly webinars, and foreclosure‑prevention hotline.

1. Enroll in education: Register for THDA homebuyer class through eHomeAmerica or local nonprofit.

2. Pre‑approval: Choose a THDA‑approved lender; lender runs AUS (DU/LP/GUS) with THDA overlays.

3. Fund reservation: Upon contract execution, lender reserves first mortgage and assistance funds in THDA’s Homebuyer Portal.

4. Appraisal & underwriting: FHA/VA/USDA appraisal plus THDA compliance review. Repairs escrowed if ≤ $5,000.

5. Closing: Borrower signs note, deed of trust, and second‑lien docs (if applicable). THDA wires DPA to title company.

6. Post‑close QC: Lender uploads final docs; THDA releases MBS pools monthly; borrower begins repayment after 30–45 days.