Down Payment Assistance Programs in Tennessee and Mississippi: What Buyers Should Know

In my years working with buyers in Memphis and the surrounding area, the same question comes up again and again: "I can afford the monthly payment, but how do I come up with the down payment?" It is a fair question, and it keeps a lot of capable people on the sidelines longer than they need to be.

The good news is that both Tennessee and Mississippi have state-backed programs designed to close that gap. Because I am licensed in both states and so many of my clients shop on both sides of the state line, I want to walk you through what is out there, how these programs generally work, and what to watch for before you commit.

Why Down Payment Assistance Exists

Most people assume they need 20 percent down. You don't. FHA loans can go as low as 3.5 percent down, and some conventional programs allow 3 percent. VA and USDA loans can require nothing down for eligible buyers. Even so, 3.5 percent of a $200,000 home is $7,000, and that is before closing costs. For many households, that is the real hurdle, not the monthly payment.

Down payment assistance (DPA) programs exist to bridge it. They are typically offered through state housing finance agencies and delivered by approved lenders, and they are usually paired with a specific first mortgage product.

Tennessee: THDA and the Great Choice Program

The Tennessee Housing Development Agency (THDA) is the primary source of down payment help in Tennessee. Its Great Choice Home Loan is the foundation, and Great Choice Plus is the assistance that layers on top of it.

What to know about Great Choice Plus:

•        It is a second loan that can be used toward your down payment and closing costs.

•        THDA has offered more than one structure, including a deferred, no-interest option with no monthly payment that comes due when you sell, refinance, or pay off the first mortgage, and a smaller forgivable option. The amounts and terms have changed over time, so confirm what is currently offered before you plan around a number.

•        Great Choice is most commonly paired with FHA, USDA, and VA first mortgages, and THDA also offers a conventional option.

•        You must complete a homebuyer education course from a THDA-approved instructor to receive the assistance.

•        Income and purchase price limits apply, and they vary by county.

Other Tennessee options worth asking about:

•        Homeownership for Heroes: A reduced interest rate on the Great Choice first mortgage for eligible military members, veterans, and certain public service workers, which can be combined with Great Choice Plus.

•        Targeted-area assistance: THDA has offered larger forgivable assistance in designated ZIP codes aimed at revitalizing specific communities. Availability depends on funding, so ask your lender whether it is currently open.

•        Local programs: Some cities and counties, including programs in the Memphis and Shelby County area, offer their own assistance. These change often, and I am happy to point you in the right direction.

THDA is not only for first-time buyers. Repeat buyers can qualify in some situations, such as not having owned a home you lived in for the past three years, so do not rule yourself out too quickly.

Mississippi: Mississippi Home Corporation (MHC)

If you are looking at DeSoto County or elsewhere in Mississippi, the Mississippi Home Corporation is your starting point.

Programs to be aware of:

•        Mortgage Revenue Bond (MRB) products: MHC has rolled out a series of bond programs that pair a competitive fixed-rate first mortgage with cash toward your down payment and closing costs. Its Easy8 and Trusty10 programs, for example, provide $8,000 and $10,000 respectively and replaced the earlier MRB7 program. Many of these are structured as a forgivable second mortgage, meaning the balance is forgiven if you stay in the home for the required period but must be repaid if you sell or refinance sooner.

•        Smart Solution / Smart6: Assistance for down payment and closing costs paired with an MHC first mortgage, available with FHA, VA, USDA, and conventional financing for income-eligible buyers.

•        Home4All: A grant program funded through the federal HOME program for households at or below 80 percent of area median income. It includes pre-purchase education and credit counseling, and eligible households may receive assistance of up to $25,000, subject to funding availability.

•        Housing Assistance for Teachers (HAT): Targeted help for licensed public school teachers in critical-shortage areas.

•        County partnership programs: MHC has partnered with certain counties on matching programs, such as DPA14 in Coahoma, Tunica, and Washington counties, which doubled the assistance for qualifying households. These are time-limited and funding-dependent.

What These Programs Have in Common

While the details differ, there are some themes I see in nearly every program:

1.      Income and price limits. These are set by county, and they matter. A home that is slightly over the limit can disqualify an otherwise eligible buyer.

2.      Primary residence only. These programs are for owner-occupants. They are not designed for pure investment purchases.

3.      Homebuyer education. Expect to complete a course. It is usually a few hours, and it is genuinely useful.

4.      Credit and underwriting standards. Programs set minimum credit scores, and individual lenders may add their own requirements.

5.      Participating lenders. You generally have to work with a lender approved for that specific program, which is why choosing the right lender early matters.

6.      Strings attached. Whether the assistance is deferred, forgivable, or repayable, understand what happens if you sell or refinance. Free money is rarely entirely free.

A Word for Investors

Because I work with a lot of investors, I get asked whether these programs can help build a portfolio. The short answer is that DPA is meant for the home you will live in. But that can still be a smart first step. Buying an owner-occupied property and building equity, or looking at a small multi-unit property you will live in as your primary residence, is how many people begin. Rules on multi-unit properties vary by program and lender, so verify eligibility before you write an offer.

Before You Start: A Short Checklist

•        Check your credit and know your score before you talk to a lender.

•        Confirm county income and purchase price limits for the area you are shopping.

•        Choose a lender who participates in the program you want, and ask for the current terms in writing.

•        Schedule your homebuyer education course early, since it is required for most assistance.

•        Ask what repayment or forgiveness conditions apply if you sell or refinance.

•        Do not assume last year's program is still available. Funding, amounts, and rules change, so always confirm current details with THDA, MHC, or your lender.

This post is for general information only and is not financial or legal advice. Program terms, amounts, and availability change frequently. Please verify current details with THDA, MHC, or an approved lender.

Ready to Take the Next Step?

Down payment assistance can turn a purchase that feels out of reach into one that makes sense, but only if you know which programs fit your income, your credit, and the property you have in mind. Whether you are buying your first home in Tennessee or Mississippi, or taking a first step toward building a portfolio, my goal is to help you move forward with clear numbers and no surprises.

If you would like to talk through which assistance programs you may qualify for, or review the details on a specific property, I would be glad to help. Reach out to me at J Hunter Realty, LLC, and let's find the right path to your down payment and your next home.

Stacy Hobson, MBA

Owner-Managing Broker | J Hunter Realty, LLC

Licensed in TN & MS

901.483.0412 | 901.405.0500

stacy@jhunterrealty.com

www.jhunterrealty.com

3383 Park Ave, Memphis, TN 38111