Great Choice loans for Manchester and Coffee County buyers

THDA Down Payment Assistance in Tennessee

Saving for a down payment and closing costs is one of the biggest hurdles for buyers. The Tennessee Housing Development Agency, or THDA, is the state housing agency, and its Great Choice Home Loan and Great Choice Plus down payment assistance are built for moderate income buyers across Tennessee, including Manchester and the rest of Coffee County.

My first time home buyer guide gives the short version. This guide goes deeper: the assistance options, the Coffee County limits on THDA's current chart, who counts as a first time buyer, the education requirement and the rules that come with the loan. Everything here comes from thda.org. Program terms change, so confirm the current details with THDA and a THDA approved lender. This is general information, not legal or lending advice.

What the Great Choice Home Loan is

THDA describes the Great Choice Home Loan this way:

• 30 year term with a fixed rate. The interest rate never changes for the life of the loan.
• Minimum credit score of 640 for everyone on the loan application. THDA says a lender can check your score, and if it is below the minimum, a THDA approved counselor can help you work on it.
• Household income and purchase price limits that vary by county.
• Insured loans. THDA says most Great Choice loans are insured by FHA or USDA Rural Development. With FHA, you may borrow up to 96.5 percent of the price, so you need a minimum of 3.5 percent down.
• Homebuyer education is required.
• Off site manufactured homes can be bought with a Great Choice loan, according to THDA.

THDA's eligibility page adds that every THDA mortgage must be insured or guaranteed by VA, FHA, Rural Development or, for conventional loans above 78 percent loan to value, an acceptable private mortgage insurance company.

Great Choice Plus: the down payment assistance options

If you qualify for a Great Choice Home Loan, THDA says you can also apply for Great Choice Plus, a second loan that helps with your down payment, your closing costs or both. THDA's down payment assistance page lists these options:

• Deferred option, no payments. Up to $6,000 or up to $10,000 as a forgivable second mortgage at a 0 percent interest rate. The loan is forgiven at the end of a 10 year term. If the home is sold or refinanced before then, the loan is due in full.
• Amortizing option, with a payment. Up to 5 percent of the sales price, with a maximum of $15,000, as a second mortgage with a 30 year term and the same interest rate as the first mortgage.
• Amortizing option for newly built or proposed construction. Up to $25,000 as a second mortgage with a 15 year term and a 0 percent interest rate.

THDA notes that when the money is not needed for the down payment, it can be used for closing costs and prepaids, for example on a VA loan or on an FHA loan where the buyer has the down payment saved but not the closing costs. THDA also says you must keep complying with the terms of both the Great Choice loan and the Great Choice Plus loan, or penalties may apply, including immediate repayment. Ask your lender which option fits your budget and how each one changes your monthly payment.

Coffee County limits on THDA's current chart

THDA's chart of acquisition cost and income limits for the Great Choice and HFA Advantage programs is dated 08.01.2026. For Coffee County it lists:

• Acquisition cost limit: $500,000
• Household income limit, 1 or 2 persons: $94,900
• Household income limit, 3 or more persons: $109,200

THDA counts total household income for Great Choice, and its eligibility page says rental income from extra units on a two to four unit property also counts toward the limit. A footnote on the chart says the 3 or more person figure is the maximum allowed for HFA Advantage and the 1 or 2 person figure does not apply to that program. Limits change, so check the current THDA chart and confirm with your lender before you rely on these numbers.

Looking just over the county line? The same chart marks Franklin and Grundy counties as targeted counties, and Warren County as a county where some census tracts are targeted. Limits and rules follow the county where the home sits, so check the chart for the exact address.

Who counts as a first time buyer

THDA generally makes its mortgages to first time homebuyers. It defines a first time homebuyer as anyone who has not occupied a home they owned as their principal residence during the past three years, and it says all borrowers on the loan must meet that test. Repeat buyers can still qualify in some cases:

• Targeted areas. The requirement is waived when the home is in a targeted county or a targeted census tract. THDA's chart does not mark Coffee County as targeted, and Coffee County does not appear on THDA's list of targeted census tracts, so for a home in Coffee County plan on meeting the first time buyer test unless another exception applies. THDA has an interactive targeted areas map where you can search an address.
• Veterans and qualified military. THDA says veterans with a DD 214 honorable discharge or DD 4 reenlistment form do not have to be first time homebuyers, and it lists qualified military and their spouses as eligible repeat buyers.
• Freddie Mac HFA Advantage. THDA's conventional option has no first time homebuyer requirement. More on that below.

Homeownership for Heroes

THDA's Homeownership for Heroes adds a reduced interest rate to the Great Choice loan. THDA's Great Choice page says it is offered on FHA, USDA and VA loans, and its program advantages page describes a reduction of up to one half percent. THDA lists these groups:

• Active duty military, National Guard and veterans
• EMTs and paramedics
• Firefighters
• Kindergarten through 12th grade teachers and principals employed full time in a Tennessee public or private school
• State and local law enforcement officers
• State and local public safety emergency dispatchers

THDA says the program lets you borrow up to 100 percent of the price with a VA or USDA loan, or 96.5 percent with FHA. If you are moving here for work at Arnold Air Force Base, my Arnold AFB relocation guide and VA loan guide cover the rest of the picture.

The conventional option: Freddie Mac HFA Advantage

THDA also offers the Freddie Mac HFA Advantage program, an insured conventional first mortgage. THDA highlights these points:

• No first time homebuyer requirement.
• Income limits apply differently than Great Choice. The qualifying income of the borrowers on the loan is used instead of household income.
• More flexible qualifying for borrowers with student loan debt.
• Down payment help through HFA Advantage Plus: a deferred, forgivable $6,000 second loan at 0 percent over a 10 year term, due in full if the home is sold or refinanced before then, or an amortizing second loan of up to 5 percent of the sales price, with a maximum of $15,000, paid over 30 years at the first mortgage rate.

Homebuyer education

THDA requires homebuyer education for every THDA mortgage, and its homebuyer education FAQ explains how it works:

• Who teaches it. HUD approved housing counseling agencies, including nonprofit organizations and University of Tennessee County Extension offices.
• Two ways to take it. A facilitator led class of 6 to 8 hours, in person or virtual depending on the agency, or the eHome America online course followed by a required counseling session.
• Cost. Each agency sets its class fee within THDA limits, no more than $100 and no less than $25 per household. The online course is $100 per household. THDA does not issue refunds.
• Timing. THDA recommends taking the class as your first step, before you sign a contract, and encourages finishing it no later than 4 weeks before closing.
• Certificate. The certificate of completion is good for 12 months from the date it is issued.
• Spanish. THDA marks agencies with Spanish speaking counselors on its approved agency list.

Start with THDA's homebuyer education page to find a class.

Rules that come with a THDA loan

THDA's eligibility and conditions page lists rules every buyer should know before applying:

• Your home, not an investment. The home must be your principal residence. THDA loans cannot be used for investment property, a second home or property used to run a business. A property can have up to four units if you live in one of them.
• No buying down the rate. All loans are 30 year fixed rate loans, and THDA says the borrower may not buy down the rate by paying discount points.
• Assumable, with no prepayment penalty. THDA mortgages are assumable if the new buyer meets THDA qualifying terms, and you may pay down principal early without penalty.
• Some money of your own. THDA loans require some minimum investment and minimum reserves from the borrower, based on the type of mortgage insurance or guarantee.
• Federal recapture. THDA mortgages are subject to federal recapture provisions if the home is sold within the first nine years. Ask your lender to explain how this could apply to you.
• Help with closing costs. THDA says the costs you pay at closing may come from you, the seller, a gift or other sources the loan type permits. Its advantages page notes that on an FHA loan with the seller paying the buyer's closing costs, a buyer may need little or none of their own money down.

How to get started

1. Take a THDA approved homebuyer education class, ideally before you start touring.

2. Talk with a THDA approved lender. THDA keeps a list of approved lenders on its Find a Lender page, and a lender can confirm your eligibility, credit and the assistance amount. Compare at least one other loan option too.

3. Check the address. Confirm the county and the current limits on THDA's chart for the home you want.

4. Plan your full cash to close. My buyer closing costs guide lists what to budget, and my earnest money guide explains the deposit you make with your offer.

5. Read the loan comparisons in my FHA loan guide and USDA loan guide, since most Great Choice loans are insured by one of them.

6. Print my home buyer checklist and keep my real estate glossary handy.

You can reach THDA at 800 228 THDA, and its office is in the Andrew Jackson Building, 502 Deaderick Street, Nashville.

Fair housing laws protect every buyer, and I work with every buyer the same way. I can explain how an offer with down payment assistance works and keep your lender and closing agent on the same schedule, but your lender decides whether you qualify.

Keep reading:

• First time home buyer help in Tennessee
• FHA loans for Tennessee buyers
• USDA home loans in Coffee County
• Using a VA home loan in Manchester
• Buyer closing costs in Tennessee
• All Manchester guides

Buying your first home in Manchester?

I help buyers in Manchester and across Coffee County understand each step before it happens. Call or text me at (615) 497 1658, or request my buyer guide below and tell me what you are looking for.

Common questions

Matt Sargent is a Tennessee licensed affiliate broker with Keller Williams who helps buyers and sellers in Manchester and Coffee County. Call (615) 497 1658 or send a message.