Most Buyers Know About THDA. Fewer Know About This One.
A few weeks ago I wrote about THDA -- the Tennessee Housing Development Agency and their Great Choice Plus program that offers up to $15,000 in down payment help. If you haven't read that one, it's worth your time.
But there's another program in Tennessee that a lot of buyers never hear about. It's called The Housing Fund. And in some situations, it's a better fit.
The Housing Fund is a nonprofit based in Madison, Tennessee. They've been doing this since 1996. They've helped over 4,500 buyers get into homes and have put more than $41 million in down payment assistance loans to work across the state. They're a certified Community Development Financial Institution -- a CDFI -- which means they're federally recognized and regulated, not some fly-by-night operation.
The Big Number: Up to $35,000
The main thing that sets The Housing Fund apart is the loan amount. They can provide up to $35,000 for down payment, prepaids, and closing costs.
THDA maxes out at $15,000. The Housing Fund goes more than twice as high.
For buyers in Nashville and the surrounding counties, where home prices have climbed significantly over the last few years, that extra range matters. A $300,000 home with an FHA loan needs about $10,500 down. A $400,000 home needs $14,000. But once you factor in closing costs -- which can run $6,000 to $10,000 depending on the deal -- the total cash needed at closing gets bigger fast. Having access to $35,000 in assistance can genuinely change what's possible for a lot of buyers.
No First-Time Buyer Requirement
THDA generally requires you to be a first-time homebuyer, meaning you haven't owned a home in the last three years. There are exceptions -- targeted counties, military, veterans -- but as a rule, it's a first-time buyer program.
The Housing Fund has no such requirement.
If you owned a home five years ago and had to sell, if you went through a divorce, if you've been renting for a while and are ready to buy again -- none of that disqualifies you here. You just need to be buying a home that will be your primary residence.
That opens the door for a lot of buyers who assume they've aged out of assistance programs.
The Credit Score Threshold Is Lower
THDA requires a 640 credit score from everyone on the loan application. That's a firm line.
The Housing Fund works with a 600 minimum for loans under $10,000, and a 620 minimum for loans between $10,000 and $35,000. If you're in that 600 to 640 range, THDA won't work for you. The Housing Fund might.
They also encourage buyers who are below the threshold to still reach out. They have staff who can walk you through what it would take to get your score to the qualifying level. That's not something every lender does.
How the Income Limit Works
The Housing Fund uses HUD's Area Median Income guidelines, updated for 2026. Their down payment assistance program serves buyers earning up to 120% of AMI for their county.
AMI varies by county and household size, so there's no single number that applies everywhere. For the Nashville-Davidson MSA, 120% AMI for a household of four is in the range of $137,000 to $140,000 based on current HUD data. Smaller households have lower limits, larger households have higher ones.
The easiest way to check your specific county and household size is to go directly to thehousingfund.org/income-guidelines. They have the full 2026 HUD tables there.
What the Loan Actually Looks Like
This is important to understand going in: The Housing Fund's down payment assistance is a real loan. It is not a grant. It is not forgiven over time.
The current rate is 5% fixed. You will have a monthly payment on it. If you borrow $20,000 at 5% over 30 years, that's roughly $107 a month added to your housing costs.
For some buyers, that extra payment is a dealbreaker. For others, it's a reasonable trade-off for getting into a home now instead of waiting another two or three years to save more cash. Only you can make that call -- but you should make it with the full picture in front of you, not because you didn't know the program existed.
THDA's deferred option, by contrast, has no monthly payment for 10 years and is forgiven at the end. If you qualify for THDA and don't need more than $15,000, that structure is hard to beat. But if you need more than $15,000, or you don't meet THDA's credit or first-time buyer requirements, The Housing Fund is often the next best option.
The 1% Contribution Rule
One requirement that catches some buyers off guard: you have to contribute at least 1% of the purchase price yourself. On a $350,000 home, that's $3,500 out of your own pocket.
This isn't unusual -- a lot of assistance programs have a minimum borrower contribution to make sure you have some skin in the game. But it's worth knowing upfront so you're not surprised at closing.
The Homebuyer Education Requirement
Before you can close, you have to complete a homebuyer education course from a THDA-certified counselor. The Housing Fund also accepts online courses through eHome America, as long as you pair it with a one-hour one-on-one counseling session.
Same as with THDA, I'd encourage you not to treat this as a box to check. The course covers budgeting, loan documents, what to expect at closing, and what to do if you run into financial trouble after you buy. Buyers who complete it are statistically less likely to end up in foreclosure. It's worth the time.
How the Application Process Works
You don't apply to The Housing Fund directly on your own. The process runs through your first mortgage lender.
Here's how it works: you get approved for your first mortgage with an FHA-approved lender in Tennessee. You tell your lender you want to use The Housing Fund for down payment assistance. Your lender submits a complete application package to The Housing Fund. Once they have everything they need, underwriting takes 5 to 7 business days.
The key word there is "complete." If your lender submits an incomplete packet, the clock doesn't start until everything is in. That's why it matters to work with someone who has done this before and knows exactly what The Housing Fund needs.
I am FHA-approved in Tennessee. I've worked with The Housing Fund. If you want to know whether this program fits your situation, reach out and we'll run the numbers together.
Which Program Is Right for You
Here's a quick way to think about it. If you have a 640 credit score or higher, haven't owned a home in the last three years, and need $15,000 or less in assistance, THDA's deferred option is probably the better deal -- no monthly payment, forgiven after 10 years.
If your credit score is between 600 and 640, you've owned a home before, or you need more than $15,000 to make the deal work, The Housing Fund is worth a serious look.
In some cases, buyers qualify for both and we look at which structure makes more sense given their income, the home price, and how long they plan to stay. There's no one-size answer -- it depends on your numbers.
The Bottom Line
Tennessee has more down payment help available than most buyers realize. The Housing Fund has been doing this work for 30 years and has helped thousands of families get into homes that would have otherwise been out of reach.
If you're in Tennessee, buying a primary residence, and you're wondering whether you could use some help with the down payment -- check your income against the 120% AMI limit for your county and see if the credit score thresholds work for you. If the answer is yes on both, this program deserves a conversation.
If you want to know exactly what you'd qualify for and what the monthly payment on the assistance loan would look like, reach out and we'll figure it out. Takes about 10 minutes.
