Why Consider a THDA Loan When Preparing for Homeownership

For many people, owning a home can feel out of reach. It can be a challenge to navigate the financing process and find the best mortgage for their needs. From down payments to closing costs, it can be difficult to make sure you have enough saved up. However, help is out there for a lot of prospective buyers in the state of Tennessee.

In this post, we'll be providing an overview of why you might want to consider a THDA loan when purchasing your next home. Understanding this loan program could be a big step to making your homeownership dreams come true.

The Basics of THDA Loans

The Tennessee Housing Development Agency (THDA) aims to provide financial assistance to qualified buyers and families who want to buy a home in Tennessee. THDA's affordable home loans are one way they do this. With a THDA loan, buyers can enjoy better rates and choose from mortgage loan options that offer assistance with down payments and closing costs.

THDA Loans vs. Other Mortgage Options

What makes THDA loans unique is that they’re easier to get and more affordable than many mortgage options. The Great Choice home loan has a 30-year term and offers buyers more affordable interest rates. THDA loans are similar to USDA and FHA mortgage options in that they are not a direct lender. Instead, they partner with approved lenders across the state.

THDA helps lenders buy part of the loan, making it easier for lenders to give better interest rates and lower down payment options. This type of loan program aims to make homeownership accessible, but it's important for borrowers to note that the qualifications will vary slightly.

Income and Purchase Price Limits

THDA loans have specific household income and purchase price limits to keep them accessible for a wide range of home buyers, making a Great Choice home loan a wonderful option for many. The income limits vary depending on the county and household size, providing support to homeowners with different financial backgrounds and real estate goals. These limits are designed to cater to both low and moderate-income families in Tennessee counties. For those that apply, there will be requirements like minimum credit score and homebuyer education.

The purchase price limits set a maximum threshold for the cost of the property that can be financed through a THDA loan. These limits can differ based on location and are crucial factors to consider when exploring THDA loan eligibility for your primary residence. Understanding these limits is essential for potential applicants seeking financial assistance.

Advantages of Choosing a THDA Loan

There are many benefits to choosing a THDA loan for potential buyers. We'll break down the factors that make it an option you should consider as you work toward becoming a homeowner.

Down Payment Assistance Programs

THDA programs offer two main options for down payment assistance: the Great Choice Plus deferred option and the Great Choice Plus amortizing option. The deferred option can give you up to $6,000 as a forgivable second mortgage. This means you do not have to pay it back if you stay in your home for the entire loan term.

On the other hand, the Great Choice Plus Amortizing Option gives assistance based on a percentage of the home's purchase price, up to 6%. County rules limit this option, but it includes a second mortgage loan with a fixed interest rate, and you will make a monthly payment over the full loan term.

Another benefit to this program is that down payment assistance program funds can be used toward closing costs and prepaids when they're not needed for a down payment.

Assistance for First-Time and Repeat Buyers

If you’re a first-time buyer, the mortgage world can be hard to understand. On top of the payment assistance to help reduce the costs of buying a home, they also provide homebuyer education courses and housing counseling. These resources cover topics like mortgages, credit scores, home maintenance, and money management.

Though THDA loans are more common among first-time home buyers, there are opportunities for repeat home buyers, too. The THDA understands repeat buyers have different needs, and can also benefit from financial assistance during this transition period. Often, life changes – like moving for a job or growing a family – require them to buy a new home. That said, THDA loans are designed to make homeownership possible for everyone.

Programs for Veterans and Active Military

With the Homeownership for Heroes Program, THDA shows appreciation to active duty military and veterans. It gives service members a real benefit as they transition to a new home. This program offers a 0.5% deduction on top of the regular Great Choice loan rate. Veterans and service members can also enjoy more flexible loan guidelines. This helps to address the different financial situations that military families may face.

THDA's Role in Community Development

One way they promote this stability is by teaming up with local government agencies and non-profit groups. Together, they create and carry out programs that meet the different housing needs of people in Tennessee, including essential home energy support. These programs often aim to improve neighborhoods, provide rental help, and prevent foreclosure.

THDA focuses on building smart partnerships, making thoughtful investments, and using data to guide their actions. They want to create fair housing opportunities that help all Tennessee residents, no matter their background or money situation. By joining forces with local partners, THDA uses its resources and knowledge to make a real difference in housing stability.

Discover If a THDA Loan Is Right for You with Leaders Credit Union

Since THDA loans offer low interest rates, down payment assistance, and flexible terms, they're a great option for many Tennesseans. This is especially true if you're a first-time buyer, a veteran, or someone with limited income for a down payment.

Regardless of your financial situation, it's always a good idea to work with a loan officer who knows the process well. A professional can look at your finances and find the option that's best suited toward your homeownership goals. They can also help you through the mortgage pre-approval process, so you understand what you can afford. 

At Leaders, our Mortgage Champions have the knowledge to point you in the right direction. We are also proud to be a THDA lender. View our loan offerings and contact us today. 

Leaders Credit Union is federally insured by the NCUA and an equal housing lender.