THDA/FHA loan question.

Investor · Memphis, TN · Member since 2015 · 24 posts · 9 votes

Hi everyone, I am wondering whats the difference in the THDA loan? Pros and Cons, i am hearing that a first time buyer in Tennessee can receive 15k towards a property is this true and are there any repercussions? Thanks in advance.

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Adam Summerer
Lender · Franklin, TN · Member since 2026 · 32 posts · 2 votes
1w
THDA isn't a totally separate loan type so much as TN's first-time / assistance wrapper that still usually rides on FHA or conventional underwriting. The "~$15k toward the house" people mention is typically down-payment assistance (often a soft second), and the main tradeoff is occupancy rules plus repayment if you sell or sometimes if you refinance too early. Pull the current Great Choice guidelines and compare a THDA LE next to a plain FHA LE on the same purchase price — that's the only way the pros/cons get real.
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Ryan ThomsonBusiness Member
Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
3d
FHA loans are assumable by law, so yes, a THDA/FHA loan can be assumed if you ever sell.
That's the good news. The practical angle on THDA is what actually matters here: the down payment assistance (that ~$15k soft second) typically has occupancy requirements and sometimes a repayment clause if you sell or refinance before a certain date. That timeframe varies by program year and which Great Choice product you're looking at.
A few things worth checking before you close:
When does the soft second forgive or require repayment? Most Tennessee Great Choice assistance forgives after 30 years, but some terms are shorter.
Is there a recapture tax? THDA products tied to mortgage revenue bonds can trigger federal recapture if you sell within 9 years at a gain and your income has risen. It's rare but worth knowing.
The actual monthly payment difference between a THDA/FHA and straight FHA usually comes down to whether the rate is slightly higher in exchange for the assistance, or whether MIP terms differ. Pull both loan estimates on the same purchase price and compare total monthly cost plus the cost of losing flexibility (the occupancy lock-in).
If the rate is competitive and you plan to stay 3+ years, the assistance often wins on pure math. If you're buying this as a stepping stone you might sell in 2 years, run the recapture scenario first.
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