Down Payment Assistance Near Nashville: Options

Saving for a down payment can feel like the biggest hurdle between you and a home in Nashville. If you have stable income but limited cash, you are not alone. The good news is there are real programs in and around Davidson County that can reduce what you need to bring to closing or cover a portion of your upfront costs.

In this guide, you will learn which down payment assistance options exist near Nashville, who typically qualifies, how the programs work, and the documents you should gather now. You will also see clear next steps to connect with trusted lenders and counselors. Let’s dive in.

Down payment assistance basics

Down payment assistance, often called DPA, is funding that helps you cover your down payment and sometimes closing costs. It can look like a grant, a forgivable second mortgage, or a deferred loan that is repaid when you sell, refinance, or your loan matures. Many programs require you to live in the home as your primary residence for a set period.

DPA is often paired with specific mortgage products and must be layered correctly by your lender. Program terms change over time, so always confirm current rules with program administrators and your lender.

Nashville area options

Tennessee Housing Development Agency (THDA)

THDA is the main statewide source of structured DPA for Tennessee homebuyers. Its assistance is typically paired with THDA-eligible mortgages and delivered through approved lenders. THDA also offers Mortgage Credit Certificates that may reduce your federal tax liability if you qualify. Assistance may be a second lien that is forgivable over time, fully deferred, or repayable depending on the product.

Metro Nashville local programs

Metro Nashville and related agencies sometimes offer homebuyer assistance for low to moderate income households or targeted neighborhoods within Davidson County. These programs may include grants, deferred-payment loans, or other gap financing. Local programs can change based on funding cycles and may focus on specific areas, so always check current availability and geographic requirements.

FHA, VA, and USDA loans

Federal loan programs can reduce or eliminate the need for a traditional down payment. FHA allows low down payments. VA and USDA can offer zero-down options if you qualify based on service or property eligibility. These loans are not DPA grants, but they can be combined with DPA in many cases. Your lender will confirm compatibility and any subordinate financing rules.

Lender and bank assistance

Many lenders in Greater Nashville offer their own DPA grants or second mortgages and may partner with THDA and local programs. Some products are tied to specific rate terms or fees, so ask for a written summary that spells out the source of funds, lien position, repayment or forgiveness schedule, and total costs.

Employer and private grants

Some large employers, universities, and hospital systems provide employee housing assistance. Benefits may include grants, forgivable loans, or matching funds. You will need to check with your HR team for eligibility and enrollment timelines.

Nonprofit and community help

Local nonprofits, including Habitat for Humanity and community development organizations, can offer down payment funds, affordable mortgages, or structured homeownership programs that include education. These programs often target very low to moderate income buyers and require counseling, sweat equity, or other participation.

How these programs work

Types of assistance

• Grant: No repayment if you meet program conditions, usually owner occupancy for a set period.
• Forgivable second mortgage: The loan is forgiven over time if you meet requirements.
• Deferred or interest-free second mortgage: Repayment is due at sale, refinance, or maturity.
• Repayable second mortgage: A traditional loan with monthly payments or a balloon payoff.
• Closing-cost assistance: Some funds cover closing costs, some allow both down payment and closing costs.

Loan compatibility

Many DPA products must be paired with designated mortgages. THDA assistance is used with THDA-eligible FHA, VA, USDA, or conventional loans. FHA and VA allow certain forms of subordinate financing if structured properly. Your lender will verify program and loan compatibility.

Income and price limits

Most public DPA programs include income caps tied to area median income and purchase price limits to focus funds on intended buyers. Limits may vary by household size and can differ by neighborhood or census tract.

First-time and repeat buyers

Many programs require first-time buyer status, defined as no ownership in the past three years. Some carve-outs exist for targeted neighborhoods or qualifying groups such as veterans. Always verify the current definition and any exceptions.

Education requirements

A HUD-approved homebuyer education course or counseling is commonly required. This helps you understand budgeting, credit, loan terms, and homeownership responsibilities before you close.

Liens and resale

If the assistance is a second lien, it must be repaid or forgiven according to program rules. Forgiveness schedules and owner-occupancy requirements matter. These liens can affect your net proceeds at resale.

Tax and legal notes

DPA is generally not taxable as income when structured as a loan or forgivable loan for down payment, but tax treatment can vary. Consult a tax advisor for guidance on your specific situation.

Who usually qualifies

While each program is different, typical criteria include:

• Income limits tied to area median income and household size
• Purchase price caps for the property
• Primary residence requirement
• First-time buyer status for many programs
• Minimum credit score and acceptable credit profile
• Maximum debt-to-income ratio
• Completion of an approved homebuyer education course
• Property type restrictions, such as single-family homes or certain condos
• Occupancy and resale rules for a defined compliance period

Your first steps

• Get pre-approved: Start with a pre-approval from a reputable local lender experienced with THDA and DPA. Pre-approval helps you see your price range and which products can be layered.
• Check state and local programs: Review THDA options and Metro Nashville’s current homebuyer assistance offerings for Davidson County addresses. Confirm income limits, purchase price caps, and funding status.
• Use HUD-approved counseling: A housing counselor can screen you for eligible programs, provide required education, and help with budgeting and credit planning.
• Compare lender offers: Ask lenders for a written summary of any DPA. Verify if funds are grants or loans, lien position, repayment or forgiveness schedule, fees, and how assistance affects your rate and payment.
• Mind the timeline: DPA approvals often run alongside mortgage underwriting. Identify your DPA early, ideally during pre-approval or at loan application, so your lender can build it into the closing process.
• Watch for red flags: Be cautious of promises of guaranteed free money, high fees, or offers that require you to give up equity. Legitimate DPA requires documentation and eligibility checks.

Document checklist

Gather these items early to speed things up:

• Government-issued photo ID for all borrowers
• Social Security numbers for all borrowers
• Recent pay stubs for the past 30 days
• W-2s and 1099s for the past 2 years
• Federal tax returns and schedules for the past 2 years, if applicable
• Bank statements and asset documentation for the past 2 to 3 months
• Statements for retirement accounts, gifts, or other assets
• Proof of additional income, such as alimony, child support, or rental income
• Divorce decree or child support orders if relevant
• Purchase agreement once under contract
• Homebuyer education certificate from a HUD-approved course
• Gift letter if you will use gifted funds, in lender-required format
• Identification and documentation for co-borrowers or non-occupant co-signers
• Documentation of veteran status if you may use VA benefits
• HOA documents for condos or properties with an HOA, when available
• A list of current monthly debts for debt-to-income calculations

Risks and trade-offs

• Subordinate liens can reduce your net proceeds if you sell before forgiveness or repayment conditions are met.
• Low-down-payment loans can include private mortgage insurance or higher overall costs, depending on the program and lender pricing.
• Program rules, income limits, and purchase price caps can change. Always verify current terms with program administrators and your lender.
• Confirm how funds are delivered at closing, whether through the lender, the title company, or separate documentation, to avoid delays.

Local next steps

Buying in Nashville or nearby communities is competitive, and the right plan can make the difference. If you think DPA could help, start by getting pre-approved with a lender who regularly works with THDA and local programs, complete your homebuyer education, and line up your documents. That way, you can focus on the right homes within your eligible price range and move quickly when you find the one.

When you are ready to search in Davidson County or across Greater Nashville, we can connect you with experienced, DPA-savvy lenders and guide your offer strategy. Reach out to schedule a friendly consult with Jennifer Bickerstaff and the team.

FAQs

What is down payment assistance for Nashville buyers?

• It is funding that helps cover part of your down payment and sometimes closing costs, often as a grant, forgivable second loan, or deferred loan, typically paired with specific mortgages.

Which DPA programs serve Davidson County?

• THDA is the main statewide source, and Metro Nashville programs may layer on top. Lenders, employers, and nonprofits may also offer assistance depending on eligibility and funding.

Can I combine DPA with FHA, VA, or USDA loans?

• Often yes. Many DPA products are designed to pair with these loans, but your lender must confirm compatibility and any subordinate financing rules.

Do DPA programs require repayment?

• It depends. Some are grants, others are forgivable after a set period, and some are deferred until sale or refinance. Always review the specific terms.

How long does a DPA approval take?

• Timing varies, but many approvals happen within the mortgage underwriting timeline. Allow extra time for program paperwork and eligibility checks.

Can gifted funds be used instead of DPA?

• Yes, many buyers use gifts. You will need a gift letter and proof of funds that meet lender rules. Gifts and DPA can sometimes be used together.