All About the Tennessee Housing Development Agency
Posted by : Admin
Consumers learn lots of new terms when they’re navigating the homebuying process. Some of the most important terms deal with the type of loan program. It helps understand how all the pieces fit together if you know how some of the programs came to be, why they were created, and who benefits from them the most.
Today, we’re diving into what The Tennessee Housing Development Agency, or THDA, is and how it might benefit you when you’re trying to buy a home.
What Does “THDA Loan” Mean?
A THDA Loan refers to a mortgage loan that’s backed by the Tennessee Housing Development Agency. THDA is not a direct lender, but it buys loans from THDA-approved lenders who loan money to consumers. This is similar to the way Fannie Mae and Freddie Mac work with traditional mortgages. A THDA Loan actually covers more than one type of home loan. The program offers several types of loans right now, including Great Choice, Homeownership for the Brave and Great Advantage.
Understanding what a THDA Loan is helps borrowers decide whether it’s going to be the best option for buying a home.
THDA Loans are meant for specific homebuyers, such as:
- Homebuyers who have low or moderate incomes. Depending on your family’s size and the county you live in, you can’t make more than 100-115% of the area’s median income to qualify.
- First-time buyers. THDA considers a first-time homebuyer as someone who has never bought a home before, or who hasn’t owned a principal residence in the last three years. The program also includes a buyer purchasing in specially targeted areas, or an honorably discharged or re-enlisted veteran and their spouse under the first-time homebuyer umbrella.
- Buyers who are purchasing moderately sized and priced properties. The home price can’t exceed certain standards, which vary by county.
THDA Loans are typically either 15- or 30-year loans with a fixed interest rate.
When Is a THDA Loan a Good Choice?
There are several homebuying scenarios for which a THDA Loan makes sense. If you’re a first-time homebuyer, you’re purchasing a moderately priced home, and/or you’re trying to buy in Tennessee, working with a THDA Loan might end up being your best bet.
How Do You Qualify for a THDA Loan?
In addition to the scenarios mentioned above, the other factors that go into getting qualified for a THDA loan are:
- A minimum credit score of 640. If your score is lower than that, you’ll need to work on it before you can get qualified.
- The primary residence. You must use the property as your primary residence as long as you have the loan.
How Did THDA Loans Begin?
THDA has origins dating all the way back to 1973. It was established by a state law that was passed in hopes of stimulating the building industry, providing affordable housing, and promoting long-term homeownership.
Today, homeowners can benefit from these THDA loan programs:
- Great Choice (and Great Choice Plus). The Great Choice program provides a 30-year loan; the Great Choice Plus offers a 15-year loan.
- Homeownership for the Brave. This program is dedicated to the brave men and women who serve in our country’s military.
- Great Advantage. While this program’s interest rate is a bit higher than Great Rate’s, it offers down payment and closing cost assistance that’s equal to 2% of the purchase price.
THDA’s mission is “Leading Tennessee home by creating safe, sound, affordable housing opportunities.” Its loan programs do just that and the results are stable housing costs, tax benefits, equity, and homeownership to the borrowers who qualify for it. Mortgage Investors Group is proud to be the Number One THDA Lender since 2003.*
*According to Tennessee Housing Development Agency, 2020.
