Memphis Down Payment Assistance and First-Time Homebuyer Programs

There are almost too many reasons to consider a move to Memphis, the birthplace of Rock and Roll. Beale Street has incredible live music, sports fans can choose between the college game at University of Memphis and the pro game with the Grizzlies and 901 FC, and the art and cuisine is one of a kind. Furthermore, the job market is strong and real estate is affordable. Looking to make the Bluff City home? We prepared this list of down payment assistance options for you.

Down payment assistance programs in Memphis

Down payment assistance and first time home buyer programs aim to help home buyers make a larger down payment, cover closing costs, or a combination of both. There are several types of home buyer benefits, including grants, forgivable loans, and interest rate reductions and tax credits.

A grant is similar to a scholarship for college. You apply, and if you qualify for the program (i.e. meet all the criteria and the entity still has the money), you can receive funds toward your down payment or for another upfront cost related to your home purchase. 

A down payment loan (or second mortgage loan) is a loan you acquire in order to have the funds for a down payment. Many loan types require a minimum down payment between 3% and 20%. If you don’t have this money saved (many first-time home buyers don’t) then a down payment loan is an option to help you qualify. Some loans are even forgivable if you meet certain requirements like staying in the home for a few years.

Less commonly, some programs come with lower interest rates and tax credits (e.g., mortgage credit certificates) to help lower your monthly payments.

City of Memphis Down Payment Assistance Programs

The City of Memphis’ Division of Housing and Community Development (HCD) also offers financial assistance to its citizens through the Down Payment Assistance Program (DPA), which helps meet the financial requirements of becoming a homeowner. Residents of Memphis can opt for the Citywide program (CWDPA), Memphis Housing Authority Program (MHA DPA), Section 8 Homeownership Assistance Program (SHAPE DPA), and the Targeted Area program (TADPA).

Assistance type: Deferred payment loan

Sponsor: City of Memphis’ Housing and Community Development

Assistance amount: 10% of the purchase price, not exceeding $25,000.

Purchase price limit: $189,000 for existing homes and $243,000 for new constructions.

Minimum borrower contribution: The lesser of $500 or 1% of the purchase price

Eligibility requirements:

• First-time homeowners with income not exceeding 80% AMI 
• Applicants must complete HUD-certified housing counseling
• Applicants must maintain the property as the primary residence for a 5-year affordability period.

Statewide down payment assistance programs available in Memphis

Great Choice Home Loan Programs

The Tennessee Housing Development Agency created the Great Choice Home Loan programs to make homeownership available and more affordable for Tennesseans of middle to moderate-income levels. The first-time homebuyer assistance option is a forgivable second mortgage that helps cover down payment and closing costs.

Assistance type: Forgivable loan

Sponsor: Tennessee Housing Development Agency (THDA)

Assistance amount: 96.5% of the total price of the property

Minimum borrower contribution: 3.5% of purchase price

Eligibility requirements

• Eligible applicants must have a credit score of at least 640
• Applicants must complete a homebuyer education class before applying for down payment assistance.
• Applicants must also fulfill the household income and purchase price limit based on their counties. Here is a complete chart of income and purchase price limits.

The Housing Fund Down Payment Assistance Program

This down payment assistance program is another statewide initiative aimed at helping eligible homebuyers in Tennessee overcome financial barriers to homeownership. Administered by the Housing Fund, this program offers individuals and families loans to cover a portion of the down payment, prepaid, and closing costs associated with purchasing a home.

Assistance type: Deferred payment loan

Sponsor: The Housing Fund

Assistance amount: $35,000

Minimum borrower contribution: 1% of the purchase price

Eligibility requirements

• The property must serve as the buyer’s primary residence.
• Specific requirements regarding income limits and credit standards vary depending on the region.
• Applicants must complete a homebuyer education program provided by a THDA-certified counselor. The Housing Fund also allows online homebuyer education through eHome America when combined with a one-hour one-on-one counseling session.

The Tennessee Down Payment Partnership

The Tennessee Down Payment Partnership program also provides first-time home buyers with their down payment or closing costs in the form of deferred loans. These loans are due on sale and will only be repaid when the property is sold; the repaid down payment will then be made available for another first-time homebuyer.

Assistance type: Deferred payment loan

Sponsor: Affordable Housing Resource

Eligibility requirements

• Eligible applicants’ annual income, in combination with household size, must be at or below the 80% income limit set by the US Department of Housing and Urban Development (HUD).
• Applicants must also use a first mortgage from one of the recognized financial partners of Affordable Housing Resource Inc.

Disclaimer: This article is for informational purposes only and should not be considered as legal or financial advice. Please consult an attorney, mortgage lender, or CPA for guidance on your specific situation.