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SB 2341

Tennessee Housing Development Agency - As introduced, enacts the "First-Time Homebuyer Assistance Program," which creates a first-time homebuyer assistance program, to be administered by the agency. - Amends TCA Title 5; Title 6; Title 7 and Title 13, Chapter 23.

114th Regular Session (2025-2026) Introduced by Charlane Oliver

The bill creates the First-Time Homebuyer Assistance Program to provide up to $20,000 in down payment, closing costs, or rate reduction help to eligible Tennessee first-time buyers

Passed on Second Consideration, refer to Senate State and Local Government Committee
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Bill Summary · SB 2341

Summary of SB 2341 / HB 2236 (Tennessee 114th General Assembly)

Purpose and Intent

  • Establishes the “First-Time Homebuyer Assistance Program” to be administered by the Tennessee Housing Development Agency (THDA).
  • The program provides targeted financial assistance to eligible first-time homebuyers to support the purchase of qualifying residential units.

Key Provisions and Changes

What the bill creates

  • A new part in Tennessee Code Annotated, Title 13, Chapter 23, establishing the First-Time Homebuyer Assistance Program (referred to as “the Program”).

Eligibility and definitions

  • Defines “First-time homebuyer” to generally meet the federal three-year requirement under Internal Revenue Code § 143(d) and agency rules, with special consideration for certain single parents who would otherwise qualify but for previous ownership events or marital history.
  • Establishes terms:
    • “Qualifying residential unit”: located in Tennessee, new or newly constructed but uninhabited, financed by a qualifying mortgage loan, owner-occupied within 60 days of purchase (or at least one unit in a two-unit dwelling), and with a purchase price cap (initially $450,000 or the agency-set maximum).
    • “Qualifying mortgage loan”: purchased by THDA and recorded in the county register of deeds.
    • “Home equity amount”: the difference between either the sale price (minus up to 1% of sales price for seller’s closing costs) or appraised value on refinance, and the payoff amount of the qualifying mortgage loan.
    • “Program funds”: money appropriated for the Program; “Recipient”: a first-time homebuyer receiving Program funds.

Program funding and use

  • Program funds may be distributed to first-time homebuyers to assist with:
    • Down payment
    • Closing costs
    • Permanent reduction in the advertised par rate of a qualifying mortgage loan
  • Maximum program payout per recipient: $20,000.
  • THDA will determine disbursement and may adjust the maximum purchase price (and create different maximums by unit type, location, etc.). The agency may adjust maximum purchase prices no more than once per calendar year.
  • A builder/developer cannot raise the price of the unit because program funds were used.
  • THDA may use up to 5% of program funds for administration.

Repayment and reinvestment

  • If a recipient sells the unit or refinances the funding mortgage before the end of the original loan term, they must repay THDA an amount equal to the lesser of:
    • The amount of Program funds received, or
    • 50% of the recipient’s home equity amount.
  • Repayments must be used for further Program distributions.
  • If the loan is refinanced into a new qualifying mortgage with subordinate loans resubordinated, the repayment rule in (g)(1) does not apply to the new arrangement.

Rules, oversight, and reporting

  • THDA will promulgate rules under the Uniform Administrative Procedures Act to govern application forms, processes, and eligibility criteria.
  • Annual reporting to the Senate Finance, Ways and Means Committee and the House committee with budget oversight on disbursements and any adjustments to maximum purchase prices.

Effective Dates and Implementation

  • Effective date for rulemaking and related forms: upon becoming law.
  • General effective date: January 1, 2027.
  • This provides a lead-in period for THDA to design and implement the program.

Fiscal Impact

  • State expenditures:
    • FY 2026-27: estimated $25.43 million (half of the full-year recurring impact, due to the Jan 1, 2027 effective date)
    • FY 2027-28 and later: estimated $50.86 million per year
  • Assumptions used:
    • About 2,543 first-time homebuyers receiving THDA assistance annually (based on recent years’ activity).
    • Each recipient would receive the maximum $20,000, aligning with the program’s cap.
  • Administrative costs: THDA may use up to 5% of program funds for administration; current staff/resources for existing programs may be leveraged.
  • Repayments of program funds (from sales/refinancing) would be reinvested into the program rather than added to state revenue.

Who is Affected

  • Target beneficiaries: First-time homebuyers in Tennessee who meet federal and agency criteria.
  • Parties involved: THDA (administering agency), homebuyers, lenders, builders/developers.
  • Legislative committees: Finance, Ways and Means (Senate and House) will review annual program distributions and adjustments.

If you’d like, I can provide a side-by-side comparison with THDA’s existing homebuyer programs or a plain-language FAQ for potential applicants.

Compiled from official sources — confirm details with the bill’s official record.

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