Mortgages in Tennessee
Tennessee's housing market is highly varied: Nashville metro prices have risen sharply and competition is intense. Memphis and Knoxville offer more accessible entry-level markets. Chattanooga and the smaller cities present growing markets. Tennessee has no state income tax on wages — a meaningful affordability benefit.
Tennessee at a glance
Population
7.1M
U.S. Census Bureau, July 1, 2025 estimate
Editorial note — Tennessee
Nashville buyers face a highly competitive market where THDA program price caps are frequently exceeded. Knoxville, Memphis, and secondary market buyers benefit most from THDA programs. Tennessee's no-income-tax environment boosts effective affordability.
Tennessee Housing Finance Agency
The state HFA, first-time buyer programs, and down-payment assistance available in Tennessee.
Primary regulator
Tennessee Housing Development Agency (THDA)
THDA provides the Great Choice Home Loan with Great Choice Plus DPA (a second loan) for qualifying Tennessee homebuyers.
Verify HFA programs ↗First-time buyer & DPA programs
THDA's Great Choice Plus provides a second loan at 0% interest for down payment and closing costs alongside a Great Choice first mortgage. The loan is deferred — no monthly payments until you sell, refinance, or pay off the first mortgage. Visit thda.org for income limits and approved lenders.
Federal resources: HUD (U.S. Department of Housing and Urban Development) publishes state-by-state homebuyer resources and lists approved nonprofit housing counselors. Visit hud.gov for CFPB mortgage tools and the FHFA for conforming loan limits. hud.gov
What to compare when shopping a mortgage in Tennessee
Mortgage rates and fees for the same borrower vary meaningfully across lenders. Shopping at least 3–4 lenders within a 14-day window counts as a single credit inquiry.
Interest rate vs. APR
APR includes lender fees (origination, points) and reflects the true annual cost. A lower rate with high fees can cost more than a slightly higher rate with no fees, depending on how long you keep the loan.
Loan type (conventional, FHA, VA, USDA)
Loan type determines down-payment requirements, mortgage insurance rules, and eligibility criteria. FHA loans allow lower credit scores and down payments; VA and USDA offer zero-down options for qualifying borrowers.
Down payment and PMI
Conventional loans require PMI (private mortgage insurance) below 20% down — typically 0.5–1.5% of the loan annually. FHA has its own mortgage insurance premium (MIP) regardless of down payment.
State HFA programs
Check the Tennessee Housing Development Agency (THDA) for first-time buyer mortgage programs and DPA before choosing a lender. HFA programs can reduce cash-to-close significantly.
Loan term
30-year fixed is the standard. 15-year fixed reduces total interest paid dramatically but raises monthly payments. ARMs carry rate-reset risk and are appropriate only for buyers with a defined short-term horizon.
Lender responsiveness and lock policy
In competitive markets, lender responsiveness and willingness to issue a fully underwritten pre-approval (not just a pre-qualification) can make the difference between winning and losing an offer.
Compare top mortgage lender picks for Tennessee buyers
Ranked by rates, fees, and loan-type availability. Ranked by our published methodology.
Mortgages in Tennessee — common questions
What is THDA? +
THDA (Tennessee Housing Development Agency) at thda.org provides the Great Choice Home Loan and Great Choice Plus DPA (0% deferred second) for qualifying TN buyers.
What is Great Choice Plus? +
Great Choice Plus provides a 0% interest deferred second loan — no monthly payments until you sell, refinance, or pay off the first. Verify current terms at thda.org.
How competitive is the Nashville housing market? +
Nashville is one of the most competitive markets in the Southeast. Pre-approval and strong offers are required. THDA program purchase-price caps are often exceeded in Nashville metro.
Does Tennessee have a state income tax? +
Tennessee has no state income tax on wages (investment income tax was also eliminated). This significantly boosts take-home pay and effective affordability.
Where can I find a HUD counselor in Tennessee? +
HUD lists approved housing counselors at hud.gov/states/tennessee.
Ready to compare mortgage lenders in Tennessee?
We rank, against our published methodology, top mortgage lenders by rates, fees, and loan-type availability. Shopping 3–4 lenders within a 14-day window counts as a single inquiry for credit-scoring purposes.
Compare mortgage options →ClearValue Lending is an independent editorial platform and is not a mortgage broker, lender, or loan originator — we do not originate loans or provide mortgage advice. Some links are affiliate links — see disclosure below. Rankings are based on editorial criteria, not compensation. ClearValue Lending does not guarantee loan approval, specific rates, or program availability.
Sources
- Tennessee Housing Development Agency (THDA) — Official Website ↗
- U.S. Department of Housing and Urban Development (HUD) ↗ — HUD-approved housing counselors and homebuyer resources by state
- U.S. Census Bureau ↗ — July 1, 2025 population estimates
Editorial disclaimer: This page provides general educational information about mortgages and housing finance programs in Tennessee. It is not legal, tax, or financial advice and does not guarantee loan approval, rates, or program availability. HFA program details and conforming loan limits were accurate as of May 22, 2026. Verify current program terms directly with Tennessee Housing Development Agency (THDA), HUD at hud.gov, and FHFA at fhfa.gov before applying. Scored against ClearValue's published methodology. Updated May 2026.
Some links on this page are affiliate links. ClearValue Lending may earn a commission at no cost to you. Rankings are based on editorial criteria, not compensation. See our full advertiser disclosure for details.