Ready to buy a home in the Volunteer State?
With four distinct seasons, a vibrant music scene, and a zero state income tax, Tennessee offers a desirable lifestyle with financial benefits. Your dream home could be a charming single-family house in Nashville or a cozy condo in Knoxville.
Whether you’re a first-time homebuyer or new to Tennessee’s housing market, this guide will teach you everything you need to know. We’ve broken down the entire home-buying process into 13 actionable steps.
Key Takeaways:
- Get Pre-Approved ASAP: In a buyer’s market like Tennessee, a pre-approval letter helps you stand out.
- Save Thousands with Assistance Programs: Programs like “THDA Down Payment Assistance” offer up to $15,000 assistance for your down payment and closing costs. Ensure you research downpayment assistance programs thoroughly.
- Don’t Skip Tennessee-Specific Inspections: While Tennessee doesn’t require inspections, skipping one can lead to higher insurance premiums due to the high risk of storms and flooding. Therefore, a 4-Point Inspection of the roof, electrical, plumbing, and HVAC can help you mitigate risk.
- Ask for Credits, Not Repairs: If the inspection has issues, ask the seller for credit at closing. This allows you to hire your own contractors and prevent closing delays.
- Protect Your Investment and Your Wallet: Remember to get flood and tornado insurance, as standard policies don’t cover these disasters. Don’t forget to file for the Homestead Exemption to save up to $35,000 on your home’s taxable value.
How to Buy a Home for the First Time in Tennessee: 13 Steps!
This step-by-step guide walks first-time home buyers in Tennessee through everything, from assessing finances and budgeting for a down payment to choosing the right mortgage. These 13 steps make the Tennessee real estate process clear, simple, and manageable.
Step 1: Assess Your Finances
As a first-time home buyer in Tennessee, the two factors that should matter the most to you are your credit score and Debt-to-Income (DTI) ratio. Additionally, you must also consider how much you can afford for a down payment, a monthly mortgage, taxes, and insurance.
What Is Your Credit Score?
A credit score is a three-digit number that indicates your creditworthiness to lenders. The minimum credit score to buy a house in Tennessee depends on the type of mortgage you get.
Minimum and Ideal Credit Scores by Loan Type
| Loan Type | Minimum Score | Ideal Score |
|---|---|---|
| FHA | 500 (10% down) | 580+ (3.5% down) |
| Conventional | 620 (varies by lender) | 740+ for best rates |
| VA | No minimum | 620+ |
| USDA | Often around 580 or 600+ | 640 or stronger profile for best terms |
Portfolio mortgage loans are easy to qualify for. Here, the credit score needed to buy a house starts at around 580. VA loans are available only to veterans and active-duty service members, and require a score of 620 for the best terms. FHA loans also accept scores as low as 500. They are good for buyers with lower credit scores looking for houses in Tennessee.
When purchasing property in Tennessee, you can check your credit score using several reliable methods. Most of them are free and will not harm your score:
- Annual Credit Reports: Federal law entitles you to one free credit report every 12 months from each of the three major credit bureaus: Equifax, Experian, and TransUnion. These can be accessed through the official, government-authorized website, AnnualCreditReport.com.
- Credit Monitoring Services: Many banks, credit card issuers, and financial service apps provide complimentary and regular access to the FICO score. This is a convenient way to track your credit health over time.
Knowing how to repair your credit score is important to get better mortgage rates. If you’re a first time home buyer in Tennessee, here’s what you need to do:
- Pay down credit card balances and make all payments on time.
- Avoid opening multiple new accounts quickly.
- Avoid new credit inquiries.
- Minimize your credit card use.
- Consider becoming an authorized user on a family member’s account with a good history.
- Monitor your score regularly to track progress.
How to Calculate Your Monthly Mortgage Payment in Tennessee?
As a first time home buyer in Tennessee, knowing your average mortgage payment helps you plan your budget. Your total payment includes 4 key components, often called PITI:
- Principal and Interest: This is a major chunk of your payment, covering the amount you borrowed (principal) and the cost of borrowing (interest). It’s determined by your loan amount, interest rate, and loan term.
- Taxes: Tennessee property taxes are based on your home’s assessed value. The lender holds these funds in an escrow account and pays the tax on your behalf.
- Insurance: Lenders require you to have homeowners’ insurance to protect the property. The annual premium is usually divided by 12 and added to your monthly payment, also managed through the escrow account.
Apart from PITI, your monthly payment may also include Private Mortgage Insurance if your down payment is less than 20%, and HOA fees.
What Is a Debt-to-Income (DTI) Ratio?
Your debt-to-income ratio shows how much of your monthly income goes toward debt payments, including mortgage, car loans, credit cards, and student loans. To calculate it, add all monthly debts and divide the total by your gross pre-tax monthly income.
A high DTI can prevent you from qualifying for a mortgage, as it shows that you struggle to manage your debt. For the best mortgage rates and a higher likelihood of mortgage approval in Tennessee, aim for a DTI ratio of 36% or lower.
💡 You can still qualify for a loan in Tennessee despite a high DTI if you have compensating factors like a strong credit history, significant cash reserves or savings, stable long-term employment, etc.
Recommended DTI Ratios by Loan Type
| Loan Type | Recommended DTI Ratio | With Compensating Factors |
|---|---|---|
| Conventional | 43% back‑end | 43-50% |
| FHA | 43% back-end | Up to 57% |
| VA | No fixed public guideline, but 41‑43% is widely acceptable | Can exceed 50% with the residual income test |
| USDA | No fixed public guideline, but 41‑44% is widely acceptable | Up to 45‑50% with a strong credit profile |
To improve your DTI ratio for a mortgage, you can either reduce your monthly debts or increase your verifiable income.
- Pay Down Debt: Use a tax refund or bonus to clear smaller loans, or consolidate multiple debts into a single loan with a lower monthly payment.
- Minimize Credit Card Use and Avoid New Inquiries: If possible, consider minimizing your credit card use for a few months before applying for a mortgage. This keeps your reported balance and minimum payment low.
- Increase Verifiable Income: Ask for a raise, take on part-time work, or start a side business. Include all consistent income sources on your application, such as bonuses or commissions, but remember that lenders require a two-year history for secondary income.
- Adjust Your Housing Budget: A larger down payment reduces your loan amount and your monthly mortgage payment. You can also consider a lower home purchase price to keep your future housing costs down.
Step 2: Budget for Your Down Payment and Closing Costs
You should set aside money for the down payment and closing costs. Tennessee’s first time home buyer programs help make homeownership accessible and affordable.
How Much Down Payment Does a Tennessee First Time Home Buyer Need?
Typically, the down payment on a house for a first time home buyer in Tennessee ranges from 3% to 20% of the property’s price. However, it can vary based on the loan type. FHA loans require just 3.5% down, while some conventional loans allow a 3% down payment.
To help with these upfront costs, there are many state and local down payment assistance programs in Tennessee. They provide grants or loans to cover these expenses.
👉 First-Time Home Buyer Programs in Tennessee: Find out which is the #1 downpayment assistance program in the Volunteer State.
How to Estimate Closing Costs in Tennessee?
Closing costs are fees and expenses paid at closing beyond your down payment. Typically, buyer closing costs in Tennessee usually range from 2% to 5% of the home’s price. So, for a $406,300 home, buyers might pay $8,126 to $20,315.
These fees cover lender charges, appraisals, inspections, title insurance, taxes, agent commissions, and recording fees when buying a property in Tennessee.
Step 3: Get Pre-Approved for a Mortgage
Secure your financing early by getting pre-approved for a mortgage as a first time homebuyer in Tennessee. This step helps you understand your budget and strengthens your offer when buying a house.
How to Get Pre-approved as a First Time Home Buyer in Tennessee?
You need to follow these steps to get pre-approved when buying a house in Tennessee:
- Evaluate Your Financial Situation: Check the required credit score by different lenders and obtain a copy of your credit report. Evaluate your income, expenses, and savings to get a sense of what you can comfortably afford. Save for your down payment and closing costs.
- Search for Buyer Assistance Programs: Look into different loan home buyer assistance programs and their eligibility criteria in Tennessee. As a first-time buyer, you may qualify for programs like the Great Choice Home Loan, which offers a 30-year fixed mortgage and down payment assistance.
- Gather Financial Documents: Provide proof of income (recent pay stubs and W-2s), tax returns (last two years), asset statements, debt information, and a government-issued ID.
- Choose a Lender and Apply: Compare lenders in Tennessee and submit a mortgage application to get the best rates and terms.
- Receive Pre-Approval Letter: The lender verifies your information and issues a letter stating your approved loan amount, usually valid for 30–90 days.
A mortgage preapproval turns you from a casual house hunter to a serious buyer in Tennessee, as it:
- Strengthens Your Offer: 86% of the sellers prefer buyers with a pre-approved mortgage. For the strongest position, ask for a fully underwritten pre-approval, where the lender has already verified all your documents.
- Defines Your Budget: It clarifies exactly how much you can afford, allowing you to focus your home search on a realistic price range.
- Speeds Up Closing: With much of the financial vetting already completed, the mortgage process is streamlined once your offer on a home is accepted.
Yes, you can get pre-approved and even buy a home with bad credit in Tennessee. However, your loan options may be limited. You can also expect higher interest rates with poor credit.
Step 4: Choose the Right Mortgage
As a first time homebuyer in Tennessee, assess your finances and select a loan that fits your budget and qualifies you for available programs.
| Feature | Conventional | FHA | VA | USDA | THDA Great Choice/Plus |
|---|---|---|---|---|---|
| Min Credit Score | 620 (some lenders 640) | 580 (500 w/10% down) | No official minimum | 640 typical | 640 |
| Min Down Payment | 3% – 5% | 3.5% | 0% | 0% | 3.5%, plus up to 5% DPA |
| Max DTI | 43% – 50% | 43% – 57% | 41%+ | 41% – 44% | 45% |
| Mortgage Insurance | PMI if <20% | Always | None | None | Required for FHA/USDA |
| Loan Limits (2025) | $806,500 to $1,209,750 | $524,225 to $989,000 | $806,500 to $1,209,750 | County-based | $806,500 |
| Property Eligibility Criteria | Few | FHA standards | VA standards | Rural only (USDA map) | Statewide, plus DPA |
| DPA/Grant Available | Up to $5,000 through the First Home DPA Loan program | Up to $35,000 through The Housing Fund DPA program | Yes, TDHA Homeownership for Heroes Program | No | Yes, up to 5% (max $15K) |
| Buyer Education Required | No (unless program requires) | Yes (for THDA/HUD DPA) | No | No | Yes |
Step 5: Decide Where to Buy a Home in Tennessee
Deciding where to buy is one of the most important steps for a first time homebuyer in Tennessee. Consider factors like local housing markets, popular neighborhoods, cost of living, and amenities to help you find the best places to live in Tennessee.
Why Now Is the Time to Buy in Tennessee
The Tennessee housing market is a buyer’s market. You now have more negotiating power and a wider selection of properties to choose from:
- Housing Supply is High: Tennessee has a 5-month housing supply, which is the benchmark for a buyer’s market.
- Prices Have Stabilized: The median home price has remained relatively constant at $406,300. This allows you to set your budget with more certainty.
- Sellers are Negotiating: 28.7% of homes in Tennessee have seen price drops, signaling increased seller flexibility.
- Homes are on the Market Longer: Properties are taking an average of 68 days to sell, which allows you to make more informed decisions.
These trends show that now is the best time to buy a house in Tennessee. According to Mauricio Umansky, founder of The Agency, the current market provides “great opportunities for buyers to be aggressive and write strong offers.”
Popular Areas for Different Buyer Types
With the market now in your favor, you can be more selective about where you buy. Use this advantage to find a neighborhood that matches your priorities, whether it’s schools, commute, or lifestyle.
- Best Areas for Families: Neighborhoods like Brentwood, Farragut, and Collierville are top choices for their excellent schools and family-friendly parks. If you envision life in a community with safe streets, great parks, and good neighbors, explore homes for sale in Nolensville, TN. Properties with access to top-tier schools and excellent recreational options typically range between $400,000 and $700,000.
- Best Areas for Retirees: For those seeking an active retirement, Franklin and Germantown offer low-maintenance living and easy access to health care. If you are interested in a quieter, suburban community, consider homes for sale in Franklin, which consistently ranks as one of Tennessee’s safest cities.
- Best Areas for Young Adults: Cities like Nashville and Memphis offer rapidly growing job markets and vibrant social events. If a cosmopolitan lifestyle is what you seek, browse the latest Memphis houses for sale, where you can find modern condos and apartments starting at just $275,000.
Consider the Cost of Living When Choosing a Location
When looking for the best place to buy a house in Tennessee, consider the overall cost of living, as lower home prices can be offset by higher taxes or insurance.
- High-Cost Areas: Nashville and Blountville are 7–9% above the state average.
- Moderate-Cost Areas: Murfreesboro and Cookeville are near or just below the state average.
- Low-Cost Areas: Cleveland, Kingsport, and Morristown are 5–8% below the state average.
Step 6: Start House Hunting in Tennessee
Once you’re pre-approved and know where you want to live, the next step is finding the right house. As a first-time home buyer in Tennessee, you have two options:
- Work with a Realtor.
- Search for homes online.
An experienced agent can give you valuable local insights and expert guidance on neighborhood trends. However, you’ll have to negotiate the buyer agent commission with the seller, which may raise the home sale price.
If you prefer to take the lead, a high-tech platform like Houzeo is what you need. Whether you’re looking for beachfront mansions, high‑rise penthouses, spacious big homes, or luxury homes in Tennessee, Houzeo has you covered. You can browse through thousands of listings, set alerts, and save your search. You can even schedule showings and submit offers, all by yourself.
Don’t Just Browse. Buy.
Your entire home purchase, managed in one place.
Download the Houzeo Mobile AppStep 7: Schedule and Attend Home Showings
After you narrow down your list of potential homes, schedule and attend showings to see each property in person. For a first-time home buyer in Tennessee, visiting homes firsthand helps you evaluate condition, layout, and neighborhood, ensuring you make an informed choice.
During the showing, ask specific questions like:
- How long has the home been on the market?
- Why is the owner selling?
- What is the age of the roof, HVAC system, and water heater?
- Is there any history of water damage, flooding, or mold?
- Are there any HOA fees or pending special assessments?
- Is the property located in a flood zone?
- Are there any neighborhood nuisances or upcoming developments?
- Are there any known structural or foundation issues?
When buying a house in Tennessee for the first-time, check the property carefully during the open house. Look for signs of water damage or foundation issues, water stains, uneven floors, or sticking doors, which may indicate serious issues.
As a first time home buyer in Tennessee, there are three main aspects you need to focus on when shortlisting homes:
- Insurance Risks: Verify the home’s flood zone using FEMA’s maps. Get a 4-point inspection report to assess insurability. Additionally, these reports help you identify features, like an old roof or the lack of impact windows, that could drive up insurance costs.
- Commute and Lifestyle: Test your commute during rush hour. Visit the neighborhood at different times to check for noise from traffic, airports, or nightlife. Ensure convenient access to key amenities like schools, groceries, and parks.
- Costs and ownership: If your house is governed by the HOA, find out about any homeowner’s association fees or special assessments. Additionally, check for any restrictive covenants, which can limit how you can use the property.
- Tennessee Home Loans/Assistance Program Eligibility: If you’re applying for a loan or first time buyer program in Tennessee, ensure that the house complies with its property requirements, or you may risk losing the assistance.
Step 8: Make an Offer
When crafting an offer, make a competitive bid but stay within your budget. As a first-time home buyer in Tennessee, consider factors like the home’s market value, recent comparable sales, and any repairs needed. This increases your chances of getting a fair deal.
Step 1: Analyze Recent Sales
Your agent will pull up real estate comps that are similar to the one you want. Focus on the final sale price, not the list price. Home prices in many Tennessee metro areas have seen a modest increase, so your offer should reflect this trend.
Step 2: Adjust for the Home’s Condition
Factor in the age and condition of the roof and HVAC. If a comparable home sold for $406,300 but had a new roof, and your target home needs a $20,000 replacement, adjust your offer to account for that expense.
Step 3: Factor in Today’s Market
With more homes for sale, you have leverage. Even home builders are lowering their prices by almost 6% to attract buyers. So, for a home that is priced fairly, offer 3% to 5% less. If it is overpriced, you can justify an even lower offer, citing both the comps and market trends.
What is an Earnest Money Deposit in Tennessee?
An earnest money deposit is a “good-faith” payment that shows you are a serious buyer. This money is held in escrow and applied towards your down payment at closing.
In Tennessee, the standard deposit is 1% to 3% of the purchase price. On a $406,300 home, this would be between $4,063 and $12,189. In highly competitive markets like Clarksville or Knoxville, sellers may expect a deposit closer to 10%.
Once your offer is accepted, you typically have 3 business days to submit the deposit to an escrow agent, such as a title company or real estate attorney.
Yes, you can get your earnest money deposit back in Tennessee, but only if you back out of the sale for the following reasons:
- The inspection reveals major issues, and you exercise the inspection contingency.
- The appraisal comes in low, and you exercise the appraisal contingency.
- You’re unable to secure the required financing, and exit during the financing contingency period
- Title issues are discovered.
Many Tennessee first time home buyers forfeit their earnest money because:
- They back out after the contingency periods expire without a valid reason.
- They violate contract terms.
- The seller meets all contract obligations, but the buyer still refuses to close.
Step 9: Conduct Home Inspections
First-time home buyers in Tennessee should schedule home inspections to uncover any issues before buying a house. You typically get the inspection report within 24 to 48 hours.
Which Tennessee Home Inspections Should You Schedule?
A standard home inspection in Tennessee isn’t enough. The state’s unique climate and weather risks require a few specialized inspections:
- General Home Inspection ($300–$500): A licensed inspector will examine everything from the roof to the foundation. They pay special attention to storm damage, proper drainage, and the age of the AC unit.
- Radon Inspection ($100–$200): Radon is a radioactive gas that can seep into homes from the ground. In Middle and East Tennessee, radon levels often exceed EPA recommendations. A radon inspection is crucial to ensure indoor air safety.
- Foundation or Structural Inspection ($300–$600): Clay-rich soils in areas like Nashville, Murfreesboro, and Memphis can expand and contract, leading to foundation cracks. A foundation inspection can help you assess the severity and estimate repair costs if needed.
- WDO/Termite Inspection ($75–$125): A termite inspection is mandatory for government-backed loans like FHA and VA, and is highly recommended for all others. Tennessee’s warm, damp climate is a breeding ground for termites and other pests that can cause severe structural damage.
- Roof Inspection ($150–$300): Tennessee’s severe storms and occasional tornadoes make it crucial to regularly check for any hidden damage in the roof. A specialized roof inspection ensures that the shingles, gutters, and flashing are in good condition before closing.
Consider Other Specialized Inspections
Based on the property, a Tennessee first-time home buyer may want to conduct additional tests. For older homes, a sewer scope can detect cracks or tree roots in the main sewer line, saving you from a $15,000 repair down the road.
For rural properties, a septic inspection is essential. If the home has a pool, a separate pool inspection will check the pump, filter, and structure for costly defects.
It’s not recommended. Even if you plan to buy cheap homes in Tennessee, skipping a home inspection can lead to unexpected repair costs.
Step 10: Complete the Home Appraisal
After the inspection, your lender will typically order a home appraisal, which professionally values the property to ensure it matches your offer.
Why Do Lenders Need Appraisals?
A home appraisal in Tennessee confirms the property’s market value. Appraisers typically focus on the following parameters:
- Property Characteristics: A home appraisal in Tennessee focuses on your property’s square footage, lot size, and usable space. Additionally, they look for structural integrity and the condition of major systems like electrical, plumbing, and HVAC.
- Insurance and Mitigation Features: The age of the roof, the presence of hurricane shutters, and impact-resistant windows directly affect a home’s insurability and, therefore, its market value.
- Condo/HOA Health: Appraisers closely examine a condo association’s financial health. They look for anything that may reduce the unit’s value, like the association’s reserve funds or any pending special assessments.
A standard appraisal in Tennessee costs around $650 and typically takes 7 to 14 days to complete. For luxury or waterfront properties, the cost and timeline can be higher.
If the appraisal comes in lower than your offer price, you have an appraisal gap. In such a situation, you can either:
- Renegotiate the Price: Ask the seller to lower the price to the appraised value. In the current market, many sellers are willing to negotiate.
- Cover the Gap: If the seller won’t budge, you can choose to pay the difference in cash.
- Dispute the Appraisal: If you believe the appraiser made a factual error or used poor comparable sales, you can file for a Reconsideration of Value.
- Walk Away: If you cannot reach an agreement, your appraisal contingency allows you to cancel the contract and get your earnest money back.
Step 11: Negotiate Repairs and Credits
As a first time home buyer in Tennessee, use your home inspection results to negotiate repairs and request credits from the seller. This step can help reduce unexpected costs and ensure your new house is move-in ready.
How to Use Your Inspection Report to Negotiate Repairs?
Your negotiation strategy should center on issues that impact the home’s safety, structural integrity, and insurability. Minor cosmetic flaws are not worth fighting over and can make you seem unreasonable. It’s easy to make this mistake as a first home buyer in Tennessee.
Focus your request on these critical areas:
- Safety Hazards: This includes outdated and dangerous electrical panels, faulty wiring, or missing safety features like GFCI outlets near water.
- Structural Problems: Any issues with the foundation, load-bearing walls, or the roof structure.
- System Failures: A failing HVAC system, major plumbing leaks, or an old roof.
Get 2 to 3 written estimates from licensed contractors for any major repairs. A repair request that includes professional quotes shows you are serious and have done your homework.
Should You Ask for Repair Credit?
While you can ask the seller to perform the repairs themselves, it’s better to ask for credit instead. Credit gives you the funds to hire your own contractors and ensures the work is done to your standards, not just the cheapest way possible. It also allows the sale to proceed on schedule, without any delays.
How to Negotiate Seller Concessions
Seller concessions are a powerful tool for reducing your out-of-pocket closing costs when buying real estate in Tennessee. Here, the seller pays for some of your expenses, such as the appraisal, title insurance, or property taxes.
Your ability to negotiate concessions depends on your loan type. Each loan program sets a maximum limit on how much a seller can contribute:
| Loan Type | Minimum Down Payment | Maximum Seller Concession |
|---|---|---|
| Conventional | Less than 10% | 3% of the purchase price |
| Conventional | 10% to <25% | 6% of the purchase price |
| Conventional | 25% or more | 9% of the purchase price |
| FHA Loan | Any amount | 6% of the purchase price |
| VA Loan | Any amount | 4% of the purchase price |
| USDA Loan | Any amount | 6% of the purchase price |
Step 12: Review Your Closing Costs
After negotiating repairs and credit as a first time home buyer in Tennessee, review all closing costs carefully. Check title fees, escrow, insurance, and taxes so you can finalize your budget and confidently buy your house.
Understanding Closing Costs in Tennessee
- Tennessee-Specific Taxes ($1,500+): In Tennessee, buyers are responsible for the realty transfer tax, which is roughly $0.37 per $100 of the sale price. For example, on a $406,300 loan, these two taxes alone will add $1,503 to your bill.
- Title Fees ($500-$2,000): These fees cover the title search, settlement services, and title insurance policies for both you and your lender. In Tennessee, the party responsible for paying the owner’s title insurance varies by county.
- Third-Party Fees ($1,000 to $1,500): This category includes the appraisal fee, credit report fee, and flood certification fee. It also covers any inspections you ordered, like the general, 4-point, and WDO inspections.
- Prepaid and Escrow Costs ($3,000 to $6,000): You will pay for your first year of homeowners’ and flood insurance upfront. You will also fund your escrow account with several months of property tax and insurance payments to cover future bills.
Step 13: Close on Your New Home
Closing day is the moment you officially become the owner of your new Tennessee home. Its success depends on a careful final walk-through, a smooth funding process, and making sure all legal documents are properly signed and recorded.
Complete Your Final Walk-Through
Within 24 hours of closing, you will do one last walk-through of the property. This is not a formal inspection, but rather your final chance to see if you want this home. Use this checklist:
- Verify Repairs: Bring your inspection report and repair addendum. Confirm that all negotiated repairs have been completed to a professional standard.
- Test Everything: Run the air conditioning and test all appliances. Make sure every system is functioning as it should.
- Check for Included Items: Ensure all items that were supposed to be included in the sale, like appliances, window treatments, and light fixtures, are still in place.
- Look for Signs of Additional Damage: Make sure no new damage has occurred since your last visit. If you see any issues, notify your agent and the title company immediately before you sign any documents.
Sign the Documents
While there are numerous documents to sign, the most important ones are:
- The Closing Disclosure: You will sign the final version of this document, which outlines all your loan terms and costs.
- The Promissory Note: This is your legal promise to repay the loan. The promissory note outlines the loan amount, interest rate, repayment schedule, and maturity date.
- The Mortgage: This document secures the property as collateral for your loan.
Once you have signed everything, you will provide your “cash to close” amount via a cashier’s check or wire transfer. After your lender sends their funds to the title company, the deal is officially funded.
Get Your Keys and Celebrate
Once the deal is funded, the title company will record the new deed with the county, officially transferring ownership to you. After they pay the seller and other parties, you will finally get the keys to your new home.
Congratulations, you are officially a Tennessee homeowner! 🎉
A new home is a huge financial investment. To ensure that you don’t sink your money into a dud, look out for these red flags:
🚩 What are the Red Flags to Look for When Buying a House in Tennessee?
1. Bargain-Priced Homes
An asking price that’s significantly lower than comparable homes in the area seems like a dream come true. But that’s just until the roof collapses or faulty electrical systems burn the house down.
An extremely low price could mean the property is uninsurable, or is located in a high-risk flood zone with steep insurance costs. So before you put in an offer, check the home’s sale history and other permits from the local county’s office. Also, get insurance quotes to understand your total expense better.
2. Neighborhood Sell-Out
During the open house, if you notice too many “For Sale” signs on a single street or in a small community, it should ring alarm bells. It could be due to skyrocketing HOA fees, declining school quality, or a recent increase in crime rates. It could also point to a future nuisance, like a commercial development planned nearby.
Talk to potential neighbors to get their opinion on the area. You can also check community social media pages or online forums like Nextdoor for discussions about local issues.
3. Excessive Use of Air Fresheners
A few scented candles create a welcoming atmosphere, but if a home smells like a lavender bubble burst in it, then there’s something fishy. It may be covering up a musty smell that highlights the presence of mold and plumbing issues.
Pay close attention to the smell in the closets, bathrooms, and around the air conditioning unit. Open kitchen and bathroom cabinets and smell the area under the sink. If you detect a musty odor, ask for a separate mold inspection along with the standard home inspection.
4. Signs of Drainage or Water Intrusion Problems
Tennessee’s rainy climate, especially in Middle and East Tennessee, brings frequent heavy rains and high humidity. A poor drainage system or water intrusion can quickly lead to foundation damage, mold growth, and costly repairs.
Check if the water is pooling near the foundation, damp basements or crawl spaces, and clogged gutters, as these can lead to structural damage. Additionally, look for any foundation cracks, zig-zag patterns, or signs like stains, peeling paint, or warped floors, which may indicate water intrusion.
5. Seller-Related Issues
These issues include lack of transparency by the sellers, missing permits for past work, and title or ownership complications. Ignoring these can lead to expensive repairs or legal hurdles that may affect your ownership.
To protect yourself, request full disclosure from the seller, verify permits with local authorities, and review the property’s history. Additionally, work with a real estate attorney or title company to ensure a clear and smooth closing process.
What Should You Do After Closing?
Welcome home! Now it’s time to handle a few must-dos to protect your investment:
- File for Homestead Exemption: If the house is your primary residence, apply for Tennessee’s Homestead Exemption to reduce your property taxes. You could save about $35,000 in taxes, which is especially valuable in high-tax areas like Nashville and Brentwood.
- Set Up Utilities: Get the water, electric, internet, and trash services connected. Don’t forget pest control, especially in Nashville, Knoxville, and Chattanooga, where termite infestation is a prevalent issue.
- Get Insurance: Homeowners insurance is required if you’re financing, and flood insurance may be needed in FEMA zones. Rates are higher in coastal cities like Kingsport and Hendersonville due to the highest number of properties in flood zones.
- Home Maintenance Plan: Schedule AC tune-ups at least twice a year, clear gutters regularly, and inspect roofs for storm damage or algae buildup. Consider wind mitigation upgrades to reduce insurance costs.
How to Buy a House in Tennessee Without a Realtor?
Research neighborhoods and browse listings on trusted sites like Houzeo. Then, schedule showings directly with sellers or their agents. You can also hire a real estate attorney to review contracts and handle legal details.
Next, get pre-approved for a mortgage, make an offer, schedule inspections, and negotiate repairs. With the necessary due diligence, you can buy a house without a Realtor.
Which First Time Home Buyer Programs in Tennessee Can You Apply For?
Various programs make homeownership accessible for a first time home buyer in Tennessee. They assist with down payments through grants or low-interest, deferred-payment loans. Applicants must meet the income and credit score criteria and complete a homebuyer education course to avail of these programs.
| Program Name | Eligibility | Grants/Assistance | Key Benefit |
|---|---|---|---|
| THDA Great Choice Home Loan | First-time buyers or anyone not owning in the past 3 years; income & price limits; 640+ credit score; must complete education course | 30-year fixed-rate loan at competitive rates | Pairs with down payment assistance |
| THDA Great Choice Plus | Must qualify for Great Choice loan (see above) | Up to 5% of the sale price ($15,000 max) as a second loan or $6,000 deferred forgivable loan | Covers down payment & closing costs |
| THDA Homeownership for Heroes | Military, veterans, police, fire, EMT, teachers; meet income/price criteria | Reduced rate on the Great Choice loan and up to $15,000 in down payment assistance | Lower mortgage rates for community heroes |
| New Start Loan Program | Must be a low-income Tennessee resident | Up to $200,000 in 0% fixed interest mortgage | tailored financing options for first-time homebuyers |
| Affordable Housing Resources (AHR) Nashville | First-time buyers meeting income limits, often essential workers in the Nashville area. | Up to $15,000 down payment via NeighborhoodLIFT | Extra support for qualifying buyers |
1. THDA Great Choice Home Loan
- Eligible Buyers: low-to-moderate income first-time homebuyers in Tennessee.
- Credit Score: 640+
- Assistance: 30-year fixed-rate mortgage with competitive interest rates.
The THDA Great Choice Home Loan is Tennessee’s primary home buyer program for first-time buyers. The program offers a 30-year fixed-rate mortgage with down payment and closing cost assistance. To qualify, you must have a 640+ credit score, complete homebuyer education.
2. THDA Great Choice Plus
- Eligible Buyers: Must qualify for the THDA Great Choice Home Loan program.
- Credit Score: 640+
- Assistance: Offers up to 5% ($15,000) as a second mortgage or $6,000 as a deferred, forgivable loan.
The Great Choice Plus program is ideal for buyers who qualify for the main Great Choice loan but need additional funds to cover the down payments and closing costs. Depending on the option you choose, you can get up to $15,000 as a second mortgage or up to $6,000 as a deferred forgivable loan.
3. THDA Homeownership for Heroes
- Eligible Buyers: Military personnel, veterans, teachers, firefighters, law enforcement officers, and EMTs who meet income and home price criteria.
- Credit Score: 640+
- Assistance: Low-interest mortgage with up to $15,000 or 5% in down payment assistance.
The THDA Homeownership for Heroes program is available for active duty military personnel, National Guard members, veterans, law enforcement officers, EMTs, or paramedics. To qualify, you must have a credit score of 640 or above and complete a homebuyer education course.
4. New Start Loan Program
- Eligible Buyers: low-income Tennessee residents looking to buy or build a home.
- Credit Score: 620+
- Assistance: Up to $200,000 through a 0% fixed-interest mortgage.
The New Start Loan Program offers interest-free mortgages to low-income families, making monthly payments more manageable. The program is often managed by the local non-profit housing agencies. To qualify, you must be a first-time Tennessee homebuyer and meet THDA income and purchase price limits.
5. Affordable Housing Resources (AHR) Nashville
- Eligible Buyers: First-time buyers meeting income limits, often essential workers in the Nashville area.
- Credit Score: 620+
- Assistance: Up to 100% loan for down payment assistance.
The AHR Nashville partners with lenders to make homeownership more affordable and easy for working families. To qualify, you must be a low-to-moderate income essential worker in Nashville and eligible for a $180,000–$250,000 first mortgage. You also need a 620+ credit score and must complete a homebuyer education course.
» First Time Buyer Programs: Find the perfect program that helps you get the key to your first home.
How to Buy a House in Tennessee Near Me
What Should You Know Before Buying a House in Tennessee?
Before you buy a home in the Volunteer State, you must understand the factors that can impact your budget and lifestyle.
What are Some Additional Costs When Buying Houses in Tennessee?
Apart from the purchase price, you must account for several other expenses, like property taxes and potential HOA fees. However, the most critical consideration for any Tennessee homebuyer is insurance.
- Why Homeowners Insurance is Crucial: Tennessee’s susceptibility to tornadoes, wildfires, and other natural disasters makes homeowners’ insurance important. This coverage protects your investment from catastrophic damage.
- High Insurance Costs: Due to these risks, the projected annual cost of homeowners’ insurance may go as high as $3,444. That’s almost 23% higher than the national average!
- Choosing the Right Policy: When selecting a policy, ensure it provides adequate tornado and wildfire coverage. You could lower your tornado and fire insurance in Tennessee by mitigating risks with storm- and fire-resistant features, clear surroundings, and safety systems.
Do You Need Separate Flood Insurance in Tennessee?
Yes, you do. Standard homeowners’ insurance does not cover flood damage, so a separate policy is necessary for protection. FEMA maps determine your property’s flood risk:
| Flood Zone | Risk Level | Insurance Recommendation |
|---|---|---|
| A, AE, V, VE | High-Risk | Mandatory for most mortgages. FEMA-mapped “Special Flood Hazard Areas.” At least 1% annual chance of flooding. |
| B, C, X | Low-to-Moderate | Strongly Recommended. Over 40% of claims originate here; risk is significant even if not mandated. |
When is Flood Insurance Required?
Whether you need flood insurance typically depends on your property’s location, your mortgage lender, and your homeowners’ insurance provider. However, there are two main situations where flood insurance is mandatory in Tennessee:
- Federally-Backed Mortgages in High-Risk Zones: If your home is in a high-risk flood zone and you have a federally-backed mortgage, federal law requires you to have flood insurance.
- Receiving federal disaster assistance: Flood insurance is mandatory if you have received federal disaster assistance for a flood-damaged property. You are required to maintain flood insurance on that property for as long as it exists.
Why First-Time Homebuyers Should Explore Tennessee Now?
Tennessee is a smart choice for first-time buyers, thanks to its no-income-tax policy and a market that now favors buyers. From Nashville’s vibrant job market to Chattanooga’s scenic riverfront charm, there’s a community for every budget. With thousands of homes for sale and numerous down payment assistance programs, homeownership is more attainable than ever.
» Houzeo Reviews: Read what customers have to say about Houzeo, Tennessee’s best home buying website.
