The Complete First-Time Home Buyer Guide for Tennessee (2026) | BuyUnrepped

Buying your first home in Tennessee involves more steps, more paperwork, and more decisions than most first-time buyers expect. It also involves more opportunity. Tennessee has no state income tax, property tax rates lower than most comparable states, and a statewide down payment assistance program that can provide up to $15,000 toward your purchase.^1,2

This guide covers the entire first-time buyer process in Tennessee from start to finish: what you need to qualify, what programs are available, what the buying process actually looks like, and what Tennessee-specific rules you need to know before you sign anything.

Who Qualifies as a First-Time Buyer in Tennessee

The definition is broader than most people expect. For most Tennessee and federal assistance programs, a first-time buyer is anyone who has not owned a primary residence in the past three years.³

This means:

You owned a home 4+ years ago and sold it: you qualify
You've never owned a home: you qualify
Your spouse owned a home in a prior marriage but you didn't: you may qualify depending on the program
You owned an investment property but not a primary residence: you may qualify

The three-year lookback is the key. If you're unsure, check with the specific program you're applying for.

Step 1: Check and Build Your Credit

Your credit score is the single most important number in the mortgage qualification process. It affects whether you can get a loan, what rate you'll pay, and which loan programs you qualify for.

Minimum scores by loan type:⁴

Loan Type	Minimum Credit Score	Down Payment
FHA	580 (3.5% down)	3.5%
FHA	500–579 (10% down)	10%
Conventional	620	3%–5%
VA	No minimum (lender sets, typically 580–620)	0%
USDA	640 (THDA programs)	0%
THDA Great Choice	640	Varies

If your score is below these thresholds, focus on it before you focus on anything else. Strategies that work within 6–12 months:

Pay every bill on time, every month. Payment history is 35% of your FICO score.
Pay down revolving debt (credit cards) to below 30% utilization. Utilization is 30% of your score.
Don't open new credit accounts or close old ones during the 6 months before you apply for a mortgage.
Dispute any inaccurate negative items on your credit reports at annualcreditreport.com.

Step 2: Calculate What You Can Afford

Before you fall in love with a home, understand the numbers. Two calculations matter most.

Front-End Ratio (Housing Expense Ratio)

Most lenders want your total monthly housing payment (principal, interest, taxes, insurance, and HOA fees if applicable) to be no more than 28%–31% of your gross monthly income.⁴

Example: $6,000/month gross income, 28% front-end ratio = $1,680 maximum monthly housing payment.

Back-End Ratio (Total Debt-to-Income)

Most conventional loans allow a back-end ratio of up to 43%–45%. FHA allows up to 50% in some cases. This is your total monthly housing payment plus all other monthly debt obligations (car loans, student loans, credit card minimums) divided by gross monthly income.⁴

Example: $6,000 gross income, $400 car payment, $200 student loan = $600 in existing debt. At 43% DTI, maximum housing payment is $6,000 x 0.43 - $600 = $1,980.

Use our home affordability calculator to run your specific numbers before you talk to a lender.

Don't Forget Ongoing Costs

First-time buyers often budget for the purchase but underestimate what ownership costs every month:

Property taxes: Tennessee's effective rate averages 0.45% annually, but county rates vary significantly. Budget $1,200–$3,500/year on a median-priced Tennessee home depending on your county.⁵
Homeowners insurance: $1,000–$2,500/year for a typical Tennessee home. Higher in flood zones.
HOA fees: $100–$400/month in communities with HOAs, which includes most new construction.
Maintenance: Budget 1%–2% of the home's value per year for repairs and upkeep. On a $300,000 home, that's $3,000–$6,000/year. First-year costs are often higher.

Step 3: Understand Tennessee's Down Payment Requirements and Assistance Options

Minimum Down Payments

You don't need 20% down to buy in Tennessee. Most first-time buyers use one of these lower-down-payment options:

FHA loan: 3.5% down with 580+ credit score ($10,500 on a $300,000 home)
Conventional 97: 3% down with 620+ credit score ($9,000 on a $300,000 home)
VA loan: 0% down for eligible veterans and active-duty service members
USDA loan: 0% down in eligible rural areas (more of Tennessee qualifies than you'd expect)

For a detailed overview of all loan programs available in Tennessee, see our post on loan programs available to Tennessee first-time buyers.

THDA Great Choice Home Loan

The Tennessee Housing Development Agency's Great Choice program is the most accessible down payment assistance available to Tennessee first-time buyers. Here's what it offers:³

30-year fixed-rate mortgage through a THDA-approved lender
Down payment assistance of up to 6% of the purchase price (maximum $15,000) through the Great Choice Plus add-on
Minimum credit score: 640
Income limits: vary by county and household size
Purchase price limits: vary by county

The Great Choice Plus assistance comes as a second mortgage with 0% interest. It doesn't need to be repaid if you stay in the home for the term, or it converts to an ongoing obligation if you sell or refinance earlier. Verify current terms at thda.org.

On a $300,000 home, Great Choice Plus can provide up to $15,000 in down payment and closing cost assistance, potentially covering your entire upfront cash requirement beyond closing costs.

Other Tennessee Down Payment Assistance

HHF-DPA (Hardest Hit Fund Down Payment Assistance): THDA administers down payment assistance for buyers in certain counties. Check thda.org for current availability and county eligibility.
City and county programs: Nashville/Davidson County (MDHA), Memphis (City Housing Authority), Chattanooga (Community Development), and Knoxville all periodically offer local assistance programs funded through HUD CDBG allocations. These open and close based on funding. Contact your target city's housing department directly.
Employer-assisted housing: Some large Tennessee employers (particularly healthcare systems and universities) offer down payment assistance or housing grants. Ask your HR department.

Step 4: Get Pre-Approved

Pre-approval is your proof of borrowing capacity. In Tennessee's market, most sellers won't seriously consider an offer without a pre-approval letter from a recognized lender.

Get quotes from at least three lenders before you commit. The Consumer Financial Protection Bureau estimates that comparing even two mortgage quotes saves the average buyer $1,500 over the loan's life. Comparing three saves more.⁶

When comparing Loan Estimates, focus on:

Interest rate (affects your monthly payment)
Annual percentage rate (APR) (includes fees, better comparison tool)
Origination fee (0.5%–1.5% of loan amount)
Underwriting/lender fee ($950–$1,250 typically)

Pre-approval is different from pre-qualification. Pre-qualification is a quick estimate based on unverified information. Pre-approval involves a hard credit pull and review of your actual financial documents (pay stubs, W-2s, bank statements). In a competitive market, pre-approval is what actually moves sellers.

Step 5: Know Tennessee's Specific Disclosure and Legal Requirements

Tennessee has specific rules that affect every home purchase. These are not optional disclosures or customs, they're statutory requirements.

The Tennessee Residential Property Disclosure Act

Sellers of 1–4 unit residential properties must provide a property disclosure statement before you sign a purchase agreement. The disclosure covers what the seller knows about the property's condition: structural issues, water intrusion, roof condition, HVAC status, pest issues, and more.⁷

Key things to know:

The disclosure is not a warranty. It reflects what the seller knows, not everything wrong with the property.
You have one year from receiving the disclosure (or the closing date) to file a claim for misrepresentation.
Exemptions apply: new construction, foreclosures, auctions, and properties the seller hasn't occupied within 3 years.

Written Disclosure from Listing Agents

Under TCA 62-13-405, any listing agent must verbally disclose their agency relationship and confirm it in writing before preparing any offer on your behalf.⁸ The listing agent represents the seller. Don't rely on them for pricing advice or negotiation strategy.

Earnest Money and Contingencies

Tennessee doesn't specify a required earnest money amount. Market norms run 1%–2% of the purchase price. Your earnest money is refundable if you exit within your contingency terms. It is NOT automatically refundable if you simply change your mind after all contingencies expire.

Contingencies every first-time buyer should include:

Financing contingency (protects you if your mortgage is denied)
Inspection contingency (lets you exit or renegotiate after the inspection)
Appraisal contingency (protects you if the home appraises below purchase price)

For a look at what to watch in your purchase agreement specifically, see our post on 10 red flags in a purchase agreement Tennessee buyers often miss.

Step 6: Find and Evaluate Homes

You don't need a buyer's agent to find homes in Tennessee. Zillow, Redfin, and Realtor.com display the MLS in real time. Open houses are public and don't require signing any agent agreement.

When evaluating homes, look beyond the surface:

Structural and systems questions to ask at every showing:

How old is the roof? (Replacement: $8,000–$20,000)
How old is the HVAC? (Replacement: $5,000–$12,000)
Is there a crawlspace or basement? Any moisture history?
What's the water heater age? (Replacement: $800–$2,000)
Any known foundation issues?
Is the property in a flood zone?

These questions don't replace an inspection. They help you filter before you spend money on an inspection.

Research the Neighborhood

Check school ratings at greatschools.org
Look at crime data at the local police department's public data portal
Verify flood zone status at msc.fema.gov
Check the county assessor's website for tax assessment and ownership history
Drive the neighborhood at different times of day

Step 7: Make an Offer

Your purchase offer is a legally binding contract once accepted. Tennessee requires all real estate contracts to be in writing and signed by all parties under the Statute of Frauds.⁹

Have a real estate attorney review the purchase agreement before you submit it. Tennessee doesn't require an attorney to close, but for first-time buyers, an attorney review is the most important $600–$1,200 you'll spend in the transaction. Your attorney spots contract language that protects the seller at your expense, ensures your contingencies are properly worded, and represents you at closing.

For help understanding what you're signing, see our post on buyer-broker agreements explained and our guide on how to negotiate directly with a seller's agent.

Step 8: Navigate the Inspection

The home inspection is your window into the property's actual condition. Budget $325–$450 for a standard inspection in Tennessee and attend in person.

Focus your attention on four categories:

Safety issues: Electrical panels, carbon monoxide, radon (especially in East Tennessee), mold
Major systems: Roof, HVAC, plumbing, foundation
Water: Any evidence of intrusion, drainage problems, or moisture in crawlspaces
Property-specific concerns: See inspection details in our city-specific guides for Nashville, Knoxville, Chattanooga, and Memphis

After the inspection, you have three options:

Ask the seller to make specific repairs before closing
Request a price reduction
Request a closing cost credit

Credits are often more effective than repairs. You know exactly what you're getting (money), and you control how it gets spent.

For a detailed look at Tennessee-specific inspection issues that derail deals, see our post on 9 Tennessee home inspection issues that derail deals.

Step 9: Understand Tennessee Closing Costs

Closing costs in Tennessee run 2%–5% of the purchase price, divided into two components:

Hard costs (fees paid to lenders, title companies, and government):

Lender origination fee: 0.5%–1.5% of loan amount
Underwriting fee: $950–$1,250
Title search and insurance: $500–$2,500 depending on purchase price
Realty transfer tax: $3.70 per $1,000 of purchase price (fixed by state law)
Mortgage recordation tax: $1.15 per $1,000 of loan amount (fixed by state law)

Prepaids and escrow deposits:

First year of homeowners insurance
2–3 months of property taxes
Prepaid mortgage interest

On a $300,000 first Tennessee home, total closing costs typically run $6,000–$15,000. Use our closing cost calculator to get a specific estimate based on your purchase price and county.

For the complete breakdown of all 12 fees, see our Tennessee closing costs guide.

Seller Concessions Can Offset Your Costs

You can ask the seller to contribute toward your closing costs as part of your purchase offer. The limits depend on your loan type: up to 6% for FHA, 3%–6% for conventional depending on down payment, 4% plus standard closing costs for VA.¹⁰

On a $300,000 purchase with an FHA loan, that's up to $18,000 the seller can contribute toward your costs. Even asking for 2%–3% ($6,000–$9,000) can cover a significant portion of your closing expenses.

Step 10: Close on Your Home

Three business days before closing, your lender must provide a Closing Disclosure. This document itemizes every fee you're paying. Compare it line by line against your Loan Estimate to verify nothing unexpected has been added. Certain fees, including your lender's origination charges, cannot legally increase from Loan Estimate to Closing Disclosure.¹¹

At the closing table, you'll:

Sign the deed, mortgage, and all closing documents
Pay your closing costs and down payment (via wire transfer or certified check)
Receive the keys

If you hired an attorney, they should attend closing with you. That's what you hired them for.

How BuyUnrepped Helps First-Time Buyers

First-time buyers have the most to gain from understanding the full process, and the most to lose from paying full buyer's agent commissions on top of everything else they're paying at closing.

BuyUnrepped was built for exactly this situation. You get:

Tennessee-specific purchase agreements so your first contract is the right one, not a learning experience
Step-by-step closing coordination so you don't miss a deadline or a contingency window
Comparable sales data so you know what you're offering and why
Closing cost calculators built for Tennessee's specific tax structure
Flat-fee pricing: no percentage commission added to your already-significant upfront costs

On a $300,000 first Tennessee home, a traditional buyer's agent at 2.42% costs $7,260. That same $7,260 could be your entire down payment on an FHA loan. Or it could cover your closing costs in full without asking the seller for concessions. Or it could sit in your savings account as the emergency fund that new homeowners always wish they had.

See how much you'd save on your specific purchase or review our pricing to get started. Have questions about the process? Reach out to our team, we work with first-time buyers every day.

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