Tennessee FHA Loans 2026
Yes, Tennessee buyers can get an FHA loan with just 3.5% down and a 580 credit score, and in higher-cost Nashville-metro counties the FHA limit runs well above the statewide floor. FHA is often the most accessible path for first-time and credit-rebuilding buyers across Tennessee's 95 counties.
For Tennessee families pursuing homeownership, FHA loans offer an accessible pathway with just 3.5% down payment and credit flexibility that conventional loans cannot match. Whether purchasing your first home in Murfreesboro, relocating near Fort Campbell in Clarksville, or finding affordable options in Lebanon, FHA financing makes the dream achievable with loan limits up to $1,029,250 in the Nashville metro and a $541,287 baseline across most Tennessee counties.
What are today's FHA loan rates in Tennessee?
Today’s 30-Year Fixed FHA Rate
FHA – Primary Residence
Rate Assumptions
30 year fixed, $300k loan amount, $400k value, purchase, FICO Credit Score 759, Zipcode 92867
APR & Disclosures
The Annual Percentage Rate (APR) shown reflects the cost of credit over the loan term, including applicable fees, and is based on the assumptions above. Your actual rate and APR depend on your credit profile, loan amount, property, occupancy, and other factors. For information purposes only and does not constitute a loan approval or commitment to lend. Rates are subject to change without notice.
Can you buy a home in Tennessee with no down payment using an FHA loan?
Yes, for eligible borrowers. FHA loans normally require 3.5% down, but our down payment assistance grant covers it entirely, either 2% or 3.5% of the purchase price, with no repayment and no second lien on your home. It is a true grant, not a loan you pay back later, so for many Tennessee buyers it means bringing no money to the table for the down payment.
The grant is available to a wide range of Tennessee buyers. You may qualify if your income is at or below 140% of your area's median, or if you are a first-time buyer, first responder, educator, medical professional, civil servant, or military member, or if the home is in an underserved area. A 620 credit score and a short homebuyer education course are required, and the grant works on standard FHA purchases as well as FHA renovation loans.
Important: The grant requires a 620 FICO (standard FHA stays 580) and cannot be combined with high-balance FHA loans.
Can I use THDA down payment assistance with an FHA loan?
Yes. The Tennessee Housing Development Agency offers several programs compatible with FHA loans including Great Choice Home Loans with down payment assistance up to 5%. The Homeownership for the Brave program provides additional benefits for military veterans purchasing with FHA financing. THDA programs are structured as second-lien loans rather than grants, so compare both options with your loan officer.
Why is an FHA loan a good fit in Tennessee?
An FHA loan fits Tennessee well because the state's affordable housing markets combined with FHA's nationwide loan guidelines create exceptional opportunities for first-time buyers and those rebuilding credit. It is still worth comparing FHA against other Tennessee loan programs before you decide.
The Volunteer State Advantage
Tennessee's median home price of approximately $340,000 positions most properties well within FHA loan limits, unlike coastal states where buyers must stretch to conforming limits. This affordability advantage means Tennessee FHA borrowers often have lower monthly payments relative to income, creating sustainable homeownership paths that build generational wealth. Working with an experienced Tennessee mortgage broker lets first-time buyers compare FHA pricing from multiple lenders.
Research from the Consumer Financial Protection Bureau indicates that FHA loans help approximately 80% of first-time homebuyers who might otherwise struggle with conventional financing requirements. In Tennessee, where the homeownership rate exceeds the national average at 67.5%, FHA financing has played a crucial role in helping families transition from renting to owning. For applicants with thin or recovering credit, FHA also permits manually underwritten approvals that weigh the full financial picture beyond a single credit score.
The Tennessee Housing Development Agency works alongside FHA programs to provide additional assistance. Programs like Great Choice Home Loans can layer with FHA financing, providing down payment assistance that reduces out-of-pocket costs even further.
Tennessee FHA Loan Limits by County (2026)
All Tennessee counties share the same FHA loan limit based on HUD guidelines established by the Federal Housing Administration.
| County (Major City) | 2026 FHA Limit | Population |
|---|---|---|
Davidson (Nashville) | $1,029,250 | 715,884 |
Shelby (Memphis) | $541,287 | 929,744 |
Knox (Knoxville) | $541,287 | 478,971 |
Hamilton (Chattanooga) | $541,287 | 366,207 |
Rutherford (Murfreesboro) | $1,029,250 | 341,486 |
Williamson (Franklin) | $1,029,250 | 247,726 |
Montgomery (Clarksville) | $541,287 | 220,069 |
Sullivan (Kingsport) | $541,287 | 158,348 |
Note: Most Tennessee counties use the standard FHA floor of $541,287 for 2026, while Nashville-metro counties (Davidson, Williamson, Rutherford) carry higher limits. Multi-unit properties have higher limits: 2-unit ($637,950), 3-unit ($771,125), 4-unit ($958,350). Limits are set annually by HUD based on national conforming loan limits.
FHA Opportunities Across Tennessee Regions
Each region offers unique advantages for FHA homebuyers
Middle Tennessee FHA Markets
The Nashville metropolitan area represents Tennessee's fastest-growing FHA market, with communities like Murfreesboro experiencing significant population growth. First-time buyers find strong value in Clarksville, where Fort Campbell employment drives steady demand. For those seeking suburban quality schools, Lebanon and Spring Hill offer newer inventory at accessible price points.
What are the FHA requirements in Tennessee?
Credit & Income
- 580+ credit score for 3.5% down
- 500-579 credit requires 10% down
- Two years employment history
- DTI ratio up to 43% (50% with compensating factors)
Property Requirements
- Must be primary residence
- Meet HUD minimum property standards
- 1-4 unit properties eligible
- FHA appraisal required
Down Payment & Costs
- 3.5% minimum down payment
- Gift funds allowed from family
- Seller can contribute up to 6% toward closing
- THDA down payment assistance compatible
“We thought our 610 credit score would keep us renting forever. Emmett walked us through FHA requirements, helped us understand how THDA down payment assistance works, and found us a home in a neighborhood with excellent Rutherford County schools. Our mortgage payment is actually less than our rent was. The FHA process felt complicated at first, but having someone explain each step made all the difference.”
Estimate Your FHA Payment
See your complete FHA payment, including both parts of mortgage insurance, and how your down payment changes the math over time.
Understanding your FHA payment
An FHA payment has a piece conventional and VA loans don't: mortgage insurance, and it comes in two parts. The upfront premium is a one-time charge of a percentage of your loan amount, almost always rolled into the loan rather than paid at closing, which is why the total loan above can exceed your purchase price. The annual premium is charged monthly and appears as its own line in the breakdown.
The 11-year rule, and why your down payment matters more than you'd think
Here's the part that changes the math over time. If you put less than 10% down, FHA mortgage insurance stays on the loan for as long as you have it. It doesn't fall off at 20% equity the way conventional PMI does. If you put 10% or more down, it drops off after 11 years.
That's a meaningful long-term difference, and it's worth modeling both ways above if you have the savings to reach 10%. It also means FHA isn't automatically the cheaper option just because the down payment is lower. For a buyer with solid credit and some savings, a conventional loan with removable PMI often costs less over the years you actually hold the loan, even though it asks for more up front. I run that comparison for every borrower who could qualify either way, because the right answer genuinely differs by situation.
FHA loan limits are set by county
FHA limits vary county by county, and they're lower than conforming limits in most places. If your loan amount exceeds your county's FHA limit, FHA isn't available for that purchase and you'd be looking at conventional or jumbo financing. The calculator flags this automatically when it happens.
What this calculator doesn't include
It covers principal, interest, mortgage insurance, property taxes, homeowners insurance, and HOA dues. It doesn't include title, escrow, appraisal, recording, or prepaid costs, which vary by state and transaction, and it uses the rate you enter rather than one you've been quoted. Use it for the monthly number, then let me run your actual scenario.
Expert Insight
“Tennessee FHA borrowers benefit from our state's affordable housing markets. While coastal buyers max out FHA limits on modest homes, Tennessee families often have significant room under the $541,287 cap. This allows for better loan-to-value ratios and stronger approval odds. I encourage borrowers to explore THDA's Great Choice program alongside FHA. The combination can reduce out-of-pocket costs to nearly zero while building immediate equity.”
Tennessee FHA Loan Questions
Does FHA mortgage insurance ever go away?
It depends entirely on your down payment. Under 10% down, it stays for the life of the loan. At 10% or more down, it drops off after 11 years. Unlike conventional PMI, it does not automatically cancel when you reach 20% equity, which is one of the most misunderstood parts of FHA financing.
Is FHA cheaper than conventional?
Not always. FHA gets you in with less money down and more flexible credit, but its mortgage insurance is more expensive long-term and often permanent. For a buyer with good credit and 5% or more saved, conventional frequently wins on total cost. It's worth running both before you decide, and I'll do that for you.
What is the FHA loan limit in Tennessee for 2026?
Tennessee FHA loan limits for 2026 are $541,287 for single-family homes in most counties, rising to $1,029,250 in the Nashville metro (Davidson, Williamson, Rutherford, and surrounding counties). Memphis (Shelby), Knoxville (Knox), and Chattanooga (Hamilton) use the $541,287 baseline.
What credit score do I need for an FHA loan in Tennessee?
For a Tennessee FHA loan, you need a minimum credit score of 580 to qualify for the 3.5% down payment option. Scores between 500-579 require 10% down. Many Tennessee lenders work with borrowers who have credit challenges.
Can I use Tennessee Housing Development Agency programs with FHA?
Yes, THDA offers several programs compatible with FHA loans including Great Choice Home Loans with down payment assistance up to 5%. The Homeownership for the Brave program provides additional benefits for military veterans purchasing with FHA financing.
How much is FHA mortgage insurance in Tennessee?
FHA mortgage insurance in Tennessee includes an upfront premium of 1.75% of the loan amount plus annual MIP of 0.55%. For a $300,000 loan, this equals approximately $137 per month. The upfront premium can be financed into the loan.
What are FHA property requirements in Tennessee?
Tennessee FHA properties must meet HUD minimum property standards including safe electrical systems, proper roofing, working HVAC, and no structural issues. The home must be your primary residence. Many single-family homes, condos, and 2-4 unit properties qualify.
Do you have to repay FHA down payment assistance in Tennessee?
No. Our FHA down payment assistance is a true grant of 2% or 3.5% of the purchase price. There is no repayment and no second lien placed on your home, which makes it different from most down payment assistance programs that are repayable or forgivable loans.
Ready to Explore Tennessee FHA Financing?
Start your Tennessee FHA pre-approval in minutes and discover how much home you can afford with just 3.5% down.
Explore Other Tennessee Loan Options
From the blog & learning center
FHA Loan Guides & Articles
FHA MIP Refund: Can You Get Your Upfront MIP Back?
Refinance your FHA loan into a new FHA loan within three years and you get part of your upfront MIP back, credited toward the new loan. Here is how it works.
Read more
Buying a House After Bankruptcy: Real Waiting Periods by Loan Type
FHA and VA require 2 years after Chapter 7, USDA 3, conventional 4. Chapter 13 can qualify after 12 months of payments, and one program works during bankruptcy.
Read more
Buying After Foreclosure or Short Sale: The Real Timelines
After foreclosure, VA requires 2 years, FHA and USDA 3, conventional 7. Short sales are shorter, and some paths skip the waiting period entirely.
Read more
Assumable Mortgages: How to Take Over a VA or FHA Loan
An assumable mortgage lets a buyer take over a seller's VA, FHA, or USDA loan and its low rate. Learn the costs, the equity gap, and how to finance it.
Read more
Gift Funds: The Rules for Down Payment Gifts
A family member can give you money for your down payment, and on most loan types the entire down payment can be a gift. The key rules: it has to be a true gift with no repayment expected, it must come from an acceptable source, and it has to be documented with a gift letter and a clear paper trail.
Read moreSeller Concessions: How Much Can the Seller Pay?
A seller concession is when the seller agrees to pay part of your closing costs as a term of the sale. It's a legitimate, common way to reduce your cash to close, and depending on the loan type and your down payment, a seller can contribute anywhere from 2% to 9% of the purchase price toward your costs.
Read more