Tennessee Mortgage Guide 2026
This Tennessee mortgage guide covers everything you need to know about getting a mortgage in Tennessee — FHA loan limits by county, THDA Great Choice down payment assistance, property taxes, closing costs, and the 2026 Tennessee housing market outlook.
Tennessee Mortgage Guide: Loan Limits by County (2026)
Most of Tennessee’s 95 counties are at the national FHA floor. The 14 counties that make up the Nashville-Davidson-Murfreesboro-Franklin metro area have a higher FHA limit due to above-average home prices in that market.
| County | Conforming Limit | FHA Limit | Notes |
|---|---|---|---|
| Davidson (Nashville) | $832,750 | $1,029,250 | Nashville MSA |
| Williamson | $832,750 | $1,029,250 | Nashville MSA |
| Rutherford | $832,750 | $1,029,250 | Nashville MSA |
| Wilson | $832,750 | $1,029,250 | Nashville MSA |
| Sumner | $832,750 | $1,029,250 | Nashville MSA |
| Maury | $832,750 | $1,029,250 | Nashville MSA |
| Robertson | $832,750 | $1,029,250 | Nashville MSA |
| Cannon, Cheatham, Dickson, Hickman, Macon, Smith, Trousdale | $832,750 | $1,029,250 | Remaining Nashville MSA counties |
| Shelby (Memphis) | $832,750 | $541,287 | National floor |
| Knox (Knoxville) | $832,750 | $541,287 | National floor |
| Hamilton (Chattanooga) | $832,750 | $541,287 | National floor |
| Sullivan (Kingsport-Bristol) | $832,750 | $541,287 | National floor |
| Montgomery (Clarksville) | $832,750 | $541,287 | National floor |
| Sevier (Sevierville/Pigeon Forge) | $832,750 | $541,287 | National floor |
| All other 74 Tennessee counties | $832,750 | $541,287 | National floor |
FHA limits vary by county. 14 counties in the Nashville-Davidson-Murfreesboro-Franklin MSA (Cannon, Cheatham, Davidson, Dickson, Hickman, Macon, Maury, Robertson, Rutherford, Smith, Sumner, Trousdale, Williamson, and Wilson) are elevated to $1,029,250. All other 81 Tennessee counties, including Shelby (Memphis), Knox (Knoxville), and Hamilton (Chattanooga), sit at the $541,287 national floor. Always verify your specific county at HUD’s official FHA limit lookup tool, and confirm conforming limits at FHFA’s conforming loan limit page.
Loan Programs Available in Tennessee
All major federal mortgage programs are available statewide in Tennessee. Here’s how each compares for Tennessee buyers:
| Program | Min Down Payment | Min Credit Score | Best For |
|---|---|---|---|
| FHA | 3.5% | 580 | First-time buyers, lower credit scores |
| VA | 0% | 580–620 | Veterans, active duty, surviving spouses |
| USDA | 0% | 640 | Rural Tennessee buyers meeting income limits |
| Conventional | 3–20% | 620 | Strong credit, wants PMI cancellation |
| THDA Great Choice + Great Choice Plus (Deferred) | As low as $0 out of pocket | 640 | Buyers who want a 0%-interest, forgivable second mortgage |
| THDA Great Choice + Great Choice Plus (Amortizing) | As low as $0 out of pocket | 640 | Buyers who want the largest available assistance amount (up to $15,000) |
THDA Great Choice Assistance Program
The Tennessee Housing Development Agency (THDA) administers the Great Choice Home Loan — a 30-year fixed-rate first mortgage — paired with an optional Great Choice Plus second loan for down payment and closing cost assistance.
| Program | Assistance Amount | Structure | Key Requirements |
|---|---|---|---|
| Great Choice Plus — Deferred Option | $6,000 or $10,000 | 0% interest, forgivable second mortgage — forgiven at the end of a 10-year term; due in full if the home is sold or refinanced sooner | Min credit score 640; must pair with a Great Choice first mortgage |
| Great Choice Plus — Amortizing Option | Up to 5% of the sales price, maximum $15,000 | 30-year amortizing second loan at the same interest rate as the first mortgage (has a monthly payment) | Min credit score 640; must pair with a Great Choice first mortgage |
Great Choice Home Loans are typically insured by FHA or USDA-Rural Development, which means a minimum of 3.5% down (financeable via Great Choice Plus). A conventional option is also available through Freddie Mac HFA Advantage®. Household income and purchase price limits vary by county — see the full chart at thda.org. Homebuyer education is required to receive Great Choice Plus assistance.
Tennessee Property Taxes
Tennessee has one of the lower effective property tax rates in the country, estimated at roughly 0.7%–1.3% statewide depending on county and municipality. Tennessee also has no state income tax on wages, which helps offset the overall cost of homeownership.
Tennessee assesses residential property at 25% of its appraised value. Local tax rates (set per $100 of assessed value) are then applied to that 25% assessed value — not the full appraised market value.
| Purchase Price | Est. Annual Tax (1.0%) | Monthly Escrow |
|---|---|---|
| $300,000 | ~$3,000 | ~$250/mo |
| $400,000 | ~$4,000 | ~$333/mo |
| $500,000 | ~$5,000 | ~$417/mo |
| $650,000 | ~$6,500 | ~$542/mo |
Tennessee Residential Assessment Ratio: Residential property is assessed at just 25% of appraised value before local tax rates are applied. This assessment ratio is one reason effective Tennessee property tax rates remain moderate despite rising home values. Rates and assessment details are set at the county level — details at the Tennessee Comptroller’s Office.
Closing Costs in Tennessee
Tennessee closing costs are shaped mainly by the state’s recordation (transfer) tax and mortgage tax, both charged per $100 of value. Tennessee is a title-company closing state — an attorney is not legally required, though many buyers and sellers still choose to use one.
| Fee | Typical Amount | On a $400,000 Purchase |
|---|---|---|
| State recordation (transfer) tax | $0.37 per $100 of value | ~$1,480 |
| State mortgage tax | $0.115 per $100 of indebtedness | ~$460 (on a $400,000 loan) |
| Loan origination fee | 0–1% of loan | $0–$4,000 |
| Title insurance (lender’s) | Based on loan amount | ~$900–$1,500 |
| Owner’s title insurance | Based on purchase price | ~$1,000–$1,800 |
| Appraisal | Paid upfront or at closing | ~$500–$700 |
| Recording fee | Per document, county-set | ~$30–$80 |
| Homeowner’s insurance (prepaid) | First year premium | ~$800–$1,500 |
Transfer and mortgage tax note: Tennessee charges both a recordation tax on the deed ($0.37 per $100 of value) and a separate mortgage tax on the note ($0.115 per $100 of the amount financed). Together these are among the more notable closing costs in a Tennessee transaction. Always confirm exact fees with your title company before closing.
Tennessee Housing Market Overview (2026)
Tennessee has seen sustained population growth driven by no state income tax, relative affordability compared to coastal markets, and strong job growth in the Nashville and surrounding metro areas.
| Area | Market Notes |
|---|---|
| Nashville / Davidson County | Largest and most competitive metro; highest FHA loan limit in the state at $1,029,250 |
| Williamson / Rutherford Counties | Fast-growing Nashville suburbs (Franklin, Murfreesboro); part of the elevated-limit Nashville MSA |
| Memphis / Shelby County | More affordable than Nashville; FHA limit at the national floor |
| Knoxville / Knox County | Steady growth market anchored by the University of Tennessee |
| Chattanooga / Hamilton County | Growing tech and manufacturing base; affordable relative to Nashville |
| Clarksville / Montgomery County | Military-adjacent market near Fort Campbell; VA loans close reliably here |
| Rural Tennessee (most other counties) | More affordable; broad USDA loan eligibility outside metro cores |
