Tennessee mortgage questions, answered.

It depends on the loan, and on some loans it's nothing. VA loans need no down payment for eligible veterans and service members with full entitlement, as long as the price isn't above the appraised value, and USDA loans need no down payment on homes in eligible rural areas. Conventional and FHA loans have low minimums of their own; the exact figure depends on the program, your credit score, and sometimes whether you're a first-time buyer or your income is under the program's limit.

Tennessee doesn't set any of those minimums; the loan programs do. On a conventional loan, a larger down payment can also let you skip mortgage insurance entirely.

See what the down payment does to the numbers →

There's no single cutoff; it depends on the loan. FHA allows maximum financing with a score of 580 or higher, and scores from 500 to 579 can still qualify with a larger down payment. VA and USDA don't set a minimum score of their own. Fannie Mae removed its 620 minimum for loans approved through its automated underwriting system in November 2025, though a manually underwritten Fannie Mae loan still needs at least 620 (640 for an adjustable rate). THDA's Great Choice program requires 640.

Lenders set their own floors on top of all of these, and your score affects pricing as well as approval. The useful question is what your score does to your options.

Yes. Conventional and FHA loans both accept gift money. Fannie Mae allows gifts from relatives and from people with a family-like tie to you, such as a fiancé, a domestic partner, or a long-standing mentor. FHA's list also includes an employer, a labor union, a close friend with a documented interest in you, and charities.

Expect two pieces of paperwork: a signed gift letter saying the money doesn't have to be repaid, and a record of the money moving from their account to yours or to the closing agent. The gift can't come from anyone with a stake in the sale, like the builder or an agent, and conventional loans don't allow gifts on investment properties.

Lenders use the two words differently, but generally a prequalification is an estimate based on what you tell a lender, and a preapproval means the lender has pulled your credit and reviewed your income and asset documents. That's why sellers and their agents take a preapproval more seriously.

A preapproval has no legal expiration date, but the paperwork behind it ages out. Fannie Mae wants credit documents no more than four months old when you close, and FHA allows 120 days. If you're still shopping after about three months, expect to send fresh pay stubs and statements. A preapproval also isn't a final approval: the house still has to appraise, and the loan still has to clear underwriting.

Not directly, but it changes what you can comfortably afford. Lenders qualify you on gross income, before taxes, so your salary counts the same way in Knoxville as it would in a state with an income tax.

What changes is take-home pay. Tennessee doesn't tax wages, and the Hall tax on interest and dividends was repealed starting with 2021. The money that used to go to a state return stays in your budget, which is worth weighing when you decide how much of an approval to use.

Moving to East Tennessee? Start on the Buy page →

Yes, that's what the Second Look is for. Send the Loan Estimate you were given and Hannah will read it line by line: the origination charges that are a real difference between lenders, the government fees that never are, and the escrow and prepaid lines that can look like savings without being any.

You'll hear whether she can do better, and if she can't, you'll hear that too. It isn't an application and it doesn't touch your credit. On most home loans, a lender has to give you a Loan Estimate within three business days of your application, so comparing two of them is exactly what the form is for.

How the Second Look works →

In Tennessee, the purchase contract decides who pays most closing costs. Under the standard Tennessee REALTORS® Purchase and Sale Agreement, the buyer pays the transfer tax, the recording fees on the deed and deed of trust, and the costs of getting the loan. The seller pays to prepare the deed. Title insurance, both the lender's policy and the owner's, is left blank for the two sides to negotiate, and local custom varies by county.

Property taxes are split by date. If the year's tax rate hasn't been set by closing, as can happen in a reappraisal year like 2026 in Knox County, the contract uses last year's rate and assessment and has both sides settle up when the real bill comes out.

Estimate your cash to close →

It's a state tax on the debt your deed of trust secures, paid by the borrower when the deed of trust is recorded: 11.5 cents for every $100 you borrow, with the first $2,000 exempt. On a $300,000 loan, that's $342.70.

It's the same at every lender. You'll find it in Section E of your Loan Estimate, “Taxes and Other Government Fees,” so it's never a reason to choose one lender over another. On a home equity line of credit, the tax is figured on the full credit limit, not on what you draw.

It's a state tax on transferring real estate: 37 cents for every $100 of the sale price or the property's value, whichever is greater. On a $400,000 home, that's $1,480.

Tennessee law puts the tax on the buyer, and the standard Tennessee REALTORS® contract does too, which is worth knowing if you're coming from a state where the seller customarily pays it. It's paid to the county Register of Deeds when the deed is recorded. Like anything else in a contract, who pays can be negotiated.

Start with the county's appraised value, take 25% of it (Tennessee assesses homes at a quarter of their value), then apply the tax rate, which is set per $100 of assessed value. In the Comptroller's own example, a $400,000 home is assessed at $100,000, and a rate of $2.50 per $100 makes the bill $2,500. If the home is inside a city with its own property tax, the city's rate is added to the county's.

Bills cover the current year and are due the first Monday in October, with interest added March 1. That's why a closing before the bill is paid includes a credit from the seller for the part of the year they owned the home.

See taxes by area in the calculator →

A higher value doesn't automatically mean a higher bill. After a reappraisal, Tennessee law requires the county to certify a tax rate that brings in the same property tax revenue as the year before, not counting new construction, so the rate drops as values rise. Your bill generally goes up only if your value rose more than values countywide did, or if the county adopts a rate above the certified one.

Your escrow catches up at the servicer's annual escrow analysis. If the account comes up short by a month's escrow payment or more, the servicer can't demand it in one lump sum; it has to leave the shortage alone or spread it over at least 12 months. The main 2026 appeal deadlines have passed.

Yes, and there are three to know about. Tennessee's Property Tax Relief program pays part of the tax for homeowners who are 65 or older or have a qualifying disability, if their 2025 income was $38,470 or less. For 2026, the relief is figured on up to $33,600 of the home's market value.

Veterans with a qualifying service-connected disability get relief figured on up to $175,000 of market value, with no income limit, and some surviving spouses qualify too. Knox County also runs a Tax Freeze program for homeowners 65 and older that holds the county tax on their home at its base-year amount; the 2026 income limit is $63,470. Apply through the county Trustee, or the city's tax office for city taxes.

THDA is the Tennessee Housing Development Agency, and Great Choice is its loan for first-time buyers: generally, anyone who hasn't owned and lived in a home in the past three years, a rule THDA waives in targeted areas and for qualifying veterans. Everyone on the loan needs a 640 credit score and a homebuyer education course, and income and price limits vary by county.

Great Choice Plus adds down payment help as a second loan, in two versions: one that's forgiven at the end of its term unless you sell or refinance first, in which case it's due in full, and one you repay monthly alongside your mortgage. THDA publishes the current amounts and terms. Its loans are made through THDA-approved lenders, and since the help is itself a loan, price it against a plain FHA or conventional loan first.

Possibly. USDA's guaranteed loan is for homes in eligible rural areas, but “rural” is defined by USDA's map, not by how the land looks, so check the address before ruling it out.

There are two tests. The property has to fall inside an eligible area on USDA's eligibility map, and household income, including household members who aren't on the loan and after USDA's allowed deductions for things like dependents and child care, has to fall within the area's limit, which USDA sets at 115% of the median. If both check out, no down payment is required, and USDA sets no credit score minimum of its own.

The VA doesn't lend the money; it guarantees part of a loan made by a lender like Foundation. With full entitlement, that guarantee allows no down payment, as long as the price isn't above the appraised value, and there's no VA loan limit. There's no monthly mortgage insurance either. Most borrowers pay a one-time funding fee, but veterans receiving VA compensation for a service-connected disability are exempt.

Tennessee adds a benefit after you move in: veterans with a qualifying service-connected disability can get property tax relief figured on up to $175,000 of their home's market value, with no income limit.

For a one-unit home in Knox County in 2026, the conforming loan limit is $832,750 and the FHA limit is $541,287. Borrow more than $832,750 and you're in jumbo territory: a loan Fannie Mae and Freddie Mac won't buy, so the lender sets its own requirements for credit, cash reserves, and documentation.

The limit isn't the same everywhere in Tennessee; some counties around Nashville are higher. The limits reset every year, usually announced in late November. If your price puts you just over the line, a slightly larger down payment can keep the loan conforming.

Yes, as long as it's a second home in the lender's eyes. Under Fannie Mae's rules, that means a one-unit home you live in for part of the year, suitable for year-round use, and under your exclusive control.

Renting it out some of the time doesn't automatically disqualify it, but the rental income can't be used to qualify, and the home can't be in a rental pool or under an agreement that gives a management company control over when it's occupied. A cabin run by a management company that controls the booking calendar is an investment property to a lender, which is often where a DSCR loan comes in.

Yes, but not with a standard conventional loan. Fannie Mae won't buy loans in projects run like hotels: a front desk, daily or short-term rentals, housekeeping, a rental pool. That describes a condotel, so condotels are financed with portfolio and other non-agency loans, which Foundation offers.

Expect a bigger down payment than on a regular condo, and questions about the building as well as about you, including how the rental program works and how the project is run. Have the project reviewed before you make an offer, not after; the building can decide the loan as much as your credit does.

Yes, and it can be one loan instead of two. A one-time close construction loan covers the build and then becomes your permanent mortgage when the house is finished: one application, one closing, one set of closing costs.

If you aren't ready to build, a land loan can buy the lot first. Land loans are structured differently from home loans, so plan on a larger down payment. Either way, bring your builder in early, because the lender reviews the builder, the plans, and the budget along with you.

A DSCR loan qualifies a rental property on its own income instead of yours. The lender compares the property's rent to its full monthly housing cost (principal, interest, taxes, insurance, and any HOA dues), and that ratio, the debt service coverage ratio, drives the approval. There are no tax returns or pay stubs to average, which is why self-employed investors often use them.

The trade-offs: DSCR loans are only for investment properties, never a home you'll live in, and they typically cost more than a conventional investment-property loan.

See investor financing on the Buy page →

No. Tennessee doesn't require an attorney at a residential closing: a non-attorney can prepare the closing documents, and a title company or an attorney can act as the settlement agent, handling the title work, the signing, and the money.

What a title company can't give you is legal advice, or documents that call for a lawyer's judgment. If you have a question about the contract, a boundary line, or how to hold title, hire your own attorney for that part.

It's the document that pledges your home as security for the loan, and it's the standard form in Tennessee. It has three parties: you, the lender, and a trustee who holds the power to sell the property if the loan isn't repaid.

Day to day, it changes nothing. You own the home and your name is on the deed. The difference only matters in a default, when a deed of trust lets a foreclosure proceed without a court case after notice is mailed to you and published. When the loan is paid off, a release is recorded and the trustee's role ends.

Your purchase contract sets the closing date, and the loan is built to meet it. In between come the appraisal, underwriting, and title work, framed by two federal deadlines that apply to most home loans: your Loan Estimate arrives within three business days of your application, and your Closing Disclosure has to reach you at least three business days before you sign.

That second rule is why certain late changes to a loan can push a closing back. The biggest thing you control is getting your documents in early: pay stubs, bank statements, and tax returns.

Treat every email with wiring instructions as possibly fake, because closing is exactly when criminals try to redirect your money. Before you send anything, call your title company at a number you already have, from your contract or its website and never from the email, and confirm the account details out loud.

Treat any last-minute change to the instructions as fraud until proven otherwise. If you think money went to the wrong place, call your bank right away and ask for a wire recall, then report it to the FBI at ic3.gov.

On a conventional loan, federal law gives you two ways out. You can ask your servicer in writing to cancel PMI once your balance is scheduled to reach 80% of the home's original value, if you have a good payment history, no second mortgage, and the home hasn't lost value. If you don't ask, PMI has to end automatically when the balance is scheduled to hit 78%, as long as you're current on payments.

FHA works differently. On FHA loans made since June 2013, the annual premium lasts either 11 years or the life of the loan, depending on the loan-to-value you started with. The usual way out of FHA insurance is refinancing into a conventional loan.

Run the break-even on dropping it →

Federally, yes, if you itemize. Tennessee has no state income tax, so there's no state deduction to take. On your federal return, interest on up to $750,000 of debt used to buy, build, or substantially improve your home is deductible ($375,000 if married filing separately), and the 2025 tax law made that limit permanent.

Starting with the 2026 tax year, mortgage insurance premiums can count too, though income limits may apply. Whether any of it helps depends on whether your itemized deductions beat the standard deduction, which is a question for your tax preparer.

Yes, with a home equity line of credit. A HELOC is a second loan behind your first mortgage, so your first loan stays exactly as it is. You get a credit limit and draw what you need, when you need it.

Most HELOCs have variable rates, and the line is secured by your home, so treat it as debt rather than savings. One Tennessee detail: the mortgage recording tax on a HELOC is figured on the full credit limit, not on what you use.

When the new loan pays for itself before you'd sell or refinance again. A lower rate alone doesn't settle it: closing costs, restarting the loan term, and how long you'll keep the house all change the answer.

The four usual reasons — a lower payment, paying off sooner, taking cash out, or dropping mortgage insurance — each have their own test. The refinance calculator runs your current loan and the new one side by side, month by month, so a longer term can't hide the cost, and it tells you the month you break even, or that you never do.

Run your break-even →

Your loan's servicing was transferred, which is common and doesn't change the terms of your loan. Federal rules cover the switch: your old servicer generally has to notify you at least 15 days before the transfer, and the new servicer within 15 days after, or both can send one combined notice ahead of time.

For 60 days after the transfer date, a payment the old servicer receives by the due date (including any grace period) can't be treated as late. Before you redirect payments, confirm the change with your current servicer using the phone number on your statement.

Your servicer returns whatever is left in your escrow account within 20 business days, and the lender records a release of your deed of trust with the county Register of Deeds, which clears its claim on the home. From then on, property taxes and homeowners insurance are yours to pay directly; county property taxes are due the first Monday in October.

Check the Register of Deeds' records to confirm the release was recorded. If it wasn't, send the lender a written request: under Tennessee law, a lender that still hasn't recorded a release 45 days after receiving that request owes you $100, and more if it ignores a second request.