Mortgage

Tennessee First Time House Consumers: Packages and Grants for 2021

What You Should Know About Buying a Home in Tennessee

As a first-time Tennessee home buyer, you can expect tons of help from your state, county, or city.

If eligible, this could include homebuyer training, specialty mortgage programs, and even down payment assistance.

Ready to take the first step towards becoming a homeowner? Here is what to do.

Check Your Tennessee Home Buying Eligibility. Start here (15.12.2021)

In this article (continue to …)

Tennessee Home Buyer Summary

The average sales price in Tennessee in October 2021 was $ 329,900, according to Redfin. This reflected a 16% year-over-year increase, which is pretty close to the national average.

Tennessee Home Buyer Summary

Average house sale price in TN
$ 329,900

Minimum deposit in TN (3%)
$ 9,900

20% deposit in TN
$ 65,980

Average number of credit points in TN1
697

Maximum TN home buyer allowance2
6% of sales price nationwide (THDA repayable loan)

Down payment amounts are based on the last available average home sale price in the state. The “minimum” down payment assumes a reduction of 3% on a conventional mortgage with a minimum creditworthiness of 620.

If you are eligible for a VA loan (supported by the Department of Veterans Affairs) or a USDA loan (supported by the U.S. Department of Agriculture), you may not require a down payment at all.

Check Your Tennessee Home Buying Eligibility. Start here (15.12.2021)

Initial Loans for Homebuyers in Tennessee

If this is your first time buying a Tennessee home with a 20% down payment, you can get a conventional loan with a low interest rate. And you never have to pay for personal mortgage insurance (PMI).

Of course, only a few first-time buyers have saved enough for 20 percent. But the good news is you don't need that much. By far not.

Borrowers can often move into a new home at as little as 3% or even 0% using one of these low down payment mortgage programs:

Conventional 97 – From Freddie Mac or Fannie Mae. 3% deposit and 620 FICO pass mark. Typically, when you have reached 20% home equity, you can stop taking out mortgage insurance after a few yearsFHA loan – Supported by the Federal Housing Administration. Down 3.5% and a credit score of at least 580. But you're looking for mortgage insurance until you refinance, move to another mortgage, or pay off your loanVA loan – For veterans and service members only. A zero deposit is required. The minimum credit score varies by lender, but is often 620. No ongoing mortgage insurance upon completion. These are arguably the best mortgages available. So apply when you are eligibleUSDA loan – For people with low to middle income who shop in designated rural areas. Zero deposit required. The creditworthiness requirements vary depending on the lender, but are often 640. Low mortgage insurance ratesLoan from the Tennessee Housing Development Agency – May include competitive interest rates and deposit assistance. More information below

Note that government loan programs (including the FHA, VA, and USDA home loans) require that you buy a primary residence. That means you cannot use these loans on a vacation home or investment property.

Depending on the mortgage loan you choose, you may be able to move into your new home with minimal cash.

With these programs, you can even use free cash or Down Payment Assistance (DPA) to help cover down payment and closing costs.

If you are unsure which program to choose for your first mortgage loan, your lender can help you find the right deal based on your finances and your home purchase goals.

Find The Best Home Buyer Loan For You (December 15, 2021)

Tennessee Programs for First Time Home Buyers

The Tennessee Housing Development Agency (THDA) offers a range of support services for first-time home buyers in Tennessee. These include homebuyer education, a range of mortgage loans, and down payment assistance.

These mortgages are known as the "Great Choice Home Loan" programs. And they are mostly based on FHA or USDA loans.

However, there is also a special program called "Homeownership for the Brave" that can be used with a VA loan that does not require a down payment. These are of course reserved exclusively for veterans and military personnel or their surviving spouses.

Great Choice's home loan programs are aimed at low- and middle-income buyers looking to purchase homes at reasonable prices. As such, there are household income limits as well as purchase price caps. On this page of the THDA website you can find the upper limits that apply in the country where you want to buy.

To qualify, you must:

If you're interested in one of these loans, the next step is to download the THDA Homebuyer Guide.

Next, contact an approved lender from this THDA list (link above). Let the broker know that you are interested in a Great Choice home loan and they should quickly determine if you are eligible. If so, your lender will guide you through the entire process.

Grants for First Time Home Buyers in Tennessee

THDA offers eligible first-time Tennessee home buyers a choice of two DPA programs. Both of these must be used on a Great Choice home loan:

Delayed DPA option – Borrow up to $ 6,000. This loan does not require any monthly payments and charges 0% interest. After 30 years, your loan will be waived entirely. However, if you sell your home or refinance your mortgage before the 30 years are up, you will need to repay the full amountAmortize the DPA option – This allows you to borrow more: up to 6% of the selling price. But you have to repay the loan every month over 15 years. And you pay the same interest rate as your first (main) mortgage fee

The DPA you choose will likely depend on how much you need to borrow to cover your down payment and closing costs. It can also depend on how long you plan to stay in your next home.

Or you can choose neither. Before you decide, check out other deposit programs that might cover your city or county. And choose the one that best suits your needs.

Check Your Tennessee Home Buying Eligibility. Start here (15.12.2021)

Buy a home in Tennessee's largest cities

For the year ending September 2021, house prices in the volunteer state's three largest cities did not rise as quickly as nationwide. But they still increased significantly.

First time home buyer in Nashville

In September 2021, the average list price for homes in Nashville was $ 400,000, up 11.1% year over year, according to Realtor.com.

If you want to buy a home at this average price, your down payment options can be between the following options:

$ 12,000 for 3% deposit$ 80,000 for 20% deposit

The Nashville Metropolitan Development and Housing Agency appears to be offering down payment assistance, but few details are available on their website. So please contact the agency for more information.

Affordable Housing Resources (AHR) offers eligible Nashville borrowers a deposit of up to $ 15,000. This is part of the nationwide NeighborhoodLift program and there are caps on household income. However, it says, "The income limits are higher for military personnel, veterans, law enforcement officers, pre-school teachers through 12th grade, firefighters and paramedics."

Unfortunately, it is not specified whether it is a loan or a grant. But you can call (615) 251-0025 to find out.

First time home buyer in Memphis

In September 2021, the average list price for a Memphis home was $ 175,000, up 9.4% year over year, according to Realtor.com.

If you want to buy a home at this average price, your down payment options can be between the following options:

$ 5,250 for 3% deposit$ 35,000 for 20% deposit

The City of Memphis Division of Housing and Community Development (HCD) can provide down payment assistance of up to $ 10,000 to eligible borrowers. There are several terms and conditions – including income and home price caps – that you can find out by downloading the factsheet. There is no income limit for teachers and employees in the police or fire department.

Unfortunately, the HCD does not reveal whether the funding is in the form of a grant or a loan. So for clarification, contact the department at dpa@memphistn.gov or call (901) 636-7474.

First time home buyer in Knoxville

In September 2021, the average list price for Knoxville homes was $ 295,000, up 13.5% year over year, according to Realtor.com.

If you want to buy a home at this average price, your down payment options can be between the following options:

$ 8,850 for 3% deposit$ 59,000 for 20% deposit

Unfortunately, the City of Knoxville website states, "APPLICATIONS ARE CLOSED TO THIS PROGRAM," except for those looking to purchase a home developed by Home Source East Tennessee, Neighborhood Housing, Inc., and East Tennessee Housing Development Corporation.

The site gives some information about income limits. But it doesn't reveal any other useful details, such as how much help you could get, or whether it's a loan or a grant, provided you're interested in a home from one of these developers. To find out more, call (865) 215-2865.

Where can I find help buying a home in Tennessee

All of the organizations listed above should provide free advice to any first time home buyer in the state or their areas of Tennessee.

In addition to our selections, the US Department of Housing and Urban Development (HUD) offers some lists for statewide, regional, and local resources:

Nationwide resources for first time home buyers in Tennessee

The HUD website also provides a list of resources by county and city for first-time home buyers in Tennessee.

What are the current mortgage rates in Tennessee?

See the latest live Tennessee mortgage rates here.

When you're ready to start buying your home, make sure to get personalized interest rate quotes from at least 3 mortgage lenders.

Don't just look at the advertised prices online; In fact, apply for pre-approval and compare the interest rates and fees that are offered to you. This is the only way you can be sure that you are getting the best possible offer for your new home loan.

Show me today's prices (December 15, 2021)

1 Source: Experian.com 2021 study on 2020 data

2Based on a review of available state DPA grants at the time of this writing

The information contained on The Mortgage Reports website is provided for informational purposes only and is not intended to promote the products offered by Full Beaker. The views and opinions expressed are those of the author and do not reflect the policies or position of Full Beaker, its officers, parents or affiliates.

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