Overview of Tennessee Mortgages
With its rich legacy of country music and sweeping mountain views, the Volunteer State is a vibrant place to call home. Tennessee mortgage rates historically hover right around the national average. The state's counties have conforming and FHA loan limits that are mostly uniform, though there is some variation.
|30 year fixed||3.15%||3.00%||+0.15|
|15 year fixed||2.73%||2.73%||0.00|
|30 yr fixed mtg refi||3.00%||3.08%||-0.08|
|15 yr fixed mtg refi||3.08%||3.08%||0.00|
|7/1 ARM refi||3.63%||3.63%||0.00|
|15 yr jumbo fixed mtg refi||3.63%||3.63%||0.00|
National Mortgage Rates
Historical Mortgage Rates in Tennessee
Tennessee Mortgage Rates Quick Facts
- Median Home Value: $151,700 (U.S. Census Bureau)
- Loan Funding Rate: 50.42% (CFPB)
- Average Mortgage Rate: 4.56% (FHFA)
- Homeownership Rate: 68% (St. Louis Fed)
- Median Monthly Homeownership Costs: $1,224 (U.S. Census Bureau)
Tennessee has lots to offer prospective residents. It's the birthplace of country music and the landscape is beautiful throughout. On top of that, Nashville is renowned for its high quality southern cuisine.
The housing market is fairly standard in Tennessee. Over the past 30 years, mortgage rates here have been close to the national average.
A financial advisor in Tennessee can help you plan for the homebuying process. Financial advisors can also help with investing and financial plans, including tax, retirement and estate planning, to make sure you are preparing for the future.
Tennessee Historic Mortgage Rates
|Year||Tennessee Rate||U.S. Rate|
Tennessee Mortgages Overview
Before you begin looking for your dream home in Tennessee, it would be a wise idea to set up a budget to help keep you on track and realistic. You can also consider applying for mortgage preapproval from a lender, which may speed up the buying process.
The conforming loan limits for Tennessee are mostly at $510,400, but in some counties, the limits reach $563,500. FHA limits echo that pattern, ranging from the average of $331,760 up to $563,500.
Conforming and FHA Loan Limits by County
|County||Conforming Limit||FHA Limit|
When you buy a home in Tennessee, you will receive a deed of trust instead of an actual mortgage. This is an important distinction because deeds of trust have a power of sale clause which allows lenders to foreclose on homes without getting a court order. The lender can bypass the expense and time of going to court and instead hire a third party to auction a home if the buyer has fallen behind on payments. You probably don’t foresee going into foreclose, but it is still a good idea to know where you would stand if the worst were to happen.
Tennessee state law mandates that a seller must provide a buyer with a disclosure form. The Tennessee Association of Realtors offers a comprehensive disclosure form, which includes details on known defects, items included in the sale, environmental hazards like mold, structural damage and even neighborhood noise problems. Buyers also have the option to waive the disclosure form and purchase the property “as is.” Whatever you decide, a buyer should always schedule a home inspection to protect the integrity of the sale and uncover any hidden defects.
30-Year Fixed Mortgage Rates in Tennessee
Buying your forever home in Tennessee? A 30-year fixed-rate mortgage is the most popular loan option. It’s worth exploring what getting one of these popular options would do to your monthly payments and your overall budget. Not only does this choice give you a long time to pay off the loan (30 years), but the interest rate will remain the same that entire time so you can more easily budget your monthly payments. You can also consider a 15-year fixed-rate mortgage which will allow you to pay off your loan in half the time and to pay less interest overall but your monthly payments will be higher with that option.
The average Tennessee rate for a fixed 30-year mortgage is 3.81%.
Tennessee Jumbo Loan Rates
Jumbo loans are home loans that are bigger than the conforming loan limit set in each county. In many parts of the country, as well as most of Tennessee, the limit is $510,400. That means that if you take out a home loan that’s more expensive than that, you'll have a jumbo loan. If you’re considering a jumbo loan for your mortgage, keep in mind than they come with higher interest rates.
The average jumbo loan rate in Tennessee is 4.15%.
Tennessee ARM Loan Rates
Another option for buyers is an adjustable-rate mortgage (ARM). Unlike a fixed-rate mortgage, an ARM has an interest rate that changes over the duration of the loan. Typically for an introductory period of somewhere between one and 10 years, the interest rate on this loan will be lower than it would be on a fixed-rate mortgage. Once that period ends, the rate is free to increase or decrease, and that typically means it will go up.
However, it is important to note that an ARM’s interest rate cannot simply skyrocket overnight. The interest rate will be capped at a certain level which will be specified in the terms of the loan. That said, the rate may still adjust to a level that an owner cannot afford to pay. It’s easy to see how owners may fall behind on monthly payments with this home loan option. To prevent that from happening to you, it is crucial that you assess the interest rate cap before you decide on an ARM and figure out whether it’s something that fits in your budget.
The average rate for an ARM in Tennessee is 3.95%.
Tennessee Mortgage Resources
Volunteer State buyers have options when it comes to securing a mortgage or financing their home purchases.
The Tennessee Housing Development Agency offers programs for first, repeat and military buyers:
- Great Choice Loan Program provides qualifying first-time homebuyers with 30-year fixed-rate loans and down payment assistance. Applicants are required to take a homebuyer education course.
- Homeownership for the Brave offers service members purchasing in Tennessee a 0.5% rate reduction on the Great Choice Loan Program. Applicants can also receive down payment and closing cost assistance through the Great Choice Plus second mortgage loan at a 0% interest rate.
- Great Choice Plus offers repeat homebuyers 30-year fixed-rate loans from THDA with an optional 0% second mortgage for down payment assistance. The Plus loans can be used along with VA, FHA, USDA-Rural Development or uninsured conventional loans.
|Resource||Problem or Issue||Who Qualifies|
|Tennessee Housing Development Agency||Provides affordable loans and down payment assistance for Tennessee buyers.||First-time, repeat and military homebuyers who fit the qualifications.|
|USDA Rural Development - Single family loans||Offers payment assistance to increase an applicant’s repayment ability.||Applicants must be without decent, safe and sanitary housing; Be unable to obtain a loan from other resources on terms and conditions that can reasonably be expected to meet; Agree to occupy the property as your primary residence; Have the legal capacity to incur a loan obligation; Meet citizenship or eligible noncitizen requirements; Not be suspended or debarred from participation in federal programs.|
Tennessee is eligible for the United States Department of Agriculture Rural Development program. The USDA offers nationwide programs in rural communities which provide aid for safe, affordable housing. Loans and grants are available for people looking to purchase a new home or repair their current home.
Tennessee Mortgage Taxes
Tennessee charges transfer taxes on real estate, so be prepared for that if you’re buying as buyers typically pay this fee. The transfer tax is $0.37 per $100, and the mortgage tax comes to $0.115 per $100.
Homeowners across the country can deduct the mortgage interest they pay throughout the year from their taxable income when they are filing their federal income taxes.
Tennessee Mortgage Refinance
If you want to refinance in Tennessee, consider Fannie Mae's High Loan-to-Value Refinance Option. Each of these are basically replacements for the Home Affordable Refinance Program (HARP), which has been out of commission since the end of 2018.
Best Places To Get A Mortgage
SmartAsset’s interactive map highlights the best counties in the U.S. (and in each state) for securing a home mortgage. Hover over states and counties to see rankings and data points for each region, or use the map’s tabs to view the top counties for each of the factors included in our analysis.
Methodology In order to determine the best places in the country to get a mortgage, our study compared four factors, including overall borrowing costs, likelihood of securing a mortgage, property taxes and annual mortgage payments.
To calculate the overall borrowing costs, we analyzed the expected costs throughout the first five years for a $200,000 mortgage with a 20% down payment, including closing costs. We calculated the ease of getting a mortgage as the ratio of mortgage applications to mortgage originations (secured mortgages) in each county. Annual mortgage payments are a measure of the annual principal and interest payments for a $200,000 loan in that location using average mortgage rates in each county.
Finally, we ranked locations based on these four factors, giving equal weight to each factor. The areas with the lowest average rankings are the best places to get a mortgage.
Sources: Mortgage Bankers Association, US Census Bureau 2018 5-Year American Community Survey, Informa, Bankrate, government websites, SmartAsset