Tennessee Mortgage and Refinance Rates

Current mortgage rates in Tennessee

Mortgage interest rates are reaching their highest levels since 2008. As of Wednesday, July 10, 2024, current interest rates in Tennessee are 7.00% for a 30-year fixed mortgage and 6.75% for a 15-year fixed mortgage.

As of December 2023, the median home sale price in the state was $309,900 — virtually flat from the previous year, according to ATTOM. Home sales are down 16%, suggesting the challenges of today’s higher mortgage rate environment. Still, that price is below the national median of $345,000 for a single family home, bolstering the state’s reputation as a cost-effective alternative for young professionals and first-time homebuyers.

Refinance rates in Tennessee

While mortgage refinance rates have more than doubled since the pandemic, many Tennessee homeowners have much more tappable equity now. With a cash-out mortgage refinance or a home equity loan/line of credit, you could take advantage of this asset — your ownership stake in your home — to further your financial goals.

Learn more: Why and how to do a cash-out refinance

Tennessee mortgage rate trends

While mortgage rates are difficult to predict, the current consensus is for rates to remain well above historical lows for the foreseeable future, including in Tennessee.

Learn more: Latest mortgage rate forecast

National mortgage rates by loan type

Mortgage statistics for Tennessee

Tennessee has a rich cultural history and has become a popular place to live in recent years, offering an appealing work-life balance and lower cost of living than many East and West Coast states. Its homeownership rate has been rising, and its most populated city, Nashville, was named by Bankrate as the fifth best place to start a career. If you’re buying a home in Tennessee, here are some stats to know:

• Most popular cities: Memphis, Nashville, Knoxville, Chattanooga, Murfreesboro
• Most affordable counties (based on median home value): Lake, Lauderdale, Obion, Decatur, Wayne
• Median home sales price, Dec. 2023: $309,900
• Median down payment, Dec. 2023: $45,500
• Homeownership rate, Q4 2023: 72%

Sources: ATTOM, U.S. Census Bureau

Mortgage options in Tennessee

There’s a variety of mortgage options available to homebuyers in Tennessee. Here are some of the most common:

• Tennessee conventional mortgages: To qualify for a conventional mortgage, you’ll need a minimum credit score of 620 and a debt-to-income (DTI) ratio no more than 45 percent. With a down payment of less than 20 percent, you’ll need to pay private mortgage insurance (PMI) premiums, as well.
• Tennessee FHA loans: If your credit history disqualifies you from a conventional mortgage, you might be able to obtain a loan insured by the Federal Housing Administration (FHA). If you have a down payment of at least 3.5 percent, you could qualify for this type of loan with a credit score as low as 580. 
• Tennessee VA loans: If you’re a veteran or active-duty member of the military, you might qualify for a mortgage guaranteed by the Department of Veterans Affairs (VA). A VA loan doesn’t require a down payment or mortgage insurance, but you do need to pay a funding fee, which ranges from 1.25 percent to 2.15 percent.
• Tennessee USDA loans: If you’re buying a rural property in Tennessee, you might be eligible for a mortgage guaranteed by the U.S. Department of Agriculture (USDA). These loans don’t require a down payment, but you’ll need to purchase in a designated rural area and meet the area’s income limits.

First-time homebuyer programs in Tennessee

In addition to conventional loans and FHA loans, the Tennessee Housing Development Agency (THDA) offers a handful of programs designed to assist first-time homebuyers:

• Great Choice Home Loans: The Great Choice Home Loan program is aimed at moderate-income buyers. It offers 30-year fixed-rate mortgages to those with credit scores as low as 640. The program comes with household income and purchase price limits, which vary by county, as well as down payment assistance.
• Homeownership for Heroes: In terms of features, the Homeownership for Heroes program — available to members of the military and law enforcement, paramedics, and firefighters — is very similar to Tennessee's Great Choice Home Loan for first-time homebuyers. It offers a 30-year fixed interest rate and has a minimum credit score requirement of 640. Interest rates through Homeownership for Heroes are reduced a half-percentage point; the requirement that you be a first-time homeowner to participate is waived; and buyers are able to borrow as much as 100 percent of a property's purchase price with a VA or USDA loan, and 96.5 percent with an FHA loan.
• Take Credit MCC Program: The Take Credit Mortgage Credit Certificate (MCC) provides a federal income tax reduction for those who purchase a property in one of the state’s Targeted Areas. In addition to first-time homebuyers, Take Credit MCC is open to veterans or repeat homebuyers, as long as the property is located in one of the state’s qualifying Targeted Areas. MCC participants are eligible for a federal tax credit of as much as $2,000 annually, which can be used to decrease the homebuyer’s income tax liability year after year, as long as the house remains the primary residence.

How to find the best mortgage rate in Tennessee for you

• Step 1: Strengthen your credit score - Long before you start looking for a mortgage lender or applying for a loan, give your finances a checkup, and improve your credit score if needed.
• Step 2: Determine your budget - To find the right mortgage, you’ll need a good handle on how much house you can afford.
• Step 3: Know your mortgage options - There are a few different types of mortgages.
• Step 4: Compare rates and terms from several lenders - Rate-shop with at least three different banks or mortgage companies.
• Step 5: Get preapproved for a mortgage - Getting a mortgage preapproval is the only way to get an accurate loan amount and cost for your specific situation.

Learn more: How to get a mortgage

Additional Tennessee mortgage resources

• Tennessee loan limits by county: Learn the loan limits for FHA and conventional loans at the county level.
• Tennessee mortgage lenders: Explore mortgage lenders in your state.
• How to buy a house in Tennessee: Get set up for a successful house hunt with this guide.
• Homeowners insurance in Tennessee: All about the ins and outs of protecting your property. 

Meet our Bankrate experts

Written by: Andrew Dehan, Writer, Home Lending

I’ve covered mortgages, real estate and personal finance since 2020. At Bankrate, I’m focused on all of the factors that affect mortgage rates and home equity. I enjoy distilling data and expert advice into takeaways borrowers can use. Prior to Bankrate, I wrote and edited for Rocket Mortgage/Quicken Loans. My work has been published by Business Insider, Forbes Advisor, SmartAsset, Crain’s Business and more.

Read more from Andrew Dehan

Edited by: Suzanne De Vita, Senior Editor, Home Lending

I’ve covered the housing market, mortgages and real estate for the past 12 years. At Bankrate, my areas of focus include first-time homebuyers and mortgage rate trends, and I’m especially interested in the housing needs of baby boomers. In the past, I’ve reported on market indicators like home sales and supply, as well as the real estate brokerage business. My work has been recognized by the National Association of Real Estate Editors.

Read more from Suzanne De Vita