Tennessee has consistently been one of the South’s most attractive destinations for in-migration — ranked fifth most popular for U-Haul customers in 2024 — driving strong demand for accessible first-time buyer financing across the state. FHA Loans deliver: credit scores as low as 580, down payments at 3.5%, and loan limits that cover the vast majority of Tennessee homes. And in the Nashville MSA, Tennessee’s high-cost tier gives FHA buyers access to the market at a $1,029,250 limit — among the highest FHA limits in the Southeast.
FHA Loan qualification guidelines are set federally, but individual lenders may apply additional requirements (called “overlays”). Here’s what most Arizona buyers can expect:
580 for 3.5% down; 500–579 for 10% down
3.5% of the purchase price (for scores 580+)
Up to 57% in some cases; 43–50% typical
Upfront (1.75% of loan amount) and annual (paid monthly)
Must meet FHA minimum property standards
$541,287 in most TN counties; $1,029,250 in the Nashville MSA high-cost tier
$541,287 (national floor — most counties): The majority of Tennessee’s 95 counties, including Shelby (Memphis), Knox (Knoxville), Hamilton (Chattanooga), Montgomery (Clarksville/Fort Campbell), Sullivan (Tri-Cities), Rutherford (Murfreesboro), and most smaller and rural counties statewide.
$1,029,250 (Nashville MSA high-cost tier): Davidson County (Nashville) and Williamson County (Franklin/Brentwood). For Nashville-area first-time buyers, FHA can finance well into the $700,000–$900,000 price range with just 3.5% down — an opportunity unavailable in most of the country.
Upfront MIP: 1.75% of the loan amount, typically financed into the loan balance.
Annual MIP: Paid monthly. For most buyers putting less than 10% down on a 30-year loan, MIP applies for the life of the loan. To remove it, borrowers typically refinance into a conventional loan once 20%+ equity is established.
Tennessee Appreciation Note: Tennessee’s markets — particularly Nashville, Williamson County, and the Knoxville-Murfreesboro growth corridor — have experienced strong appreciation, enabling FHA buyers to reach refinance-out-of-MIP equity milestones faster than expected.
For most Tennessee first-time buyers, combining FHA with THDA’s Great Choice Home Loan and Great Choice Plus DPA is the most effective path to minimizing upfront costs. Great Choice Plus provides DPA of either $6,000 (deferred/forgivable) or up to $15,000 (amortizing) stacked on top of the FHA loan.
See our Down Payment Assistance in Tennessee page.
$1,029,250 — among the highest FHA limits in the Southeast.
$541,287 — the national floor. Applies to Knox (Knoxville), Hamilton (Chattanooga), Shelby (Memphis), and Montgomery (Clarksville).
580 or higher for 3.5% down. THDA programs require 640 minimum.
Yes. THDA’s Great Choice Home Loan is primarily FHA-based and automatically enables access to Great Choice Plus DPA.
Yes. FHA supports 2–4 unit properties as long as you occupy one unit as your primary residence.
