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FHA Loans in Tennessee

By Michael Stradford
Updated August 21, 2019
3 min read
Nashville, Tennessee

With the Mighty Mississippi to the west, the Great Smoky Mountains to the east, and the country music capital of the world right in the middle, Tennessee is a great place to live, and a wonderful place to buy a home.

However, choosing the right financing option can seem as far-fetched as finding your perfect house. Buyers worry they may not have an adequate credit score for the loan, or sufficient savings for a down payment. This is where Tennessee FHA loans can help. Continue reading to see why an FHA loan in Tennessee can help you on your journey to your dream home.

Why to Consider an FHA Loan in Tennessee

Whether or not you’re a country music lover, purchasing a home in Tennessee is an exciting time. With a median home cost nearly $60,000 below the national average, it’s a great time to buy. When it comes to choosing a mortgage, many Tennessee residents are looking to FHA loans, and as of April 2019, the total value of FHA loans in Tennessee was over $316 million!

Benefits of using FHA Loans

  • FHA loans are great for first-time homebuyers, especially those who can’t or don’t want to put down a large down payment.
  • FHA mortgage rates are typically lower than conventional mortgage rates.
  • FHA down payment and credit score requirements are typically lower than conventional loans
  • Sellers can contribute up to 6% of the purchase price or appraised value (whichever is less) towards the buyers’ closing costs.
  • FHA loans are assumable

FHA Loan Limits in Tennessee

While there is a maximum loan limit on Tennessee FHA loans, the maximum loan limit varies from location to location, and is adjusted every year. In most of Tennessee, the baseline limit of $314,827 applies, but in a place like Nashville, the limit is $534,750 due to the relatively high cost of real estate in the area. See the link below to check the FHA loan limit in your area.

Are You Eligible for an FHA Loan in TN?

You may be eligible for an FHA loan, if you:

  • Have 2 years of steady employment, preferably with the same employer.
  • Have had steady income (or increasing income) in the past two years.
  • Have had less than two 30 day periods of late payments on your credit report.
  • Have declared bankruptcy no less than two years ago and have maintained good credit since.
  • Have not been a party in a foreclosure for at least three years and have maintained good credit since.
  • Anticipate your mortgage payment will be equal to or less than 30% of your gross income.

What Do You Need to Apply for an FHA Loan in TN?

Buyers must be able to provide the following information and documents as requested by lenders:

  • The addresses of all your residences over the past two years.
  • The names of your employers over the past two years.
  • W2's for the past two years and current paycheck stubs.
  • Your current gross monthly salary.
  • Your Social Security Number.
  • Names, addresses, and account numbers with balances on all checking and savings accounts.
  • Addresses and loan information of any other real estate you owned.
  • Self-employed individuals will need to provide personal tax returns for the past two years and a current income statement and balance sheet for the business.
  • Students will need to provide evidence of enrollment. If you have student loans, you need to provide verification information.

Note: Facts and figures sourced from the latest statistics available at the time of this writing including data from the United States Department of Labor, United States Census Bureau and the United States Department of Housing and Urban Development.

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