Tennessee · State guide
How to buy a house in Tennessee
A booming, tax-friendly state — no income tax and some of the lowest property taxes in the country — with strong first-time buyer help, set against rising, storm-driven insurance. Here is the playbook for buying in the Volunteer State.
Last updated June 2026
Why Tennessee is different
Buying a house in Tennessee, the short version
The federal process is the same everywhere — read the complete guide to buying a house for the eight universal steps — but Tennessee has its own programs, taxes, and closing rules worth knowing before you start.
The picture: Tennessee is booming and tax-friendly (a statewide median around $384,000, with no state income tax; Nashville and Williamson County are pricey, while Memphis is among the cheapest big cities in the country). The state agency, THDA, offers below-market loans plus down payment help.
Two big wins: property taxes are among the lowest in the nation, and closings run through a title company (no attorney required). The catch: Tennessee is in “Dixie Alley,” so insurance is rising, and West Tennessee has real earthquake risk. Use the 50-state hub to compare other states.
The market
What homes cost in Tennessee
Risen fast on in-migration, but with a huge range by metro.
The statewide median sale price was about $384,000 in spring 2026 (Redfin), up around 1% year over year, with rising inventory (~5 months of supply) — a more balanced market than the frenzy of recent years. No income tax keeps drawing people in. Prices vary enormously by metro:
Median prices by area
Williamson (Franklin/Brentwood, the wealthiest county) ~$975K · Nashville (Davidson, the priciest metro) ~$481K–$540K · Rutherford (Murfreesboro) ~$405K · Chattanooga (Hamilton) ~$356K · Knoxville (Knox) ~$320K · Clarksville (Montgomery, Fort Campbell) ~$308K · Memphis (Shelby), among the most affordable big cities in the US, ~$210K.
Down payment & rate help
THDA programs
You don’t apply directly — you work through a participating lender. A 640 credit score and a homebuyer course are the main requirements.
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Great Choice + down payment help
The core: the Great Choice 30-year fixed mortgage (usually FHA or USDA), paired with Great Choice Plus help. You pick either a deferred $6,000–$10,000 second at 0% with no payment (forgiven after 10 years), or an amortizing second up to 5% of the price or $15,000.
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Homeownership for Heroes
A version of Great Choice for veterans, active military, National Guard, firefighters, EMTs, teachers, and law enforcement — with a 0.5% lower interest rate, and the first-time requirement waived for military and veterans. It stacks with the same down payment help.
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The tax credit & New Start
THDA’s Take Credit certificate turns part of your mortgage interest into a federal tax credit up to $2,000 a year, for the life of the loan. And the New Start program offers 0% (or half-rate) loans on newly built homes through approved nonprofits, for lower incomes.
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Local & federal help
Cities stack more: Nashville’s The Housing Fund offers up to $35,000, Memphis up to $25,000, and Chattanooga up to $15,000. Plus USDA (0% down — much of rural TN qualifies), VA (0% down), and FHA (3.5% down).
The THDA rules in brief
You’ll generally need a 640 credit score (620 for New Start), completion of a homebuyer education course, and household income and price under limits. Income caps run about $92,300–$137,760 for 1–2 people depending on county (highest in the Nashville metro), with a purchase price cap of $500,000 statewide. The deferred help is forgiven after 10 years; the amortizing help is repaid monthly. Note: some lender pages describe an older 30-year deferred term — confirm the current structure with your lender.
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Property taxes
Property taxes in Tennessee: very low
Two big tax wins here. Tennessee has no state income tax at all (the old tax on investment income was fully repealed in 2021), and property taxes are among the lowest in the country — an effective rate around 0.49%, with a typical bill near $1,400–$1,500. The reason is that homes are taxed on just 25% of their appraised value, then the local rate (per $100 of that value) applies. Every dollar is local — there’s no state property tax.
Relief for seniors, the disabled, and veterans
Tennessee’s state-funded Tax Relief program reimburses property tax for homeowners 65+ or disabled with income under about $37,530, on the first $30,000 of value — and for 100% disabled veterans (and surviving spouses), on the first $175,000 of value with no income test. There’s also a tax freeze for qualifying seniors. Apply at your county trustee’s office. And note: Tennessee voters will decide in November 2026 whether to permanently ban a state property tax in the constitution.
Closing & costs
Closing on a home in Tennessee
Tennessee is a title-company state — a title/escrow company handles the closing and recording, and an attorney isn’t required (though they’re common in East Tennessee and complex deals). Title insurance is standard. There are two taxes at closing: the realty transfer tax of $0.37 per $100 (0.37%), which by law falls on the buyer (about $1,480 on a $400,000 home), and a small mortgage tax of $0.115 per $100 of the loan. On financing, the 2026 conforming limit is $832,750 and the FHA floor is $541,287 — rising to $694,450 across the Nashville metro (including Williamson).
Tennessee requires a seller disclosure form
Tennessee requires the seller of most homes to give you either a completed Residential Property Condition Disclosure — listing known defects — or an “as-is” disclaimer, before you sign a binding contract. A few things must always be disclosed: known sinkholes, whether the home was moved from another foundation, and airport noise zones. The federal lead-paint disclosure applies to pre-1978 homes. Always get your own home inspection too — the form is the seller’s knowledge, not a guarantee.
Insurance & risks
Insuring a Tennessee home
Here’s the cost that’s rising: Tennessee home insurance is above the national average — averaging around $3,000 a year and climbing. The main risk is tornadoes and severe storms: Middle and West Tennessee sit in “Dixie Alley” (the 2020 and 2023 Nashville-area tornadoes were deadly). Add flooding (the 2010 Nashville flood caused over $2 billion in damage), ice storms in the east, and — importantly for Memphis — earthquake risk from the New Madrid fault.
Watch the wind deductible — and earthquake in West TN
A few things to plan for. Your policy likely has a separate wind/hail deductible that’s a percentage of your home’s value (often 1–2%) rather than a flat amount — confirm it. Flood is never covered by a standard policy, so add an NFIP policy if you’re near water or in flood-prone Nashville (very few residents carry it). And in West Tennessee / Memphis, the New Madrid fault is a real threat — standard policies exclude earthquakes, so consider a separate earthquake policy (~$200/year, though with a high deductible). Tennessee has no FAIR Plan, so a hard-to-insure home would go to a surplus-lines carrier.
Wherever you buy
The steps that work the same in Tennessee
Tennessee sets the local rules, but these parts of buying are the same everywhere.
Quick answers
Buying a house in Tennessee: common questions
How much money do you need to buy a house in Tennessee?
With a conventional loan you need 3% down, FHA 3.5%, and VA or USDA can be 0%. On a typical ~$384,000 home that’s roughly $11,500–$13,400 down plus closing costs. THDA’s help — up to $15,000 — can cover much of it. See how much you really need →
Does Tennessee have down payment assistance?
Yes. THDA’s Great Choice Plus gives either a deferred $6,000–$10,000 (0%, forgiven in 10 years) or up to 5%/$15,000 amortizing. Cities add more — Nashville’s The Housing Fund up to $35,000, Memphis up to $25,000. See assistance programs →
Why are Tennessee property taxes so low?
Because homes are taxed on just 25% of their appraised value, and there’s no state property tax — only local ones. The effective rate is around 0.49%, among the lowest in the country. Combined with no state income tax, Tennessee is very tax-friendly.
Does Tennessee have a state income tax?
No. Tennessee has no tax on wages or salaries, and the old Hall tax on interest and dividends was fully repealed in 2021. There’s also no state estate or inheritance tax — a big draw for people relocating from higher-tax states.
What credit score do you need in Tennessee?
THDA generally requires a 640 (620 for the New Start program). For loans broadly, FHA can go to 580 and USDA/VA typically want 620. A higher score mainly earns a lower rate. Check the score by loan type →
Do I need an attorney to buy a house in Tennessee?
No. Tennessee is a title-company state — a title or escrow company handles the closing and recording. Attorneys are common in East Tennessee and complex deals, but they’re not required. Title insurance is standard.
Who pays the transfer tax in Tennessee?
By law the realty transfer tax ($0.37 per $100, about 0.37%) falls on the buyer, though who pays is negotiable. There’s also a small mortgage recording tax of $0.115 per $100 of the loan amount. On a $400,000 home the transfer tax is about $1,480.
Do I need earthquake or flood insurance in Tennessee?
In West Tennessee/Memphis, earthquake coverage is worth considering because of the New Madrid fault — it’s never in a standard policy. And flood is separate everywhere, so add NFIP coverage near water or in flood-prone areas like much of Nashville.
What’s the conforming loan limit in Tennessee?
$832,750 in most counties for 2026, with the FHA floor at $541,287. The Nashville metro (Davidson, Williamson, Rutherford, Sumner, Wilson, Cheatham) is higher at $694,450. Loans above the conforming limit are jumbo.
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