Home Buying in Tennessee

Tennessee features vibrant urban areas, charming small towns, and scenic rural landscapes. With its lower cost of living, no state income tax, and diverse geography ranging from the Appalachian Mountains in the east to the Mississippi River in the west, Tennessee has become an attractive destination for homebuyers. From the bustling streets of Nashville and Memphis to the serene beauty of the Smoky Mountains, Tennessee combines affordability with an appealing quality of life.

However, homebuyers in the Volunteer State face several challenges. The state's housing market has seen rising prices, especially in high-demand urban areas, while inventory in some regions remains tight. The state's population has been growing and is projected to continue growing, though at a somewhat slower rate. Tennessee's growing popularity among both out-of-state buyers and residents seeking to relocate within the state has made competition for homes fierce in some areas.

The median home price in Tennessee, around $325,000, remains below the national average and lower than neighboring states like Georgia, Virginia, Missouri, and North Carolina, making it an attractive option for many buyers. However, prices have started to climb as demand increases, particularly in cities like Nashville, Knoxville, and Chattanooga. Tennessee's real estate market is a seller's market, with homes selling in about 50 days and often for more than their asking price.

Anyone entering the Tennessee housing market should get their finances in order, determine their housing needs, and work with a real estate professional to help navigate the market and find their perfect home.

When home buying in Tennessee, it is also important to stay informed about the latest trends and statistics to make the most of the state's housing market.

Here are some statistics to focus on:

Working with a local real estate expert is essential when buying a home in Tennessee. A knowledgeable realtor can help you navigate the state's diverse housing market and guide you toward properties that meet your needs, lifestyle, and budget. It's important to choose a real estate agent with extensive experience in the area, strong communication skills, and positive references. Asking for recommendations from friends, family, or colleagues can help you find a trustworthy professional.

Finding the Right Home

Once you have settled on a local Tennessee realtor, here are some key factors you will want to consider when purchasing a home in Tennessee:

Depending on your financial situation and the type of property you're buying, there are several ways to finance your home purchase in Tennessee, from traditional home loans to government-backed mortgages.

Traditional Mortgages

When home buying in Tennessee, prospective buyers typically choose from two types of traditional mortgage options:

• Fixed-Rate Mortgages: Fixed-rate mortgages offer stability with consistent monthly payments and are ideal for buyers planning to stay in their homes long-term.
• Adjustable-Rate Mortgages (ARMs): ARMs offer lower initial interest rates that can change over time, making them suitable for buyers who plan to sell or refinance before the rate adjusts.

Homebuyers in Tennessee often turn to several well-known lending institutions to secure traditional mortgages. Banks like Regions Bank and First Horizon Bank are popular options, offering competitive rates and a variety of loan products. Local credit unions, such as Tennessee Valley Federal Credit Union and Knoxville TVA Employees Credit Union, are also recognized for their personalized service and flexible mortgage programs designed to meet the specific needs of Tennessee residents.

Government-Backed Loans

Tennessee homebuyers may also qualify for government-backed loans, which offer benefits like lower down payments and more flexible credit requirements.

• The Great Choice Home Loan: The Great Choice Home Loan program from the Tennessee Housing Development Agency (THDA) was created specifically for first-time homebuyers in Tennessee.
• FHA Loans: These loans, insured by the Federal Housing Administration, are popular among first-time buyers and those with lower credit scores.
• Veteran Affairs (VA) Loans: Veterans and active-duty military members may qualify for VA loans, which offer no down payment and competitive interest rates.
• USDA Loans: Buyers in rural areas may qualify for loans from the United States Department of Agriculture, which offers no down payment and low-interest financing.

Down Payment Assistance Programs

Tennessee also offers various down payment assistance programs to help buyers with upfront costs. For example, the THDA provides up to $15,000 in down payment assistance to eligible buyers.

The average cost of home insurance in Tennessee is around $2,000 annually, though premiums vary depending on the location and type of coverage. Homes in areas prone to natural disasters, such as tornadoes or flooding, may require additional coverage. For example, properties near rivers or in flood-prone areas may need flood insurance, which can increase premiums by $900 or more.

Despite its many advantages, buying a home in Tennessee comes with several challenges:

Tennessee presents diverse living environments, ranging from vibrant urban centers like Nashville and Memphis to the tranquil rural landscapes of East Tennessee. The state's rich cultural heritage, growing economy, and natural beauty attract homebuyers from all walks of life. Whether you're looking to take advantage of the economic opportunities in bustling cities or prefer the peaceful, scenic charm of small towns and rural areas, Tennessee offers something for everyone. The state's relatively low cost of living and lack of state income tax make it an attractive destination for families, retirees, and young professionals.

However, successfully navigating Tennessee's housing market requires careful planning and a solid understanding of current market conditions. The market can be competitive, especially in high-demand urban areas with rising prices and limited inventory. Rural areas may offer more affordable options, but it is important to know the unique challenges and benefits of living in these regions.

Working with an experienced real estate agent familiar with the local market can be invaluable. A knowledgeable agent will help you identify properties that match your lifestyle, budget, and long-term goals. In addition, understanding your financing options, whether through a traditional mortgage, a local credit union, or government-backed loans—will help you secure the best possible deal.

You can find the perfect home in Tennessee by staying informed, planning carefully, and seeking the right guidance. With its diverse living options and economic advantages, the Volunteer State offers a rewarding homebuying experience for those ready to move.