TN Mortgage Rates and Options Explained

Tennessee mortgage rates can be a bit overwhelming, but don't worry, we've got you covered. In Tennessee, the average 30-year fixed mortgage rate is around 4.5%, according to current market trends.

To get the best deal, it's essential to understand your mortgage options. You can choose between fixed-rate and adjustable-rate mortgages, with fixed-rate mortgages offering predictability and stability.

A fixed-rate mortgage typically has a rate that remains the same for the entire loan term, often 15 or 30 years. This can provide peace of mind, knowing exactly how much your monthly payments will be.

Mortgage interest rates in Tennessee are reaching their highest levels since 2008, with current rates at 6.97% for a 30-year fixed mortgage and 6.47% for a 15-year fixed mortgage as of January 3, 2025.

The median home sale price in Tennessee was $370,000 as of July 2024, according to Tennessee Realtors.

Today's mortgage rates in Tennessee are 6.964% for a 30-year fixed, 6.135% for a 15-year fixed, and 7.364% for a 5-year adjustable-rate mortgage (ARM).

You can find the current mortgage rates in Tennessee, including APR, in the table below:

Mortgage rates in Tennessee are influenced by economic factors like the federal funds rate, inflation, and the housing market.

In Memphis, TN, the current mortgage rates for a 30-year fixed FHA loan are 6.125% with an estimated monthly payment of $2,393, and for a 30-year fixed VA loan, it's 6.704% APR.

In Tennessee, various home loan types are available to meet the needs of different homebuyers. These include fixed-rate, adjustable-rate, FHA, VA, and USDA loans.

Fixed-rate mortgages are available in terms of 10, 15, 20, or 30 years, and maintain the same interest rate throughout the life of the loan. This ensures that the principal and interest payments remain constant.

Adjustable-rate mortgages (ARMs) initially offer a lower rate than fixed-rate loans, but the interest rate can adjust periodically based on a specified index after an introductory period, typically 5 or 10 years. This can be beneficial for borrowers who plan to sell their home before the fixed-rate period ends.

Some common types of mortgages in Tennessee include:

Conventional loans, which are not backed by the government, are also available and can be fixed-rate or adjustable-rate. They have a maximum allowable amount of $806,500 in most areas of Tennessee; in higher priced counties, the limit is $943,000.

Conventional loans are not backed by the government and are offered by banks, credit unions, and online lenders.

The maximum allowable amount for conventional loans varies by area, with $806,500 being the limit in most parts of Tennessee, and $943,000 in higher priced counties.

Conventional loans can be fixed-rate or adjustable-rate, giving borrowers a choice in how their mortgage payments are structured.

Fixed-rate mortgages maintain the same interest rate throughout the life of the loan, ensuring that the principal and interest payments remain constant.

Fixed-rate mortgages are available in terms of 10, 15, 20, or 30 years, providing borrowers with flexibility in repayment.

ARMs initially offer a lower rate than fixed-rate loans, making them a potentially attractive option for some borrowers.

Jumbo loans are conventional loans that exceed the conforming loan limit set by the Federal Housing Finance Agency (FHFA).

The conforming loan limits in Tennessee are $806,500 or $943,000, depending on the area.

You need a jumbo loan if your mortgage amount is above the conforming loan limits.

Jumbo loans typically require a larger down payment.

They may have higher interest rates than conforming loans.

National Type Mortgages offer a range of options to suit different needs and budgets. The interest rates for these mortgages vary depending on the type, as shown in the article.

A 30-Year Fixed Rate mortgage has an interest rate of 6.95% and an APR of 7.00%. This type of mortgage is a popular choice for homebuyers who want a stable monthly payment over a long period.

The 15-Year Fixed Rate mortgage has a lower interest rate of 6.28% and an APR of 6.36%. This mortgage option is ideal for homeowners who want to pay off their loan quickly and save on interest.

The 5-1 ARM mortgage has an interest rate of 6.52% and an APR of 7.20%. This type of mortgage offers a lower interest rate for the first five years, but the rate can increase after that.

The 30-Year Fixed Rate FHA mortgage has an interest rate of 6.87% and an APR of 6.93%. This mortgage option is designed for first-time homebuyers and those with lower credit scores.

The 30-Year Fixed Rate VA mortgage has an interest rate of 6.50% and an APR of 6.55%. This mortgage option is available to eligible veterans and active-duty military personnel.

The 30-Year Fixed Rate Jumbo mortgage has a higher interest rate of 7.03% and an APR of 7.08%. This type of mortgage is designed for borrowers who need to finance a larger loan amount.

Here's a summary of the national type mortgages:

In Tennessee, homebuyers have several mortgage options to choose from. Tennessee conventional mortgages require a minimum credit score of 620 and a debt-to-income ratio of no more than 45 percent.

For those who can't qualify for a conventional mortgage, FHA loans are a viable option. These loans allow for down payments as low as 3.5% and are insured by the Federal Housing Administration.

VA loans are another option for eligible borrowers, offering no down payment requirement and no mortgage insurance. However, a funding fee is required, ranging from 1.25 to 2.15 percent for the first use.

Here are some common mortgage options in Tennessee:

Refinancing your mortgage can be a smart way to lower your interest rate, reduce your monthly payments, or cash out some of your home equity. In Tennessee, there are two main reasons to consider a refinance: if you bought your home when rates were above 7 percent, you might save money by refinancing to a lower rate, and if you've owned your home for a long time and its value has increased substantially in the last few years, you could tap your home equity to further your financial goals.

The FHA Streamline Refinance allows FHA-insured homeowners to refinance into current mortgage rates with minimal hassle. This program is available to borrowers who have an existing FHA loan and are current on their payments. An Interest-Rate Reduction Refinance Loan (IRRRL) can also reduce the monthly payments on VA loans by adjusting the APR, and is available to veterans, active-duty military members, and some Reserve and National Guard members who have an existing VA loan.

To qualify for a conventional mortgage in Tennessee, you'll need a minimum credit score of 620 and a debt-to-income (DTI) ratio of no more than 45 percent. With a down payment of less than 20 percent, you'll need to pay private mortgage insurance (PMI). In contrast, FHA loans are insured by the Federal Housing Administration and are designed for borrowers with less-than-perfect credit or a smaller down payment, allowing for down payments as low as 3.5%.

Here are some common refinancing options available in Tennessee:

Each of these options has its own benefits and requirements, so it's essential to carefully consider which one is right for you.

Comparing lenders is a crucial step in finding the right mortgage for your needs. You can use tools to compare lenders side by side, considering factors like mortgage rates and fees. Bankrate has reviewed and partners with various lenders, providing a Bankrate Score and customer ratings to help you make an informed decision.

Garden State Home Loans, for example, offers competitive rates and dedicated service, making it a smart choice for borrowers in specific states like New Jersey, California, and Florida. Homefinity, on the other hand, offers a fast and convenient process, making it suitable for medical professionals and those seeking online lenders.

To compare lenders effectively, consider the following factors:

Here's a comparison of Garden State Home Loans and Homefinity:

First-time homebuyers in Tennessee can take advantage of various programs to make homeownership more affordable. The Tennessee Housing Development Agency (THDA) offers a range of options, including the Great Choice Home Loans program, which offers 30-year fixed-rate mortgages to moderate-income buyers with credit scores as low as 640.

To qualify for these programs, homebuyers must not have owned a primary residence in the past three years. The THDA also offers a no-payment, forgivable, 0% interest second mortgage for $6,000 to be used for the down payment or closing costs. This option is part of the agency's down payment assistance programs.

The THDA's Homeownership for Heroes program is another option for first-time homebuyers, offering a 30-year fixed interest rate and reduced interest rates for military and law enforcement personnel, paramedics, and firefighters. The program also allows buyers to borrow up to 100% of a property's purchase price with a VA or USDA loan, and 96.5% with an FHA loan.

Here are some of the key features of the THDA's first-time homebuyer programs:

Tennessee offers a variety of homebuyer programs beyond conventional loans and FHA loans. The Tennessee Housing Development Agency (THDA) provides a handful of programs designed to assist first-time homebuyers, including the Great Choice Home Loan program.

This program offers 30-year fixed-rate mortgages to those with credit scores as low as 640, with household income and purchase price limits that vary by county. The program also comes with down payment assistance.

The Homeownership for Heroes program is available to members of the military and law enforcement, paramedics, and firefighters. It offers a 30-year fixed interest rate and has a minimum 640 credit score requirement, with interest rates reduced by a half-percentage point.

The Take Credit Mortgage Credit Certificate (MCC) program provides a federal income tax reduction for those who purchase a property in one of the state's Targeted Areas. This program is open to first-time homebuyers, veterans, or repeat homebuyers, as long as the property is located in one of the state's qualifying Targeted Areas.

Here are some specific benefits of the Homeownership for Heroes program:

VA loans are also available to eligible veterans, active-duty military members, and some Reserve and National Guard members. These loans do not require a down payment and offer competitive interest rates.

The THDA Homeownership for Heroes program cuts the interest rate on a mortgage by half of one percentage point for those who serve our country.

The Chattanooga Neighborhood Enterprise is a great option for first-time homebuyers in certain areas of Tennessee. It allows you to cover a $15,000 payment with the DPA, and the remainder is financed under a separate, second loan.

The interest rate for this loan is in line with the first mortgage, but can be no less than 3%. This is a relatively low rate, considering it's a second loan.

The Chattanooga Neighborhood Enterprise is available to anyone purchasing in the following counties: Bledsoe, Bradley, Grundy, Hamilton, Marion, McMinn, Meigs, Polk, Rhea, and Sequatchie.

To get an idea of what you can afford, you can use our home cost calculator. Punch in your home loan amount and a new interest rate, and we'll estimate your payoff date.

The calculator also lets you enter a few details about your home loan to get your monthly mortgage payment. This will give you a better idea of how much you'll need to pay each month.

Using the free calculators is for informational purposes only and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.

To see how much you can afford to spend on a home purchase, provide us with a few details, and we'll give you an estimate. This will help you narrow down your home search and make a more informed decision.

Mortgage rates can be influenced by the Federal Reserve's actions, such as changing the federal funds rate, which can impact mortgage rates.

The average 30-year fixed mortgage rate in Tennessee can fluctuate, but it's essential to understand that rates can vary depending on the lender and other factors.

A 1% difference in mortgage rates can result in a significant savings or expense over the life of a loan.

The amount of money you'll qualify for with a reverse mortgage can be affected by interest rates and margins.

One of the key factors is the rate at which the loan accrues interest. If the margins on adjustable rates are lower, borrowers tend to receive more money.

The fixed rate being higher can also give borrowers more money in their pockets. In fact, most borrowers find they receive more money on the adjustable rate program.

A higher margin means less money for the borrower and faster interest accrual. So, it's essential to look for the rate on a fixed rate or the margin on an adjustable rate when considering a reverse mortgage.

An increase in future interest rates might not be a bad thing, especially for those with a line of credit plan. A rise in future rates is matched by an increase in the guaranteed line of credit growth rate.

Mortgage rates have fluctuated significantly over the years. In the 1980s, rates reached their peak, with an average fixed rate over 18.00%.

These high rates made it challenging for many people to afford homes. The 1990s saw a decline in rates, reaching an average fixed rate of around 7.00% by the end of the decade.

Rates continued to drop in the early 2000s, with an average fixed rate of around 6.00%. This made it a good time to buy or refinance a home.

The low rates of the 2000s and 2010s allowed many people to take out mortgages with relatively low monthly payments. Rates remained low throughout most of the 2010s, with an average fixed rate of around 4.00%.

However, rates began to rise in the early 2020s, with an average fixed rate of around 6.00% in 2023. This change may affect the affordability of homes for some people.

The CMT Index, or Constant Maturity Treasury Index, is based on the average monthly yield of a range of Treasury Securities adjusted to a constant maturity equivalent to one year.

The U.S. Treasury determines the yields on Treasury securities at constant maturity using the daily yield curve, which is based on the closing market bid yields for actively traded over-the-counter Treasury securities.

The CMT Index is a long-standing and trusted index, established to provide a reliable benchmark for mortgage rates.

In 2020, GNMA announced it would no longer allow the LIBOR index to be used for HECM loans, effective February 1, 2021, and lenders quickly moved to the CMT index.

The SOFR index, or Secured Overnight Financing Rate, is the cost of borrowing cash overnight collateralized by Treasury Securities and cannot be manipulated.

The CMT Index was temporarily replaced by the SOFR index, but the move was made back to the CMT to eliminate the LIBOR, which was subject to manipulation and led to a major antitrust class action suit.