The Complete Tennessee Homebuyer's Guide 2025
Everything you need to know about buying a home in Tennessee—from getting pre-approved to closing day. Navigate the process with confidence using this comprehensive guide.
Last Updated: November 18, 2025 | By Tracy Southard
Get Pre-Approved for a Mortgage
Before you start looking at homes, get pre-approved for a mortgage. This critical first step shows sellers you're a serious buyer and helps you understand exactly what you can afford. Pre-approval involves a lender reviewing your financial situation—income, assets, credit, debts—and providing a letter stating how much they'll lend you.
What You'll Need
- 2 years of tax returns
- 2 months of bank statements (all accounts)
- Recent pay stubs (last 30 days)
- Photo ID and Social Security number
- List of current debts (car loans, student loans, credit cards)
- Employment verification
Credit Score Requirements
Conventional Loans: Typically require 620+ credit score. Scores above 720 qualify for the best rates.
FHA Loans: May accept scores as low as 580 (with 3.5% down) or 500 (with 10% down). Popular with first-time buyers.
VA Loans: No minimum score required, though lenders typically want 620+. Available to qualifying veterans and active military.
USDA Loans: Require 640+ score. Available for rural properties with income limits.
Down Payment Options
Down payments vary by loan type. Conventional loans can require as little as 3% down, though 20% avoids private mortgage insurance (PMI). FHA loans require 3.5% down. VA and USDA loans offer 0% down for qualifying buyers. First-time buyer programs through THDA (Tennessee Housing Development Agency) can help with down payments and closing costs.
Tracy's Tip
"Get pre-approved before you start seriously looking. I've seen too many buyers fall in love with a home only to discover they can't qualify for the mortgage. Pre-approval also strengthens your offer—sellers take you more seriously when you have financing ready. Talk to 2-3 lenders to compare rates and fees. Don't assume the first lender offers the best deal."
Choose the Right Real Estate Agent
A buyer's agent represents YOUR interests throughout the home buying process. In Tennessee, the seller typically pays all real estate commissions, meaning you get expert representation at no direct cost. The right agent provides local market knowledge, negotiation skills, access to listings, and guides you through complex paperwork.
What to Look For
- Deep knowledge of your target neighborhoods and schools
- Experience with your type of purchase (first-time buyer, luxury, investment)
- Strong communication and responsiveness
- Full-time professional (not a side hustle)
- Established track record in the area
- Good reviews and references
Interview 2-3 agents before committing. Ask about their experience, recent sales, how they communicate, and their approach to negotiations. The right agent should feel like a partner you trust, not just someone showing you houses.
Start Your Home Search
With pre-approval and an agent in place, begin your search. Make a list of must-haves versus nice-to-haves. In Tennessee, key considerations include school districts (if you have or plan children), commute times, property taxes, and access to amenities. Your agent will set up MLS searches matching your criteria and schedule showings.
Key Considerations for Tennessee Homebuyers
- School Districts: Tennessee school quality varies dramatically. Research specific schools, not just districts.
- Property Taxes: Vary by county. No state income tax helps offset this.
- Septic vs. Sewer: Rural properties may have septic systems requiring maintenance and inspection.
- Well Water: Some properties use wells instead of city water. Test water quality during inspections.
- Commute Times: East Tennessee's geography means rush hour traffic can significantly impact travel times.
- HOA Fees: Newer subdivisions often have HOAs. Understand fees and restrictions before buying.
Online vs. In-Person
While online listings provide photos and basic information, nothing beats physically visiting properties. Photos can be misleading, and you can't assess neighborhood feel, traffic noise, or nearby development from a computer. Plan to view homes in person, preferably at different times of day if serious about a property.
Tracy's Tip
"Be flexible but know your non-negotiables. I always tell buyers to prioritize location and structure over cosmetics—you can change paint and fixtures, but you can't change the neighborhood or foundation. Also, in competitive markets, don't wait for the 'perfect' home. If a property checks 80% of your boxes and is in your budget, seriously consider it. The perfect home doesn't exist, but the right home for you does."
Make an Offer
When you find the right home, it's time to make an offer. Your agent will prepare a purchase agreement detailing the price you're offering, contingencies (financing, inspection, appraisal), earnest money deposit, requested closing date, and what's included in the sale.
Determining Your Offer Price
Your agent will provide a comparative market analysis (CMA) showing recent sales of similar homes. This data guides your offer price. In a balanced market, offering near asking price is typical. In competitive markets, you may need to offer over asking. Your agent's local expertise is invaluable here—they know what homes actually sell for, not just list prices.
Contingencies
Financing Contingency: Protects you if you can't secure the loan. Don't waive this unless you're paying cash or absolutely certain of financing.
Inspection Contingency: Allows you to back out or renegotiate if inspections reveal major issues. Critical for protecting yourself from buying a problematic home.
Appraisal Contingency: Protects you if the home doesn't appraise for the purchase price. Without this, you could need to bring extra cash if the appraisal comes in low.
Sale of Current Home: If you need to sell your current home first, this contingency protects you. However, it makes your offer less attractive to sellers.
Earnest Money
Earnest money (typically 1-3% of purchase price in Tennessee) demonstrates your commitment. This deposit is held in escrow and applied to your down payment at closing. If you back out for a reason not covered by your contingencies, you may forfeit this money. If the sale completes or you back out for a valid contingency, you get it back or it goes toward your purchase.
Negotiations
Sellers may accept, reject, or counter your offer. Negotiations can involve price, closing date, repairs, included items, or other terms. Your agent's negotiation skills are crucial. They'll advise on counteroffers and help you determine when to stand firm versus when to compromise.
Navigate Inspections
Once your offer is accepted, schedule a professional home inspection immediately. In Tennessee, home inspections typically cost $350-$600 depending on the home's size and age. The inspector examines the home's structure, systems, and components, identifying issues, safety concerns, and needed repairs.
What's Inspected
- Roof condition and remaining life
- Foundation and structural integrity
- Electrical system and panels
- Plumbing and water heater
- HVAC systems (heating and cooling)
- Windows, doors, and insulation
- Drainage and grading
- Visible signs of water damage or mold
Specialized Inspections for Tennessee
Termite/Wood Destroying Insects: Essential in Tennessee's humid climate. Lenders typically require this for mortgages.
Radon Testing: Recommended, especially in certain areas of East Tennessee.
Septic Inspection: Required for homes with septic systems. Ensures the system functions properly.
Well Water Testing: If the home has a well, test water quality and quantity.
After the Inspection
Review the inspection report with your agent. No home is perfect—expect some issues. The question is whether issues are major (foundation problems, roof failure, significant water damage) or minor (cosmetic issues, routine maintenance). Based on findings, you can:
- Request the seller make specific repairs
- Ask for a credit toward repairs
- Renegotiate the purchase price
- Accept the home as-is
- Walk away (if within inspection contingency period)
Secure Financing
After the inspection period, formally apply for your mortgage. The lender will order an appraisal (required for most loans) to verify the home's value supports the loan amount. The underwriting process involves the lender thoroughly reviewing your finances to ensure you qualify.
The Appraisal
A licensed appraiser evaluates the home's value based on comparable sales, condition, and features. If the appraisal comes in at or above your purchase price, you're good to proceed. If it appraises low, you may need to renegotiate the price, bring extra cash to closing, or walk away if you have an appraisal contingency.
Underwriting
The underwriter reviews all documentation to ensure you meet the lender's requirements. They may request additional documents or explanations. Respond promptly to keep the process moving. Common requests include updated pay stubs, explanation of bank deposits, or verification of employment.
Important: Don't Change Your Finances
During the mortgage process, don't change jobs, make large purchases, open new credit accounts, or make any major financial changes. These can jeopardize your loan approval, even at the last minute. If you must make changes, consult your lender first.
Prepare for Closing
As closing approaches, finalize details. Schedule a final walk-through (typically 24 hours before closing) to verify the home's condition and ensure agreed-upon repairs were completed. Review your Closing Disclosure (provided at least 3 days before closing) detailing all costs and loan terms.
Final Walk-Through
The final walk-through ensures the home is in the same or better condition as when you made your offer. Verify that repairs were done, all included items are present, and no new damage has occurred. If you discover problems, address them with your agent immediately before closing.
Review Your Closing Disclosure
Federal law requires lenders to provide a Closing Disclosure at least 3 business days before closing. This document shows your final loan terms, closing costs, and cash needed to close. Review it carefully and compare to your initial Loan Estimate. Report any unexpected changes or errors to your lender and agent immediately.
Arrange Homeowners Insurance
Lenders require homeowners insurance before closing. Shop for quotes from multiple insurers. You'll need to provide proof of insurance to your lender. In Tennessee, also consider flood insurance if in a flood zone and earthquake riders given regional seismic activity.
Gather Closing Funds
Your Closing Disclosure shows exact cash needed to close. Arrange a wire transfer or cashier's check (personal checks typically not accepted for large amounts). Wire transfers are common but verify wiring instructions directly with the title company—wire fraud is a real threat.
Close on Your Home
Closing day is when ownership officially transfers. You'll meet at the title company or attorney's office (in Tennessee, closings are typically handled by title companies or real estate attorneys). Bring your ID, closing funds, and be prepared to sign numerous documents.
What Happens at Closing
The closing agent will walk you through each document. You'll sign the mortgage note (your promise to repay the loan), the deed of trust (securing the loan with the property), and various disclosures and forms. The seller signs the deed transferring ownership to you. Funds are distributed—seller gets their proceeds, lender is paid, agents receive commissions, and various fees are paid.
Documents You'll Sign
- Promissory Note (mortgage)
- Deed of Trust
- Closing Disclosure (final review)
- Title documents
- Various lender-required disclosures
- Homeowner association documents (if applicable)
Getting Your Keys
Once all documents are signed and funds distributed, you receive the keys to your new home! In Tennessee, possession typically transfers at closing unless otherwise specified in the contract. Congratulations—you're now a homeowner!
Understanding Costs
Down Payment
Down payments vary by loan type. Conventional: 3-20%. FHA: 3.5%. VA/USDA: 0% for qualifying buyers. Larger down payments mean lower monthly payments and potentially better interest rates. Putting down 20% or more avoids PMI (private mortgage insurance).
Closing Costs
Expect 2-5% of the purchase price for closing costs in Tennessee. These include:
- Loan origination fee (0.5-1% of loan amount)
- Title insurance (protects your ownership)
- Title search and examination
- Attorney fees (if used)
- Appraisal ($400-600)
- Home inspection ($350-600)
- Survey (if required, $400-700)
- Recording fees
- Prepaid items: homeowners insurance, property taxes, HOA dues
Ongoing Costs
Budget for: monthly mortgage payment (principal, interest, taxes, insurance), utilities, maintenance and repairs (budget 1-2% of home value annually), HOA fees (if applicable), and lawn care/landscaping.
Total Funds Needed Example
For a $300,000 home in Tennessee with 5% down payment:
• Down payment: $15,000
• Closing costs: ~$7,500
• Earnest money: ~$3,000 (applied to down payment)
• Moving costs: $1,500-3,000
• Total needed: ~$20,000-$25,000
Tennessee-Specific Information
No State Income Tax
Tennessee has no state income tax on wages, which helps with affordability. This makes your monthly budget more predictable and can allow you to qualify for a larger loan than in states with income tax.
Property Taxes
Property taxes vary by county. Blount County: ~$2.20 per $100 assessed value. Knox County: ~$2.50-$2.75 per $100. Taxes are based on assessed value (typically 25% of market value for residential property). For a $300,000 home in Knox County, expect roughly $2,000-$2,500 annually.
Disclosure Requirements
Tennessee requires sellers to complete a property disclosure form revealing known defects and issues. However, "as-is" sales are common, especially for foreclosures or estate sales. Your inspection protects you regardless of disclosures.
Attorney vs. Title Company
In Tennessee, either real estate attorneys or title companies can handle closings. Both are common. Your lender and agent will coordinate the closing process. Costs are similar either way and typically included in your closing costs.
Frequently Asked Questions
How much money do I need to buy a house in Tennessee?
Typically, you'll need 3-20% for a down payment, 2-5% for closing costs, and reserves for moving and immediate repairs. For a $300,000 home, expect to need $15,000-$75,000 total depending on your loan type and situation. First-time buyer programs may require as little as 3% down.
What credit score do you need to buy a house in Tennessee?
Most conventional loans require a 620+ credit score, though FHA loans may accept scores as low as 580. Higher scores (720+) qualify for better interest rates. Your lender can advise on specific requirements for your situation.
How long does it take to buy a house in Tennessee?
From making an offer to closing typically takes 30-45 days, though cash purchases can close faster. The entire process from starting your search to closing can take 2-6 months depending on market conditions and your specific needs.
Do I need a real estate agent to buy a house in Tennessee?
While not legally required, working with a buyer's agent is highly recommended and costs you nothing—the seller typically pays all agent commissions. An experienced local agent provides market knowledge, negotiation skills, and guides you through the complex process.
What are closing costs when buying a house in Tennessee?
Closing costs in Tennessee typically run 2-5% of the purchase price. This includes loan origination fees, title insurance, appraisal, inspections, attorney fees, recording fees, and prepaid items like homeowners insurance and property taxes.
Does Tennessee have first-time homebuyer programs?
Yes! The Tennessee Housing Development Agency (THDA) offers down payment assistance and competitive interest rates for first-time buyers. FHA, VA, and USDA loans also help buyers with lower down payments. Your lender and real estate agent can guide you through available programs.
What is included in a home inspection in Tennessee?
A standard Tennessee home inspection covers the home's structure, roof, foundation, electrical, plumbing, HVAC, and major systems. Inspectors identify issues, safety concerns, and needed repairs. Specialized inspections (termite, radon, septic) may be needed based on the property.
Ready to Buy Your Tennessee Home?
As an experienced East Tennessee real estate agent, I guide buyers through every step of the process—from pre-approval to closing and beyond.
Contact Tracy Today:
Get in TouchAbout the Author: Tracy Southard is a licensed real estate agent with Realty Executives Associates, specializing in helping homebuyers navigate the East Tennessee market. With over 600 successful transactions, Tracy provides expert guidance throughout the buying process.
Published: November 18, 2025 | Last Updated: November 18, 2025