Tennessee Mortgage and Refinance Rates

Current mortgage rates in Tennessee

Mortgage interest rates are reaching their highest levels since 2008. As of Thursday, October 31, 2024, current interest rates in Tennessee are 7.23% for a 30-year fixed mortgage and 6.46% for a 15-year fixed mortgage.

The median home sale price in Tennessee was $370,000 as of July 2024, according to Tennessee Realtors. The number of listings on the market has increased by more than 10 percent year-over-year, giving hopeful homebuyers a bigger selection of homes to look at. Months of inventory have also increased by 20 percent year-over-year in the state. 

Refinance rates in Tennessee

While refinance rates are beginning to ease nationwide, overall refinance activity has dropped by 5.7 percent in Tennessee as of June 2024, according to ATTOM. There are two main reasons to consider a refinance on your Tennessee home. First, if you bought your home when rates were above 7 percent, you might save money by refinancing to a lower rate. 

Second, 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. For example, you could do a cash-out refinance or get a home equity loan or line of credit to make updates to your home.

Tennessee mortgage rate trends

Whether you’re looking for current mortgage rates in Nashville, current mortgage rates in Knoxville or some other section of the Volunteer State, there’s some good news to celebrate: Thirty-year mortgage rates have been trending downward since mid-July. That trajectory is predicted to continue through the rest of 2024 when the Fed begins cutting rates this fall. However, lower mortgage rates could lead to a boom in buying interest.

National mortgage rates by loan type

Mortgage statistics for Tennessee

Tennessee has a rich cultural history and has become a popular place to live in recent years, offering an appealing work-life balance and lower cost of living than many East and West Coast states. Whether you’re looking for college-town charm in Knoxville or country music buzz in Nashville (one of Bankrate’s best places to start a career), Tennessee offers an appealing lifestyle for just about anyone. 

If you’re buying a home in Tennessee, here are some stats to know:

• Most popular cities, June 2024: Memphis, Nashville, Knoxville, Chattanooga, Murfreesboro
• Most affordable counties (based on median home value): Gibson,  Hardeman, Obion, Wayne
• Median home sales price, July 2024: $370,000
• Median down payment, June 2024: $52,950
• Homeownership rate, Q4 2023: 68.9%

Sources: Tennessee Association of Realtors, ATTOM, U.S. Census Bureau

Mortgage options in Tennessee

Homebuyers purchased nearly 53,000 homes in Tennessee by halfway through 2024, according to ATTOM. For those who couldn’t pay in all cash, here are some of the most common mortgage options: 

• Tennessee conventional mortgages: To qualify for a conventional mortgage, 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), as well.
• Tennessee FHA loans: If your credit history disqualifies you from a conventional mortgage, you might be able to obtain a loan insured by the Federal Housing Administration (FHA). If you have a down payment of at least 3.5 percent, you could qualify for this type of loan with a credit score as low as 580. 
• Tennessee VA loans: If you’re a veteran or active-duty member of the military, you might qualify for a mortgage guaranteed by the Department of Veterans Affairs (VA). A VA loan doesn’t require a down payment or mortgage insurance, but you do need to pay a funding fee, which ranges from 1.25 to 2.15 percent for the first use.
• Tennessee USDA loans: If you’re buying a rural property in Tennessee, you might be eligible for a mortgage guaranteed by the U.S. Department of Agriculture (USDA). These loans don’t require a down payment, but you’ll need to purchase in a designated rural area and meet the area’s income limits.

First-time homebuyer programs in Tennessee

In addition to conventional loans and FHA loans, the Tennessee Housing Development Agency (THDA) offers a handful of programs designed to assist first-time homebuyers:

• Great Choice Home Loans: The Great Choice Home Loan program is aimed at moderate-income buyers. It offers 30-year fixed-rate mortgages to those with credit scores as low as 640. The program comes with household income and purchase price limits, which vary by county, as well as down payment assistance.
• Homeownership for Heroes: In terms of features, the Homeownership for Heroes program — available to members of the military and law enforcement, paramedics, and firefighters — is very similar to Tennessee's Great Choice Home Loan for first-time homebuyers. It offers a 30-year fixed interest rate and has a minimum 640 credit score requirement. Interest rates through Homeownership for Heroes are reduced a half-percentage point; the requirement that you be a first-time homeowner to participate is waived; and buyers are able to borrow as much as 100 percent of a property's purchase price with a VA or USDA loan, and 96.5 percent with an FHA loan.
• Take Credit MCC Program: The Take Credit Mortgage Credit Certificate (MCC) provides a federal income tax reduction for those who purchase a property in one of the state’s Targeted Areas. In addition to first-time homebuyers, Take Credit MCC is open to veterans or repeat homebuyers, as long as the property is located in one of the state’s qualifying Targeted Areas. MCC participants are eligible for a federal tax credit of as much as $2,000 annually, which can be used to decrease the homebuyer’s income tax liability year after year, as long as the house remains the primary residence.

How to find the best mortgage rate in Tennessee for you

• Step 1: Strengthen your credit score - Long before you start looking for a mortgage lender or applying for a loan, give your finances a checkup, and improve your credit score if needed.
• Step 2: Determine your budget - To find the right mortgage, you’ll need a good handle on how much house you can afford.
• Step 3: Know your mortgage options - There are a few different types of mortgages.
• Step 4: Compare rates and terms from several lenders - Rate-shop with at least three different banks or mortgage companies.
• Step 5: Get preapproved for a mortgage - Getting a mortgage preapproval is the only way to get an accurate loan amount and cost for your specific situation.

Additional Tennessee mortgage resources

• Tennessee loan limits by county: Learn the loan limits for FHA and conventional loans at the county level.
• Tennessee mortgage lenders: Explore mortgage lenders in your state.
• How to buy a house in Tennessee: Get set up for a successful house hunt with this guide.
• Homeowners insurance in Tennessee: Read all about the ins and outs of protecting your property. 
• Mortgage calculator: Estimate how much you’ll pay each month and how much interest you’ll pay over the entire loan.

Meet our Bankrate experts

Written by: Andrew Dehan, Writer, Home Lending

I’ve covered mortgages, real estate and personal finance since 2020. At Bankrate, I’m focused on all of the factors that affect mortgage rates and home equity. I enjoy distilling data and expert advice into takeaways borrowers can use. Prior to Bankrate, I wrote and edited for Rocket Mortgage/Quicken Loans. My work has been published by Business Insider, Forbes Advisor, SmartAsset, Crain’s Business and more.

Read more from Andrew Dehan

Edited by: Laurie Richards, Editor, Home Lending

I’ve spent five years in writing and editing roles, and I now focus on mortgage, mortgage relief, homebuying and mortgage refinancing topics. I’m most interested in providing resources for aspiring first-time homeowners to help demystify the homebuying process. In 2021, I earned a Poynter ACES Certificate in Editing. I have an MA in English. 

Read more from Laurie Richards