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Tennessee First Time Home Buyer Loans

Apply to Get a Mortgage Loan to Buy Your First Home in Tennessee
Low Down Payment - Best Program Options - Low Interest Rates

Tennessee First Time Home Buyer – 2019 Loan Programs

Are you looking to purchase your first home? Our first time home buyer programs might be the perfect solution to help you obtain the financing you need to purchase the home you desire. We provide excellent home financing options, and encourage you to compare our offered loan terms to other mortgage lenders.

Tennessee First Time Home Buyer Loans

There are 5 types of first time home buyer loans.  You may select different loan terms, such as a fixed rate or adjustable rate mortgage, and the number of years to repay the loan (such as a 30 year fixed rate mortgage).

Types of Mortgages:

  • Conventional Loans – Conventional loans offer the best loan terms to borrowers with good or excellent credit (620 or higher credit score), as well as those who can afford to place a larger down payment.  If you are able to put 20% or more down, you will be able to avoid paying private mortgage insurance (PMI).  However, conventional loans also offer low down payment options, such as programs that only require 3% down.
  • FHA Loans – FHA loans are a good option for borrowers who may not be able to qualify for a conventional loan.  The qualification requirements for FHA loans are much more lenient than conventional loans.  This includes options for home buyers with credit scores as low as 500 (in order to qualify for a 3.5% down payment, you must have a credit score of at least 580).
  • USDA Loans – USDA loans provide home buyers the opportunity to purchase a home without any down payment.  These loans are intended for borrowers with low-to-moderate income.  In addition to not requiring any money down, you can also finance the closing costs into the loan.  This means you can essentially buy a home with no money out of pocket!
  • VA Loans – Active duty military members and veterans can apply for a VA loan which allows you to buy your first home without any down payment.  These loans are not available to the general public, but exclusively to military/veterans.
  • Jumbo Loans – Any loan that does not meet the conforming or FHA loan limits is a jumbo loan.  The FHA loan limits for most counties in Tennessee is $314,817.  The conforming loan limits, which are used for conventional and VA loans, are $484,350 for most counties.  If you want to buy a more expensive home than what your county allows, and have the income to qualify, we provide what are known as jumbo loans up to $2,000,000.

The above 5 types of loans are the main first time home buyer options that exist.  We can help you determine which loan is the right fit for you based on your particular needs and eligibility.

Tennessee Down Payment Assistance Programs

First time home buyers in Tennessee may be eligible to receive down payment assistance.  This includes programs that are available statewide, as well as some that are offered exclusively in a city or county.

Great Choice Plus Program

The Great Choice Loan offers up to 5% in down payment assistance to first time home buyers throughout the entire state of Tennessee.

Requirements

To learn more about the Great Choice Loan Program, visit the Tennessee Housing Development Agency website.

Hardest Hit Fund (HHF) Down Payment Assistance

If you qualify for the Great Choice Home Loan, you may be eligible to receive up to $15,000 in down payment assistance.  The funds are provided as an interest free, 10 year loan.  No payments are required, and the funds are fully forgiven after 10 years.  After the first 5 years, $3,000/year will be reduced from the balance, and then after the 10 years, no money is owed.  This program is only available in targeted areas, which there are 52 zip codes in 33 counties.

Regional Programs

Below are down payment assistance programs that are offered exclusively in different cities and counties in Tennessee.

City of Clarksville down payment assistance

City of Knoxville down payment assistance

City of Memphis down payment assistance

Shelby County down payment assistance

Would you like some help learning about what down payment assistance programs may be available to you?  Our loan specialists have a great deal of expertise on these programs, and can help you understand the qualifications, and see if you are eligible.   It is certainly worth the effort to find out!  To get some expert help, request a free consultation.

Tennessee First Time Home Buyer Tax Credits

The Mortgage Credit Certification (MCC) tax credit provides you an opportunity to reduce your tax bill, as well as enhance your home loan application by reducing your debt-to-income ratios.  How this works, is you can deduct up to $2,000 off your federal tax bill each year.  The MCC allows up to 50% of your annual interest to be eliminated (with the cap being at $2,000).  Some great news, is this can be used in addition to standard mortgage interest deductions!

Frequently Asked Questions About Buying Your First Home

How much do I need for a down payment?
It depends on the type of loan you want.  USDA and VA loans often will not require any down payment.  FHA loans require a 3.5% down payment.  Conventional loans typically require either 3% or 5%.  If you receive down payment assistance, you may not need any money for your down payment.

What is the maximum loan amount that I can qualify for?
The amount that you will be allowed to borrow will depend mostly on your income, as well as the particular type of loan you are interested in. There are maximum loan limits for each type of mortgage program which are set at the county level. Conforming loan limits are the maximum loan amounts allowed for conventional mortgages.  FHA loans have their own loan limits.  This is not necessarily how much you can borrow though, but the maximum amount allowed in your location.  The amount that you can personal qualify for will be based upon your income, and how much debt you have.  For most loans, your monthly mortgage payment, along with your monthly debts may not exceed 43% of your income.

Can I buy a home without a real estate agent?
It depends on your state and the type of loan program.  For some states, you must use an agent.  In other states, you are not required to use a real estate agent for many loan program, such as conventional mortgages.  However, some loan types require that you use a real estate agent regardless of your location, such as USDA loans.

Do you have first time home buyer loans for bad credit?
Yes, we offer mortgage options for borrowers with bad credit. This includes FHA loans for bad credit, which you can possibly be approved with a credit score as low as 500. However, a 580 credit score is required for the 3.5% down payment. If your credit score is between 500-579, then you will need to put 10% down.

Can I buy a home if I owe tax debt?
For government-backed loans, such as FHA, VA, and USDA loans, you can buy a home with tax debt as long as you have made a payment plan with the IRS, and are not behind on the payments. Any federal debt must be in good standing in order to get a government-based mortgage. If your tax debts have moved into the status of a tax lien, this will prevent you from getting a home loan until it is resolved.

Can I buy a home if I have student loans?
As long as you are not delinquent on the student loan payments, and the monthly payments do not cause excessive debt-to-income ratios, you can still get a mortgage.

Can I buy a home without my spouse?
A common question is if you can buy a house without your wife or husband.  The short answer is yes. There are numerous reasons someone may want to exclude their spouse from a mortgage application, such as lower credit, lack of job history or income, or one spouse having excessive debt that could prevent an approval. You may be able to qualify and get a home loan without your spouse.

How do I know if I am ready and prepared to own a home?
It is critical to consider the often unexpected expenses of buying a home. This includes repairs, maintenance, and of course furnishing the home, monthly utilities, and all other expenses that are associated with homeownership. A common mistake is to just look at the difference in rent to your total mortgage payment. Almost every year, you can expect to have to pay for various upkeep to keep the property functional. This can include anything from repairing a hot water heater that broke, to landscaping, and various maintenance.

Something else financial consultants advise is that you have at least 3 months of reserves. This means that you could afford to make your new mortgage payment for at least 3 months in the event that you lose a job or have some other unforeseen circumstance that the savings would be needed for. This is not a requirement for most home loans, but it is good advice to consider.

Have more questions about buying your first home?  Give us a call at 1-800-731-3560.

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