Today’s Tennessee Mortgage Rate

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ByChristopher Boston
Edited byVictoria Copans
ByChristopher Boston
Edited byVictoria Copans

Updated: September 26, 2023

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Tennessee has a higher homeownership rate than the national average. Many factors come into play when choosing a mortgage, but the mortgage rate is one of the most significant. Better mortgage rates in Tennessee can make your borrowing journey smoother and less costly. To make an informed choice, always compare rates and lenders before sealing the deal.

Current Mortgage Rates in Tennessee

FRED Economic Data put the national homeownership rate in 2022 at 65.9%, while the homeownership rate in Tennessee sat slightly higher at 67.3%. Even though these numbers have dipped since 2020, it's likely that mortgages are playing a role in keeping Tennessee's homeownership numbers up. If you’re leaning towards getting one, exploring current mortgage rates in Tennessee is the next logical step.

Comparing average state rates to the national average reveals interesting trends. For example, the average 30-year fixed mortgage rate is 6.89% in Tennessee, slightly lower than the U.S. average of 7.06%. However, the 15-year fixed mortgage rate sits at 6.37%, almost the same as the national average of 6.35%. For a 5-year ARM, Tennessee’s rate averages 7.07%, below the overall U.S. figure of 7.30%.

Keep in mind that mortgage rates can change due to various factors, such as economic conditions, housing demand and lender competition, so it's wise to stay updated. You should also consider the mortgage types available in Tennessee, as different types come with varying rates. Check out the rate table below to help you make an informed decision.

Finding the Best Mortgage Rates in Tennessee

Mortgage rates are pivotal in determining how much you'll end up paying for your home over time. Competitive rates can translate to thousands of dollars saved over the loan’s life. For example, a half-point drop in your rate could save you a substantial amount over 30 years. With that in mind, here are several tips to help you find the best mortgage rates in Tennessee.

  • Find a Co-Borrower: Adding a co-borrower with a strong financial profile can make your mortgage application more appealing to lenders. That typically results in a lower interest rate. It’s especially useful if your own financial situation has room for improvement. Both incomes will be considered, making qualifying for a better rate easier.

  • Negotiate Mortgage Rates: Believe it or not, mortgage rates are sometimes negotiable. Presenting offers from multiple lenders to the one you prefer could give you leverage to negotiate a lower rate. A minor rate reduction can add up to major savings over the life of the loan.

  • Use a Rate Lock: A rate lock allows you to freeze the current mortgage rate for a specific period, usually 30 to 60 days. It can be particularly beneficial if you expect rates to rise before you close the loan.

  • Larger Down Payments: The more you can put down upfront, the less risk the lender takes on, whichh often translates to a lower mortgage rate. While 20% is the standard down payment, going beyond this can tilt the odds in your favor for a lower figure.

  • Keep an Eye on Market Trends: Mortgage rates can fluctuate based on economic indicators, like the federal funds rate or Treasury bond yields. By understanding these trends, you can time your mortgage application when rates are likely to be lower.

With these techniques, you'll have a greater chance of securing a mortgage rate that suits your financial situation. Each provides a unique angle for shaving points off your rate, making your path to homeownership in Tennessee more affordable.

Mortgage Types in Tennessee

Location often affects property prices. The average home value in the U.S. is around $349,770; in Tennessee, it's slightly more budget-friendly at $311,678. The lower average home value can be an advantage for borrowers because you can potentially get a larger or nicer home for your money. Despite Tennessee's more affordable housing scene, mortgages are a valuable tool for making homeownership accessible.

Fortunately, you're not limited to one or two options here — Tennessee offers a range of mortgages to suit different needs and situations. The comparison table can help you determine which fits you best.

Usually Best For
Typical Eligibility Requirements

Conventional Loan: Standard mortgage not backed by a government agency.

Borrowers with good to excellent credit and stable income.

Minimum 620 credit score, proof of income and ideally a 20% down payment.

VA Loan: Backed by the Department of Veterans Affairs. Designed for veterans, active-duty military and eligible spouses. No down payment required.

Veterans, active-duty military or eligible spouses.

Valid Certificate of Eligibility; minimum credit score varies by lender.

FHA Loan: Federally insured loan ideal for first-time homebuyers. They have lower down payment and credit requirements.

First-time homebuyers or those with less-than-perfect credit.

Minimum 580 credit score, 3.5% down payment and mortgage insurance.

USDA Loan: Backed by the United States Department of Agriculture. No down payment required.

Borrowers looking in rural or suburban areas.

Borrower's income must be below set limits and property must meet eligibility. Credit score requirment varies.

Jumbo Loan: For homes that exceed conforming loan limits. Not backed by government agencies.

High-income earners purchasing more expensive homes.

Credit score of 700 or above, proof of income and larger down payment.

Now that we've covered various mortgage types you can tap into let's shift our focus to rate structures. Understanding how different rate structures work adds another layer of savvy to your homebuying process.

  • Fixed-Rate Mortgages: Your interest rate stays the same throughout the loan term. They offer predictable payments but if interest rates drop, you're stuck with your higher rate unless you refinance. Ideal if you plan on staying in the home for an extended period.

  • Adjustable-Rate Mortgages (ARMs): Your rate can change after a set period, although it usually starts lower than fixed rates. The upside is you’ll have lower payments in the early years. The downside is that your rate (and payments) can increase, depending on market conditions. This structure is a better option for those who plan to sell or refinance before the rate adjusts.

Whether you're considering a fixed or adjustable rate, being informed helps you navigate the landscape of mortgage rates in Tennessee more confidently.

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A mortgage calculator can help you get a better handle on mortgage rates in Tennessee. You can plug in different numbers like loan amounts, down payments and interest rates to see how they affect your monthly payments. Feel free to experiment to find out what combination suits you best. Try out MoneyGeek’s mortgage calculator to sharpen your understanding of what your financial commitment might look like. It's a solid way to get a jump start on finding the right mortgage for you in Tennessee.

How to Get a Mortgage in Tennessee

Understanding the end-to-end process of securing a mortgage in Tennessee can help you navigate your homebuying journey confidently. Knowing each step can give you an upper hand, making it easier to land a deal that fits your financial situation.

Check Your Credit Score

Your credit score will be a key factor in determining your mortgage rate. A higher score can lead to better rates and more favorable loan terms. Utilize free online services to check your credit score, and if you find any errors or discrepancies, work on resolving them as soon as possible.

Determine Your Budget

Knowing your budget will save you time and effort by narrowing down your choices. Use the 28/36 rule as a guideline, which says your mortgage payment shouldn't exceed 28% of your gross monthly income, and all your debts (including the mortgage) shouldn't exceed 36%.

Get Pre-Approved

This step involves a lender reviewing your financial background to determine how much they’re willing to lend you. Gather all required documents like W-2s, pay stubs and bank statements before you meet with the lender to speed up the pre-approval process.

Pick a Mortgage Type

Different types of mortgages come with their own pros and cons, so pick the one that aligns with your financial situation and long-term goals. If you're uncertain, consult a financial advisor who can give you tailored advice.

Shop for Lenders

Collect quotes from multiple lenders, including interest rates and other fees, and compare them. The lowest interest rate may not always be the best deal if there are hefty fees involved.

Submit Application

You'll need to submit various financial documents, including your tax returns, proof of income and details about your debt. Keep all your financial documents in one place so you can easily access them, which will speed up the application process.

Get a Home Appraisal and Inspection

The appraisal will determine the home's market value, while the inspection will identify any structural or functional issues. Use certified and trusted professionals for these services to ensure their accuracy. Don't skip the home inspection, as hidden problems can become expensive repairs later on.

Attend the Closing

This is the final step, involving a lot of paperwork and closing costs, typically amounting to 2% to 5% of the home's purchase price. Review all the documents carefully before signing to make sure everything matches what was agreed upon.

This roadmap to getting your mortgage in Tennessee will help you find a loan that aligns with your financial goals. A little knowledge goes a long way, especially when it comes to making one of the biggest purchases of your life.

Mortgage Programs in Tennessee

Owning a home isn't just about covering the mortgage — you'll also have to think about property taxes and maintenance costs. These hidden expenses can add up quickly. Fortunately, some mortgage programs can help you offset these costs, suuch as those from the Tennessee Housing Development Agency. These programs can help you secure lower mortgage rates in Tennessee, leaving you more money for those future expenses.

Great Choice Home Loans for First-Time Homebuyers

If you're looking to buy your first home in Tennessee, the Great Choice Home Loan program might be your ticket. It’s specifically for Tennesseans with middle or moderate income. You get a loan with a 30-year term, which makes your monthly payments more manageable. Plus, the interest rate won't change during the loan, so you won’t experience payment shock.

You'll need a minimum credit score of 640 to qualify, but if you fall short, there's help available to improve it. The program also comes with down payment assistance, and you can even use it for off-site manufactured homes. If you're worried about the upfront costs, this program's got you covered.

Homeownership for Heroes

If you're a hero in your community — think military, law enforcement, EMT or firefighter — Tennessee has a special mortgage program that you may be able to take advantage of. Homeownership for Heroes is designed to make your homebuying journey a bit easier. This program lowers your interest rate by 0.5% and lets you skip the first-time homeowner requirement. You can borrow up to 100% of the home's price with certain loans. And just like the Great Choice program, it offers down payment assistance and requires a minimum 640 credit score. It's a solid deal for those who serve.

Repeat Homebuyer

The THDA’s mortgage programs aren’t just for first-time homebuyers. Those who have owned homes before can apply for its Repeat Homebuyer Loan program. You're eligible if you haven't owned a home in three years, are buying in specific counties or if you're in the military. Like the first-time buyer program, this one has perks like a 30-year term, fixed interest rates and down payment help. You'll need a 640 credit score to get started. It can cover up to 96.5% of your home’s total cost, meaning you'd only need a 3.5% down payment.

Down Payment Assistance

If you've secured a Great Choice Home Loan, you've got options for extra help on your down payment or closing costs. Check out the Down Payment Assistance program, which offers two choices.

One is a deferred $6,000 loan with zero interest, and you don't pay it back until your 30-year term is up or you sell the house. The other option is a loan for 6% of your home's sales price, which you pay back monthly over 30 years. Just complete a quick homebuyer education course to qualify. Either way, it's a nice boost to make homebuying more manageable.

Frequently Asked Questions

You may have questions about Tennessee’s mortgage rates when you’re about to make a significant financial decision. Our responses to these commonly asked questions can provide you with more information.

What are the current mortgage rates in Tennessee and how do they compare with the national average?
What factors influence mortgage rates in Tennessee?
How does your credit score impact your mortgage rate in Tennessee?
Are there any special programs for first-time homebuyers in Tennessee?
How often do mortgage rates change in Tennessee?
How do different loan lengths, like 15-year vs. 30-year, affect mortgage rates in Tennessee?

About Christopher Boston

Christopher Boston headshot

Christopher Boston is a Senior Manager of Content Strategy and SEO at MoneyGeek. For over half a decade, they have crafted hundreds of articles spanning the higher education, mortgage and personal loan industries. Christopher is passionate about using their skills and experience to create quality content that helps people save and spend their earnings efficiently.