As a first time home buyer in Tennessee, it can be an intimidating and stressful process. When you work with a top-rated real estate agent and loan officer, the process of purchasing a house in the state of Tennessee will be as seamless and stress-free as possible.
As defined by the state, first time home buyer is someone who hasn’t bought a house in the last three years. When you utilize first time home buyer programs in Tennessee, not only can costs be more affordable, but you’ll find a wide variety of first time buyer assistance programs in Tennessee, including closing cost grants, down payment assistance programs, primary mortgages, and so forth.
First Time Home Buyer Tax Credits & Down Payment Assistance in Tennessee
The state of Tennessee has a Mortgage Credit Certificate (MCC) through the Tennessee Housing Development Agency, where home buyers can claim 50% of their loan interest (maximum of $2,000) per year for the IRS tax credit. The rest of the loan interest can be claimed as a tax deduction. Overall, this Tennessee first time home buyer tax credit can help homeowners when it comes to tax season.
Great Choice Home Loan
There are a few options for the Great Choice loan, which is applied toward your down payment. A deferred option allows you to receive up to $6,000 in loan money that is forgiven after you pay off the house (on a 30-year mortgage). If the home is refinanced or sold, you will have to pay it back.
The second option is an Amortizing loan. You can receive up to 6% of the sale price as a second mortgage on your home, and you will pay a set amount each month over the 30-year mortgage.
You are required to take a home buyer education class for you to qualify to receive one of these two options. You also have to be within the income limits and have a minimum credit score of 640. This program is beneficial for first time home buyers in Tennessee with bad credit.
The Great Choice Home Loan was created by the Tennessee Housing Development Agency (THDA) to help first time home buyers program, TN be able to afford to purchase a house. This down payment assistance Tennessee program can be beneficial for first time home buyers.
Tennessee Housing Development Agency, 502 Deaderick St, Nashville, TN 37243 (615) 815-2200
First Time Home Buyer Loans in Tennessee
If you’re hoping to speed up the process of getting a home, one of the most commonly used methods is getting pre-approved by the bank. A loan needs to be repaid, whereas a grant does not.
When buying a home, you can go through the process of being pre-approved or pre-qualified. If you’re pre-approved, you’ll have the necessary documents from the bank (the lender) stating that you are approved up to a certain amount; this adds reliability and gives you a competitive edge over other candidates. If you’re pre-qualified, this only gives you an idea of what you can afford.
To get pre-approved, the bank will look at a variety of items, like the percentage of the down payment, your credit score, and your income-to-debt ratio, to help ensure you aren’t over the threshold for monthly expenses and debts. A lender will recommend that you follow the 28/36 rule. What this entails is that your Principal, Interest, Taxes, and Insurance (PITI) are not higher than 28% of your take-home pay and that your total expenses don’t go above 36% of your total income. By following this rule, it helps the banker know how much you can afford.
Homeownership For Heroes
As a branch of the Great Choice Home Loan, Homeownership for Heroes is for first responders and those in our community who have served. If you are currently active in the military, a veteran, in the National Guard, part of a local/state law enforcement agency, or a paramedic or firefighter, you can qualify for the Tennessee homeownership assistance program.
In addition to the requirement of serving, you need a minimum credit score of 640 and need to fall within the same household income range for the Great Choice Home Loan. This first time home buyers program in Tennessee is a great option for people who have served and provides more of an opportunity to be able to purchase a home.
One of the additional benefits of Homeownership for Heroes is that you can qualify for down payment assistance in Tennessee, and the interest rate can potentially be lowered by up to 0.5%.
A Conventional 97 loan, also known as Frannie Mae and Freddie Mac, is only for first time home buyers and is known for having relaxed requirements. You can end up borrowing up to 97% of the loan, which means you’ll only need to come up with 3% for the down payment. When it comes to your credit score, you’ll need to have a minimum of 620.
FHA loans allow Tennessee first time home buyers to pay as low as a 3.5% down payment, and it’s a securely fixed loan that is set at 15 or 30 years. Applicants will need to have a credit score of 620+ to qualify, and you can’t have had a bankruptcy within the last four years.
While the example is not technically a loan, we wanted to include it because Tennessee is working hard to end homelessness. This program helps create grants where local nonprofits and organizations compete so they can help build homes or repair current homes for low-income families. Participating in this program does not require repayment.
First Time Home Buyer Program in Nashville/Davidson County
When it comes to individual Tennessee cities, here is the best first time home buyer program in Nashville.
The Housing Fund
The Housing Fund is a great program for the city of Nashville and Davidson County, where individuals are given assistance for a down payment on a house. There are certain income requirements and restrictions on how much you can borrow (depending on the loan term), but everything is laid out perfectly on the website.
How Much Does It Cost To Buy A House In Tennessee?
The median home price in Tennessee is $353,300. On average, homes stay on the market for 69 days before they are sold. Here are some of the most competitive areas in Tennessee and their median home prices:
- Jackson: $216,000
- Cleveland: $320,000
- East Ridge: $328,000
- La Vergne: $351,000
- Smyrna: $370,000
- Goodlettsville: $376,000
- Murfreesboro: $399,450
- Nashville: $425,125
- Berry Hill (neighborhood of Nashville): $688,000
- Nolensville: $755,000
- Oak Hill (neighborhood of Nashville): $2.7 million
Purchasing your first home can be a stressful, intimidating process, but it’s not as difficult as it might seem. Yes, buying a piece of real estate is a big commitment that requires plenty of planning and creating a proper budget, but it’s also a fulfilling experience. When it comes to a budget, you’ll want to take into consideration the cost of property taxes, closing costs, maintenance, and homeowners insurance, along with things like food, utilities, gas, and health care. This affordability calculator can help you determine what you can afford.
Tennessee First Time Home Buyers FAQs
What is a first time home buyers program?
First time home buyer programs in TN allow people who might not qualify for a mortgage based on income better afford a home loan and meet the requirements to become a homeowner. A few of those requirements include: the borrower being low income, having a minimum of 620 (sometimes 640) FICO score, and meeting the individual needs of the loan or grant program. If it’s a grant, you do not need to pay the money back, but if it’s a loan program, you do.
What programs are available for first time home buyers in Tennessee?
FHA, Conventional 97, Homeownership for Heroes, HOME Program, and Great Choice Home Loan are a few of the Tennessee first time home buyer programs available.
Are first time home buyer programs worth it?
The short answer is yes. First time home buyer programs in Tennessee are worth it because they can help to make the loan more affordable and achievable, even for families with lower incomes.
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