Prepare for your home-buying journey and secure your dream property
with these streamlined, step-by-step first-time home buyer guides.
With its scenery, rich cultural scene, and vibrant cities such as Knoxville and Memphis, Tennessee can be a great place to buy your first home. It’s affordable too. As of mid-2026, the median list price for a home in Tennessee is $383,637, which is lower than in many other states. In this guide, you’ll learn about the steps involved in buying a home for the first time in the Volunteer State and how to take advantage of first-time homebuyer benefits.
What is a first-time homebuyer? You might be considered one without realizing it. According to the U.S. Department of Housing and Urban Development, you qualify as a first-time homebuyer if you haven’t owned a principal residence in the three years before the closing date of your new home purchase. This means you can be a repeat homebuyer and still get special benefits if you have rented for the last three years or lived with family while you saved up.
Other groups also qualify for first-timer status. You’re a first-time homebuyer if you’ve only owned a home with a former spouse or only owned a principal residence that wasn’t affixed to a permanent foundation, such as certain manufactured homes.
First-time homebuyer advantages in Tennessee can give you significant help in overcoming common affordability barriers. The Tennessee Housing Development Agency (THDA) helps eligible residents achieve homeownership through down payment assistance programs, such as Great Choice Plus. So you don’t need a large savings account to purchase a home.
Ask your loan officer about this option and for any other first-time homebuyer tips when you begin the application process. They know which Tennessee first-time homebuyer assistance programs the lender can accept for your transaction. Eligibility for these programs often depends on your household income, your credit standing, and the geographic location of the property you choose.
Recommended: Tennessee First-Time Home-Buying Assistance Programs
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Buying your first home requires a clear financial strategy to avoid expensive mistakes and protect your hard-earned savings. This guide shows you how to buy a house for the first time with 11 essential steps.
Examine your personal finances before you start looking at houses. Your budget should be able to cover the down payment, monthly mortgage payments, property tax, homeowners insurance, and ongoing maintenance.
You’ll want to check your credit history and current debt load as well, as they can affect what financing options are available to you. Having good credit helps you qualify for a loan with better terms. Lenders also look at your debt-to-income ratio, which should be no more than 50% for a government loan and usually less than 43% for a conventional home loan.
Also consider your long-term plans. Staying in your new home for several years will allow your home equity to increase.
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When making your budget, you’ll need to account for both upfront expenses, such as the down payment and closing costs, and regular ongoing bills.
Homebuyers often aim for a 20% down payment to avoid paying private mortgage insurance (PMI). However, the minimum down payment for a conventional mortgage can be as low as 3%. With a down payment calculator, you can estimate how much you’ll need to save.
Additional one-time costs to include in your budget are moving expenses, potential home repairs, new furniture, and household appliances. Using a home affordability calculator can help you come up with a general estimate.
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What type of mortgage loan you need often depends on your financial situation.
Shopping around for a mortgage lender by obtaining quotes from multiple companies could save you money. Lenders can vary significantly in their closing costs and processing speeds.
As you compare offers, it’s important to understand the difference between the interest rate and the APR (annual percentage rate). The APR includes the interest rate plus other borrowing costs such as lender fees and discount points. It makes for a better apples-to-apples comparison as you shop for deals.
Prequalification is an informal step that gives you a rough estimate of your borrowing power based on unverified financial data. You can get prequalified multiple times with different lenders as you’re shopping for a mortgage loan, and it won’t have any affect on your credit score.
The mortgage preapproval process is a formal step where a lender thoroughly verifies your credit history, income, assets, and debts. To secure preapproval, you’ll need to gather financial documents including bank statements, federal tax returns, and recent pay stubs. Lenders will perform a hard credit check to evaluate your financial stability.
A preapproval letter gives you an advantage when making an offer on a home. Usually valid for 30-90 days, it shows sellers you’re a serious buyer with verified financing.
Working with a real estate agent can save you time and make the home-buying experience go more smoothly. An agent tailors your home search so you spend less time looking at properties that don’t meet your financial criteria.
They also have access to new listings that aren’t yet on the public market and can preview homes for you. Beyond the home search, you’ll appreciate their expertise in negotiating contracts, writing offer letters, and dealing with administrative paperwork.
Before finding an agent, you may want to read up on how real estate commission fees are changing so that you have a good understanding of what working with one can cost.
After securing your preapproval letter and choosing an experienced buyer’s agent, it’s time to start researching neighborhoods, school districts, and daily commute times. The Best Affordable Places in the U.S. series can point you to up-and-coming areas.
Consider categorizing homes by priority level (low, medium, high) to keep your house hunting organized and efficient. You’ll also want to take notes and photographs during showings to compare properties later. During your visits, be mindful of structural components such as the roof, foundation, and layout rather than easily changeable cosmetic details.
It’s also important to understand your legal rights as a homebuyer. Federal laws prohibit housing discrimination based on race, religion, sex, or national origin. If you experience any unfair treatment during your property search process, be sure to document it.
Once you find a house you love, your real estate agent will help you draft a formal offer letter outlining your proposed purchase price, closing timeline, and necessary contract contingencies. Contingencies are conditions that must be met for the contract to become final, such as passing a home inspection. If the seller accepts your offer letter, you’ll proceed to the contract stage.
You’ll then submit an earnest money deposit, which is an out-of-pocket expense that demonstrates your good faith to the seller. It will be held in an escrow account until closing.
After your offer letter is accepted, you want to get a home inspection, which typically costs $300-500. The inspector will complete a thorough evaluation of the property structure, mechanical systems, plumbing, and electrical components.
Consider taking the time to attend the inspection yourself, as this will allow you to ask questions about the home’s condition. If the report reveals major structural issues, you may be able to negotiate repairs with the seller or withdraw your offer without penalty.
While a home inspection protects the buyer from unpleasant surprises, the home appraisal protects the lender. More on that in the next step.
Mortgage lenders require a property appraisal to establish the official market value and ensure they aren’t loaning more than that amount. If the appraised value comes in lower than your offer price, you may need to renegotiate the sale price with the seller.
An appraisal involves a professional visiting the property to evaluate its size, condition, and comparable local sales. Your mortgage company will provide the appraiser, who is selected randomly to ensure objectivity, but the homebuyer pays the cost of the appraisal, usually $300-$600.
Closing is the final step where ownership of the property officially transfers to you. Your lender will provide a closing disclosure document at least three business days before this meeting for your review. Arrange a final walk-through of the property to make sure it’s in acceptable condition.
You’ll usually need to provide proof of homeowners insurance before closing. Be sure to check for Tennessee-specific environmental hazards, such as floods, that may require additional insurance coverage.
During the closing meeting, you’ll sign your mortgage paperwork and pay your remaining closing costs. The title company will then record the deed and hand you the keys. Congratulations!
An online calculator can be a big help in comparing home equity loan rates and terms. And it’s not the only calculator you’ll find helpful during your home equity loan process:
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
You’re now a new homeowner in Tennessee! A first-time homebuyer checklist can keep you organized:
Buying your first property in Tennessee is achievable when you follow these first-time homeowner tips and advice. While the transition from renting to owning includes many steps, having a structured budget, utilizing state assistance programs, and working with an experienced local real estate agent can protect your savings and ensure you find a home you love.
To buy a house for the first time, you need enough savings to cover your down payment and closing costs. Closing costs are typically 2%-5% of your total loan amount. Be sure your budget can also cover monthly mortgage payments, property taxes, home insurance, and any homeowners association dues.
The credit score you need as a first-time homebuyer depends on the type of loan you choose. Conventional loans typically require a credit score of at least 620, while FHA loans accept a score of 580 with a 3.5% down payment or a score of 500-579 with a 10% down payment. VA and USDA loans don’t have a strict minimum score.
When buying a house for the first time, it’s important to realize that the listing price is just the beginning of your expenses. Be sure to factor in closing costs, property tax, homeowners insurance, and ongoing maintenance.
The 30/30/3 rule is a real estate guideline that suggests spending no more than 30% of gross income on housing payments, including your mortgage, property tax, homeowners insurance, and any homeowners association dues. The guidelines also recommends having 30% of the home’s value saved in cash for your down payment, closing costs, and as an emergency buffer. Finally, choose a home priced less than three times your annual gross income.
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
This article is not intended to be legal advice. Please consult an attorney for advice.Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
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