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• There are homebuyer programs in Memphis to help with the costs of buying a house.
• Mortgage rates are influenced by economic conditions and personal finances.
• With a fixed-rate mortgage, you pay the same amount every month; but with an ARM, the rate and payment amount can fluctuate.
• A higher credit score and larger down payment usually merit better rates.
• Even a small difference in your mortgage rate can add up to thousands of dollars over the life of your loan.
Introduction to Mortgage Interest Rates
The mortgage rates you’ll see in Memphis, Tennessee, are influenced by a variety of factors, including the current economic climate and your own financial profile. This guide is designed to help you understand how these elements come together to determine the mortgage rates you’re offered. Whether you’re a first-time homebuyer or a seasoned homeowner, knowing how to navigate the mortgage rates in Tennessee can lead you to significant savings and a more secure financial future.
First-time homebuyer programs usually consider anyone who hasn’t owned a home in the previous three years to be a “first-timer.” If you think you might qualify as a first-time homebuyer, you could enjoy special benefits such as lower down payment minimums, grants, and closing cost assistance.
Where Mortgage Rates Come From
The mortgage interest rates lenders offer can vary a lot from place to place and even from person to person. The economy has a major influence on rates, which are affected by the bond market, especially the rate of the 10-year U.S. Treasury Note. When interest rates on the note go up, home loan rates usually rise as well.
Mortgage rates are also personalized for individual borrowers, based on their finances and credit history. The rates lenders offer you are influenced especially by your credit score. The higher your score, the lower the rate you’re likely to get. Making a larger down payment may decrease your rate since lenders often assume that a homebuyer who has more equity in their home will be less likely to default on their mortgage.
Finally, your debt-to-income (DTI) ratio is considered when a lender is determining your interest rate. Mortgage lenders typically like to see a DTI ratio of no more than 36%, though that’s not necessarily the maximum.
Discover how your debt level may impact your mortgage.
Try SoFi’s debt-to-income calculator to calculate your DTI number.
Discover how your debt level may impact your mortgage.
Try SoFi’s debt-to-income calculator to calculate your DTI number.
How Interest Rates Affect Home Affordability
The mortgage rate you get has a significant impact on how affordable homes are. To illustrate, a $400,000 loan obtained at a 6.50% interest rate results in a monthly payment of $2,528. However, at the rate of 7.00%, the payment increases to $2,661.
Let’s look at the long-term impact, too. Over the life of the loan, a borrower with the lower interest rate saves nearly $48,000 in interest payments.
As this example suggests, it’s well worth making the effort to do what you can to get a lower rate, including exploring multiple lender options and comparing offers.
Memphis Mortgage Rate Trends
Understanding the history of mortgage rates can give you perspective and help you anticipate where they might be headed. While mortgage rates have gone up since the lows they experienced during the Covid-19 pandemic, they’re still relatively low compared to historical norms.
Historical U.S. Mortgage Rates
Let’s briefly review how mortgage rates have fluctuated over the years. In the 1970s, the yearly average rate for 30-year fixed-rate loans climbed to around 13.00%, reaching a peak in 1981 of 16.63%. But rates have seen dramatic dips, too -– for example, in 2021, the yearly average dropped to 2.96%.
For a visual on how much rates have varied during the past 50 years, see the graphic below.
Historical Mortgage Rates in Memphis, TN
The chart below shows how Tennessee’s mortgage interest rates have compared to the national average during recent decades. (The Federal Housing Finance Agency stopped compiling this city-level data after 2018.)
You can see that historically, Tennessee’s rates have risen and fallen along with national rates, but trend slightly lower.
Year
Tennessee Rate
U.S. Rate
2000
7.99
8.14
2001
6.95
7.03
2002
6.55
6.62
2003
5.80
5.83
2004
5.85
5.95
2005
5.96
6.00
2006
6.58
6.60
2007
6.34
6.44
2008
6.03
6.09
2009
4.95
5.06
2010
4.70
4.84
2011
4.50
4.66
2012
3.63
3.74
2013
3.82
3.92
2014
4.11
4.24
2015
3.83
3.91
2016
3.65
3.72
2017
4.01
4.03
2018
4.56
4.57
Source: Federal House Finance Agency
Should You Wait for Interest Rates to Drop?
If you’re looking to buy a home in Memphis, you might be wondering if it makes sense to wait for interest rates to go down. While it’s always a good idea to keep an eye on the market, current predictions suggest that mortgage rates in Tennessee are likely to stay fairly stable in the near future. According to Fannie Mae estimates, the average mortgage rate will probably be around 6.30% by the end of 2025.
If rates do decrease after you buy your house, you can always opt for a mortgage refinance down the road.
How Costs Stack Up in Memphis
The cost of living in your city can be a significant factor as you plan your finances, since it has an impact both on home prices and how easily you’ll be able to budget for your monthly mortgage payments.
Here’s how Memphis compares to other towns in Tennessee on an index where 100 equals the average cost of living in the U.S.
To help you get your optimal mortgage rates in Memphis, think about making the following smart moves.
• Evaluate your credit score. If it’s too low to qualify for the rates you want, plan out how to work on building a stronger credit history.
• Lower your debt-to-income (DTI) ratio. Focus on paying down your debts.
• Raise the amount of your down payment. Savings and gifts from friends and family can both be used to up the amount.
• Compare rates from different lenders. Shopping around can help you find the best rate, since lenders have varying qualifications.
• Consider going through the mortgage preapproval process. This will give you a better sense of what you can afford.
Tools & Calculators
When you’re looking for a home, it’s a good idea to use a mortgage payment calculator. It can give you a realistic sense of what your monthly payments might look like, and it can also calculate the total amount of interest you’ll end up paying during the life of the loan. These tools take into account a number of important variables, such as the loan amount you’re seeking, the interest rate you’re being offered, and the loan term you select. By plugging in different numbers, you’ll get a clear picture of the financial commitments required by different loans.
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.
Types of Mortgages Available in Memphis
In Memphis, you can find many types of mortgage loans, and one is sure to fit your unique financial profile and needs. Conventional mortgages are within reach if you have a credit score of 620 or higher, but for those who don’t meet that criterion, there are other options. Federal Housing Administration (FHA) loans and Veterans Affairs (VA) loans are also available, offering more flexible terms and often lower down payment requirements.
Fixed-Rate Mortgages
A fixed-rate mortgage is a popular and straightforward option. With these loans, the interest rate you start with stays the same for the life of the loan, so your monthly payments will be consistent and predictable. Fixed-rate mortgages are available in a variety of terms, typically 15 or 30 years. Especially if you’re buying your first home, a fixed-rate mortgage can provide you with a sense of financial stability.
Adjustable-Rate Mortgages (ARMs)
ARMs start off with a lower interest rate than fixed-rate loans, but after a set period, they shift to a rate that can vary with the market. An ARM can be a good idea if you’re planning to sell before the fixed period is up. But keep in mind that eventually you might face higher and less predictable monthly payments.
FHA Loans
With the backing of the Federal Housing Administration, FHA loans are known for eligibility requirements that are more forgiving than those of conventional loans. With a minimum down payment of just 3.5% and a credit score of 580, these loans are accessible to many first-time homebuyers. When considering an FHA loan in Memphis, it’s crucial to compare mortgage rates and understand the long-term implications. Take the time to explore all the facets of this loan, and you’ll be well on your way to making an informed decision.
VA Loans
VA loans are a great option for many people who have served our country. They’re available to eligible active-duty military members, veterans, reservists, National Guard members, and some surviving spouses. One of the primary benefits of VA loans is that they don’t require a down payment, which makes homeownership more accessible for many potential buyers. They also feature lower interest rates, which can save you a significant amount of money over the life of the loan.
Jumbo Loans
In most regions, including Memphis, conventional mortgage loans are capped at $806,500 for a single-family home. But what if you’re eyeing a more luxurious property? That’s where jumbo loans come in. Tailored for high-end real estate, these loans often carry higher interest rates and more stringent qualification criteria, including a robust credit score and a heftier down payment.
Current mortgage rates by state.
Compare current home interest rates by state and find a mortgage rate that suits your financial goals.
Select a state to view current rates:
How to Evaluate Loan Offers in Memphis
Let’s talk about the nitty-gritty of comparing and choosing among mortgage rates.
A competitive rate is your ticket to long-term savings. As we’ve seen, even a half a percentage point can add up to substantial cash in your pocket over the life of the loan. Here are some pointers about making your decision.
• Be sure to compare rates and fees from multiple lenders.
• Look at each loan’s annual percentage rate (APR), which takes into account fees, closing costs, and mortgage points.
• If you’re concerned about rates going up, many lenders will let you pay a fee to lock in your rate for up to 90 days.
Tennessee, the Volunteer State, is a goldmine of resources and programs to aid would-be homeowners, particularly first-time homebuyers and those with limited financial means.
The Tennessee Housing Development Agency (THDA) helms the Great Choice Home Loan Program, which offers 30-year fixed-rate loans and options for down payment assistance. The program works in conjunction with conventional loans and many government-backed loans. And you can qualify as a first-time homebuyer or as a repeat buyer.
If you’re buying a home in Memphis, you can expect to pay between 2% and 5% of your loan amount in closing costs. (The exact amount of these costs can vary based on the home’s value and location.) The average cost of a house in Memphis is about $146,000, so closing costs would probably run between around $2,920 and $7,300.
Closing costs typically include things like loan origination fees, appraisal fees, and title insurance. To help reduce these costs, it’s important to shop around and compare different lenders. By understanding and negotiating these costs, you can potentially make your home-buying process more affordable.
The Takeaway
The mortgage market in Memphis is rich with possibilities, offering something for everyone. By keeping your finger on the pulse of current mortgage rates and exploring various assistance programs, you can make informed decisions that will set you on the path to successful homeownership. Whether you’re a first-time buyer or a seasoned homeowner, the key to a successful purchase is understanding the market and your options.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
I’m wondering if mortgage rates will take a dip in Memphis, Tennessee?
While it’s tricky to pinpoint the exact trajectory of mortgage rates, you can stay ahead by keeping an eye on key economic indicators and market movements. The bond market, inflation rates, and housing demand can all play significant roles in mortgage rate shifts. If you’re in the market for a new home, it’s a good idea to keep yourself informed and consider consulting with a financial advisor. They can help you navigate the complexities and make a decision that’s right for your unique financial situation.
Will mortgage rates ever go back to normal?
Mortgage rates have always fluctuated, and while we may not see the record lows of the Covid-19 pandemic again anytime soon, rates are now at historically moderate levels. Recent predictions from Fannie Mae suggest that at the end of 2025 rates will likely be 6.30% and anticipate that 2026 will end with a rate of 6.20%.
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How do I lock in a mortgage rate?
Once you’ve found a loan with an interest rate you’re happy with, you can ask to have the rate locked. Rate locks guarantee that you’ll get the agreed upon rate for a set time, usually 30 to 60 days. They are sometimes free but often cost between 0.25% and 0.50% of the loan amount.
How do mortgage interest rates operate?
Mortgage interest is basically the fee you pay your lender in order to borrow the money to purchase a property. Your interest rate is usually calculated as a percentage of the total loan, and your mortgage will have a fixed or an adjustable rate. Fixed rates remain constant throughout the loan term, so your monthly payments are always the same. Adjustable-rate mortgages (ARMs) have rates that start at a low fixed percentage, but at the end of a defined period, your rate can change at regular intervals, meaning that your monthly payments may be less predictable.
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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.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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