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• Mortgage rates in Nashville are influenced by economic factors and a borrower’s financial profile.
• Check your credit score before you apply for a mortgage.
• Consider a larger down payment to secure a lower interest rate.
• Compare rates and terms on fixed-rate and adjustable-rate mortgages.
• Explore first-time homebuyer assistance programs in Tennessee for help with the down payment and closing costs.
Introduction to Mortgage Interest Rates
Welcome to our comprehensive guide to mortgage rates in Nashville, Tennessee. This article is designed to help you thoroughly grasp how mortgage rates are determined in the region, and equip you with strategies on how to secure the lowest possible rate for your circumstances. Particularly if you are buying your first home, it’s important to understand how rates are set and how to make a well-informed decision about your home loan.
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
Mortgage rates are influenced by a variety of economic factors. The bond market, and particularly rates on the 10-year U.S. Treasury Note, have historically served as a strong predictor of where rates may be headed. The housing market’s overall performance and inflation levels also play crucial roles in determining rates.
These factors are outside of your control, but there are things you can do to influence your own personal mortgage rate. Lenders will look at the following:
• Credit score The higher the score, the lower the rate you’ll likely obtain. Most conventional lenders will look for a score of 620 or better.
• Down payment Making a larger down payment can result in a lower interest rate because lenders perceive a lower default risk.
• Debt-to-income (DTI) ratio In general, mortgage lenders like to see a DTI ratio of no more than 36%, though that is 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
Why take the time to study mortgage rates in such detail? They are a big deal when it comes to the overall cost of your home. Let’s say you’re looking at a $400,000 loan. At a 6.50% interest rate, you’d be shelling out $2,528 each month. But if that rate creeps up to 7.00%, your payment jumps to $2,661. Over 30 years, that’s a nearly $48,000 difference in interest alone. That’s a hefty chunk of change. And that’s why it’s so important to snag the best mortgage rate possible in Nashville.
Nashville Mortgage Rate Trends
Historical U.S. Mortgage Rates
When you view the current mortgage rates in Tennessee through the lens of history, they’re actually quite competitive. While rates have risen in recent years, moving away from record lows seen in 2021, they are still below historical highs observed over the last half-century (as shown in the graphic).
The table shows how average mortgage rates in Tennessee tend to compare to those for the U.S. as a whole. The cost of living in Tennessee is generally below the national average, and the same is true of mortgage rates. (The Federal Housing Finance Agency stopped tracking state averages after 2018.)
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
Types of Mortgages Available in Nashville, Tennessee
Nashville offers all the usual types of mortgage loans when you’re ready to make that dream home a reality. Take some time to understand the differences, and to consider government-backed loans, which come with more flexible terms and benefits. Here are the most common types you’ll see.
Fixed-Rate Mortgage
A fixed-rate mortgage is a great option for those who want to know exactly what their monthly payment will be, and exactly how much they’ll pay over the life of the loan. With a fixed-rate mortgage, your interest rate will stay the same throughout the entire term, which could be 10, 15, 20, 30, or 40 years. The 30-year term is the most popular option, but you may want to consider a shorter term if you can afford a higher monthly payment in exchange for a lower interest rate and less interest paid over time.
Adjustable-Rate Mortgage (ARM)
Adjustable-rate mortgages (ARMs) often offer lower initial rates compared to fixed-rate loans. But after an introductory period, the rate can adjust according to market conditions — so it could go up or down. If you’re thinking of selling before the introductory period ends, an ARM could be a particularly good fit. Just remember the possibility of rate adjustments and think through how they might affect your monthly payments before signing on.
FHA Loan
With Federal Housing Administration backing, FHA loans are known for their more forgiving eligibility criteria compared to conventional loans. They require a minimum down payment of just 3.5% for borrowers with a credit score of 580, making homeownership more accessible to many. Even those with a credit score of 500-579 could qualify for this loan type with a 10% down payment. The more flexible underwriting guidelines can be a lifeline for first-time buyers.
VA Loan
VA loans are a great option for eligible active-duty military members, veterans, reservists, National Guard members, and surviving spouses. One of the biggest benefits of VA loans is that they typically don’t require a down payment, making homeownership more accessible to more people. VA loans also often have lower interest rates than conventional loans.
Jumbo Loan
In most parts of the U.S., a conventional mortgage loan tops out at $806,500 for a single-family home. In the Nashville area, that loan limit is extended to $989,000. If your Nashville home purchase requires you to borrow more than $989,000, you’ll need a jumbo loan. They often come with interest rates that are slightly higher and qualification criteria that are a bit more stringent, including the need for a higher credit score and a larger down payment. But for those looking to buy a higher-priced home in Nashville, jumbo loans are the answer.
Compare current home interest rates by state and find a mortgage rate that suits your financial goals.
Select a state to view current rates:
Should You Wait for Interest Rates to Drop?
Many homebuyers in Nashville find themselves wondering whether they should delay their home purchase until interest rates drop. However, current predictions suggest that these rates will likely remain relatively stable in the near future. According to Fannie Mae’s forecasts, the average mortgage rates in Tennessee are expected to end the year 2025 at around 6.30%. Given this landscape, whether or not to purchase may depend more on your personal budget and housing needs than on rates. The good news is that homeowners always have the option of a mortgage refinance if rates decline in the future.
When thinking about what your monthly mortgage payment will be in Nashville, it’s also important to take the city’s overall cost of living into account. Good news: Tennessee as a whole is more affordable than the U.S. average. Even higher-cost Nashville comes in below the country’s norm. That said, home prices are high. The median sale price tops $470,000 and has risen in the last year.
In the Nashville area, a living wage for a single adult without children is $53,090 according to the Massachusetts Institute of Technology’s Living Wage Calculator. Two working adults with two kids will need an income of $91,559 before taxes. Here’s how Nashville compares to other Tennessee cities on a cost-of-living index where 100 equals the average cost of living in the U.S.
Tennessee City
Cost of Living
Chattanooga
88.6
Cookeville
90.3
Jackson-Madison County
88.1
Knoxville
86.4
Maury County
95.6
Memphis
89.8
Morristown
86.2
Nashville-Murfreesboro
98.7
Get Your Best Possible Rate in Nashville
To secure the best mortgage rates in Nashville, it’s important to focus on improving your credit score. First step? Check your credit report for errors, and request corrections for any you find. And of course, focus on paying every single bill on time. To the extent possible, you’ll also want to reduce your overall debt. Aim for a DTI ratio below 36% to show financial responsibility. A larger down payment can also substantially reduce your rate, so examine your budget to see what you can afford. Consider going through the mortgage preapproval process. A lender will thoroughly scrutinize your financial stats. Having a preapproval letter will tell you exactly how much you might be able to borrow. (Showing the letter to a seller in a competitive housing market might also improve your chances of landing the property.)
Helpful Tools & Calculators
A mortgage calculator can be a great resource to help you estimate your monthly payments and total costs when it comes to buying a home. You can put in different rates and terms to understand how changing one or both might affect your costs. All three of these calculators will be useful as your home search plays out.
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.
How to Evaluate Loan Offers in Nashville
Once you have loan offers from multiple lenders in hand, you’ll want to look at them closely to determine which one is most advantageous for you. Don’t just compare interest rates. Take into account the annual percentage rate (APR) on each loan, which encompasses fees, closing costs, and discount points. If you’re concerned about potential rate hikes, some lenders offer the option to lock in your rate for up to 90 days for a fee. Congratulations — you’re in the homestretch. By diligently shopping around for the best mortgage rates in Nashville, you’re taking a proactive step toward financial well-being.
Nashville Mortgage Resources
Tennessee, the Volunteer State, offers resources and programs to help those who are first-time buyers or who have limited financial means to purchase a home. The Tennessee Housing Development Agency (THDA) is a go-to for first-time buyers. Its Great Choice Home Loan Program offers 30-year fixed-rate loans and down payment assistance for FHA or USDA (United States Department of Agriculture) loans. Repeat buyers can get down payment assistance through THDA as well. If you’re a hero in our community — active military, a veteran, or a first responder — THDA’s Homeownership for Heroes program has a 30-year loan with a reduced interest rate.
Closing Costs in Nashville
If you’re buying a home in Nashville, you can expect to pay between 2% and 5% of the loan value in closing costs. Several factors influence the amount of closing costs in Nashville, Tennessee, including the property’s value and its location. These costs typically include loan origination fees, property appraisal fees, title insurance premiums, and attorney fees for legal services. To help manage these costs, some buyers may be able to negotiate with the seller to cover some of the costs. Understanding the detailed breakdown of all closing costs and carefully comparing offers from different lenders can help you find the best deal.
The Takeaway
Nashville’s mortgage landscape offers plenty of options for area homebuyers. By staying informed about current mortgage rates in Nashville and researching available assistance programs, you can make strategic decisions that align with your financial goals and help you achieve successful homeownership in Music City.
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.
Pinning down the exact future of mortgage rates in Nashville is like trying to predict the weather. Keeping an eye on economic trends and market conditions is the best way to know what will happen to mortgage rates in Nashville. If the 10-year Treasury Bond rate is falling, mortgage interest rates may fall as well. However, the forecast for interest rates through 2025 is one of relative stability, with the national average rate ending the year at 6.30%.
Will Nashville home prices ever drop?
A steady influx of people moving to Nashville means that housing prices will likely continue to increase in the near term, albeit more moderately than in the recent past. New developments on the horizon will help mitigate this increase somewhat, according to local experts.
Is it the right time to buy a home in Nashville?
The decision to purchase a home in Nashville is a multi-faceted one, with mortgage rates being just one piece of the puzzle. Rates have eased up a bit, even if home prices have not. If you are financially ready to purchase property and you find a competitive interest rate, it could be a good time to enter the market and buy a home. However, it’s important to carefully consider your overall financial goals and the current economic climate as a whole before making such a big decision.
How do mortgage interest rates operate?
Mortgage interest is the fee you pay to borrow money to purchase property, typically calculated as a percentage of your total loan. Mortgage rates can be fixed or variable. Fixed mortgage interest rates don’t change over the life of the loan, so you’ll know exactly how much you’ll pay each month. Variable rates can change over time, which can affect the amount of interest you’ll pay. The rate you receive is based on your credit score, down payment, and employment history, as well as current economic conditions.
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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.
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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.
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.
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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