2025 Guide: How to Buy a House in Tennessee

Are you considering buying a house in Tennessee in 2025? The state’s real estate market is showing signs of stabilization and offering potential opportunities for homebuyers. While mortgage rates have remained relatively high, the increase in housing inventory and moderate price growth may provide favorable conditions for buyers.

In this guide, we’ll walk you through the process of purchasing a home in the Volunteer State, helping you navigate the current market landscape.

Step One: Choose from the Best Cities in Tennessee

Tennessee has much to offer for those relocating here: the urban lifestyle found in major cities like Nashville and Memphis, as well as the more tranquil escapes found among the state’s rolling hills and forested beauty.

If your move is based around your career, you might have already narrowed down your location based on your expected commute. If you’re not limited by your job, you might consider relocating to one of the following areas, depending on whether you’re looking for urban convenience or rural charm:

Nashville

Come for the music, stay for the scenery. Nashville is the most populous city in Tennessee, offering a little something for everyone.

Living within the metro area might be your best bet for finding a job, but you might also be surprised to find affordable housing in one of the city’s many suburbs and residential neighborhoods.

For example, Smyrna, lies between Nashville and Murfreesboro. It’s a great place to start your search, with prices that tend to be a little more affordable at a median house price of $393,889 as of 2025.

Townsend

Those who prefer a small-town vibe might consider Townsend. Counted among the three “gateways” to the Smoky Mountains, it offers a picturesque and peaceful setting for those who are looking for a close-knit community and plenty of opportunities for outdoor adventure.

Townsend is only 45 minutes from Knoxville, which means you can enjoy this smaller community without sacrificing access to a major urban center.

Kingsport

Kingsport is only 5 miles south of the Virginia border, where it is part of Tennessee’s growing Sullivan County. You’ll find plenty of outdoor activities, thanks to easy access to national and state parks, along with stunning lakes.

What earns Kingsport a place on our list is the relatively low cost of living, which is helping to attract a growing number of residents to this Tennessee city.

Step Two: Determine Your Housing Needs

Once you narrow down your prospective destination, you’ll want to think about what you’re looking for in a house. Critical questions about the house and its location include:

• How many bedrooms do I need?
• How large of a yard do I want?
• What is the neighborhood like?
• How far is the house from my job?
• Are there good schools in the area?
• Can I buy a fixer-upper and make my own improvements?
• What sort of amenities are nearby?

With these basic considerations in mind, you can venture on to step three.

Step Three: Assess Your Finances

Next, you’ll want to assess your finances. You’ll want to and have answers to these basic questions:

• How much can I put toward a down payment?
• What is my current credit score?
• How much debt do I have?
• How much can I reasonably afford to pay for a mortgage each month?

Your mortgage lender will ask these same questions when they’re evaluating your eligibility for a loan, so it’s wise to be prepared before you even begin this process.

Keep in mind that even if you’re not in the greatest financial shape, it’s not necessarily a deal breaker. Speaking with a mortgage company and understanding your options will tell you everything you need to know about how to buy a house in Tennessee.

Step Four: Consider Your Financing Options

Tennessee homebuyers have several financing options to choose from. While a conventional mortgage is usually your best choice, you might also consider one of the government-backed loan options if your credit score is on the lower side. These programs can also be helpful if you’re struggling to come up with a 20% down payment.

Conventional Mortgages

Conventional mortgages are a popular choice for Tennessee homebuyers who meet certain financial criteria. These loans are not backed by a government agency, like the FHA or VA, which means lenders set stricter qualification standards. They often carry no private mortgage insurance depending on your equity.

To qualify for a conventional mortgage, most lenders will expect:

• A credit score of at least 620
• A debt-to-income (DTI) ratio below ~50%
• A down payment of at least 3% (though 5% to 20% is more common)
• Steady income and employment history

One of the most accessible types of conventional loans is the HomeReady mortgage, backed by Fannie Mae. It’s designed for low-to-moderate income borrowers and only requires a 3% down payment. HomeReady also offers more flexible underwriting and allows income from household members not on the mortgage to help you qualify. This makes it especially helpful for multigenerational households or those with non-traditional income sources.

In Tennessee, a conventional loan can be a smart route to homeownership, especially if you have decent credit and want to avoid paying mortgage insurance over the long term. And if you’re able to put down 20% or more, you can skip private mortgage insurance (PMI) altogether.

Loans for First-Time Homebuyers

Is this your first house? If so, you’re likely wondering how to buy a house in Tennessee if you have limited savings or a less-than-stellar credit history.  The U.S. government offers different loan programs that can put your dream home within reach.

If your credit score is 500 or above, you may be eligible for a Federal Housing Administration (FHA) loan. With an FHA loan, you can make a down payment of only 10%. If your credit score is 580 or better, you’re only required to make a 3.5% down payment.

However, with a down payment of less than 20%, you’ll have to purchase FHA mortgage insurance. This expense can be rolled into your monthly payments.

Is your new home located in a suburban or rural area? If so, you might look into a United States Department of Agriculture (USDA) loan. USDA loans are reserved for homes located in specific areas, but if you qualify, you can purchase a home with no down payment.

Have you or your spouse ever served in the military? If so, you may be eligible for a Veterans Benefits Administration (VA) loan. VA loans don’t require any down payment, nor will you find yourself paying mortgage insurance. This is a great option for former or active military members and their families.

The flip side to all of these loan programs is that they generally exclude fixer-upper homes. If you’re looking into a home that needs a lot of upgrades or improvements, the current owner may have to make repairs before you could qualify for one of these programs. Keep this in mind during your home search.

Step Five: Get a Realtor in Tennessee

Once you’re ready to start the search for your home, you’ll want to connect with a real estate agent. A licensed Realtor can help you navigate the confusing process of negotiating an offer and juggling all of the administrative details that go into buying a home. Plus, it’s always good to have an advocate on your side who will make your needs a priority.

Your Realtor will help you find homes that fit your needs and budget, while teaching you the basics of how to buy a home. While you can conduct some of the search beforehand, Realtors often have more knowledge of the local housing market than what you can find online on your own.

Step Six: Find a House in Tennessee

Now that your financial ducks are in a row, it’s time to go shopping. Finding a house in Tennessee is more focused once you’ve narrowed down your needs, price range and geographic area. Most homebuyers spend time using online search tools to find houses that meet their budgets. These online tools often allow you to view photographs of the home’s interior to give you a better idea of what to expect inside.

Of course, you don’t have to rely solely on your laptop or smartphone to do your searching. If it’s geographically possible, take a quick drive around some of your prospective neighborhoods. Even if you don’t spot any “For Sale” signs, you’ll be better able to match an online listing with its real-world setting.

Your Realtor can also be your greatest resource during this process. While every home is different, their years of experience can provide insight into property values and housing trends in the local area. They also may be able to give you practical advice on how to find the best prices.

A Realtor will be your initial tour guide while you find a house that fits your needs and budget. They’ll also be your advocate throughout the entire homebuying process, walking you through inspections, appraisals and more until you get to the closing table.

Step Seven: Make an Offer

Before long, you’ll likely find a house that you love. Your Realtor will help you put together an offer and present it to the seller’s real estate agent. The seller can accept your offer, counter it, or reject it.

This means that the actual purchasing process can have some back-and-forth before the sale is complete. In some cases, the seller might be unwilling to budge on their sale price. If you can’t come to an agreement, you may need to walk away and pursue other properties.

For this reason, it’s best not to get too attached to any single house, at least not before the sale is closed. Otherwise, the negotiating process can be frustrating and even demoralizing. Keep your options open and be prepared to make offers on multiple properties before your dream home becomes a reality.

Step Seven: Close the Sale

Eventually, you’ll hear the magic words that the seller has accepted your offer. Keep in mind, there are still some administrative fees that go into the sale process independent of the mortgage or down payment.

These “closing costs” are typically between 2% and 5% of the home’s total value. They include costs such as:

• Real estate commissions and fees
• Taxes
• Filings
• Insurance payments
• Mortgage fees

If you’re lucky, your seller might agree to cover these costs as part of your purchase agreement. Otherwise, you’ll be responsible to pay them at the time of your sale.

With the final paperwork signed, it’s time to celebrate buying your new home!

Ready to Buy a House in Tennessee?

At Agave Home Loans, we want your next move to be as stress-free as possible. When you’re ready to purchase a new home in Tennessee, reach out to our team to learn more about your options for financing.