Buying your first home in Tennessee? It’s exciting—but let’s be real, figuring out home loans for first time buyers can feel a little overwhelming. With so many loan types, credit score rules, and down payment options, it’s hard to know where to start.

Don’t worry—you’re not alone, and we’ve got your back.

This friendly First Time Homebuyer Guide breaks it all down for you, step by step. Whether you’re looking for advice for first time home buyers, want to explore low-rate loans, or just need help making sense of it all, you’re in the right place. Let’s make your homeownership journey in Tennessee simple, affordable, and stress-free. You’ve got this—and we’re here to help every step of the way.

Best Home Loans for First Time Buyers in Tennessee in 2025

These loans often come with low interest rates, smaller down payments, and easier approvals—so you don’t need to have it all figured out (or saved up) to get started.

There’s no one-size-fits-all, so here are a few of the best options worth checking out:

1. THDA Great Choice Home Loan

If you’re just starting your homeownership journey and don’t have a ton of savings, this program might be the perfect fit. It’s designed to make buying your first home easier, more affordable, and way less stressful.

Here’s what makes it a great choice:

• 30-year fixed-rate mortgage – stable monthly payments you can plan for

• Down payment as low as 3% – which is ideal if you're working with a tight budget

• Grants or second mortgages – extra help with closing costs if you need it

• Minimum credit score of 640 – flexible enough for many first-time buyers

• Homebuyer education course – quick, helpful, and totally worth it

• Income limits vary by county – check your eligibility based on where you live

If you're looking for home loans for first time buyers in Tennessee, the THDA Great Choice Home Loan offers solid benefits to help you get the keys to your first home.

2. FHA Loans for First-Time Buyers

Backed by the Federal Housing Administration, FHA loans are one of the most popular home loans for first time buyers. They’re especially great if you’ve got a moderate credit score and not a lot saved up for a down payment. Think of them as a flexible, affordable way to get into your first home without jumping through too many hoops.

Here’s what makes FHA loans a smart option:

• Down payment as low as 3.5% – keep more money in your bank account

• Credit scores starting at 580 – perfect if your score isn’t perfect

• Mortgage insurance is required – but it can be rolled into your loan

• Lower interest rates – often better than conventional loans

FHA loans strike a great balance between affordability and accessibility—making homeownership possible for lots of first-time buyers across Tennessee.

3. USDA Rural Development Loans

These loans are perfect for folks in rural or suburban Tennessee who want to skip the down payment and still get a great deal. With below-market interest rates and income-based rules, USDA loans make owning a home outside the busy urban areas more affordable and achievable.

Here’s what makes USDA loans stand out:

• No down payment needed — that’s 100% financing!

• Interest rates lower than the market average — saving you money every month

• Income limits apply — designed to help those who really need it

• Property must be in USDA-eligible areas — mostly rural and suburban zones

If you’re looking to buy outside the city, USDA loans can help you save big upfront and make homeownership easier.

4. VA Loans for Veterans and Military Families

These loans are designed to lower the financial hurdles for military families, helping you get into your new home without a big upfront cost.

Here’s why VA loans are such a great option:

• No down payment required — keep your savings intact

• No private mortgage insurance (PMI) — saving you extra monthly fees

• Competitive interest rates — so you pay less over time

• Flexible credit requirements — more chances to qualify

VA loans remove a lot of the stress and cost, making homeownership much more affordable for those who serve.

Home Loans for First Time Buyers: Step-by-Step Guide to Homeownership in Tennessee

This first time homebuyer guide breaks down the essential steps to secure the right home loan and navigate the buying process in Tennessee. From assessing your finances to closing on your new home, it’s designed to make your journey clear and manageable.

• Assess Your Finances

Review your income, savings, and credit score to understand what you can afford. Use online mortgage calculators to estimate monthly payments and then set a realistic price range.

• Research Loan Programs

Explore various loan options designed for first-time buyers. Compare interest rates, down payment requirements, and eligibility criteria to find the best fit for your situation.

• Complete Homebuyer Education

Many loan programs require completing a homebuyer education course. This prepares you for homeownership by explaining loans, budgeting, and maintenance.

• Get Pre-Approved

Getting pre-approved from a lender shows sellers you’re a serious buyer. It also provides a clear budget, helping you shop confidently within your price range.

• Find a Real Estate Agent

Choose an agent experienced in working with home loans for first time buyers and Tennessee-specific loan programs. They can guide you through the process and negotiate on your behalf.

• Shop for Homes

Look for homes within your budget and pay attention to neighborhood factors like schools, safety, and commute times. Stay realistic to avoid financial strain.

• Make an Offer

Your agent will help you craft a strong, competitive offer that protects your interests. This step starts the negotiation process with the seller.

• Schedule Home Inspection

A home inspection identifies potential issues before purchase. This helps you avoid unexpected repair costs and ensures the property is in good condition.

• Finalize Your Loan

Submit all required documents to your lender and respond promptly to requests. Once approved, you’ll receive your final loan terms before closing.

• Close on Your Home

Sign the closing documents, pay any closing costs, and officially become a homeowner. After this, you’ll receive your keys and can move into your new home.

Frequently Asked Questions 

1. What credit score do I need for first-time buyer home loans?

Most Tennessee programs require at least 640; however, FHA loans may accept 580. Having a higher score improves your chances of getting better rates and faster approval.

2. Can I qualify for a loan with a low down payment?

Yes, some loans allow down payments as low as 3%. USDA and VA loans may require no down payment at all, making homeownership more accessible for buyers with limited savings.

3. How do I apply for down payment assistance?

Assistance is usually available through state programs like THDA. Your lender or mortgage broker can help you apply and guide you through the documentation needed.

4. Are there income limits for home loans for first time buyers in Tennessee?

Yes, income limits vary by county and program to target those in need. It ensures the programs support buyers who meet certain financial qualifications and truly require assistance.

5. Is homebuyer education required?

Yes, many loans require buyers to complete an education course. This helps first-time buyers understand the mortgage process and how to maintain their home successfully.

Conclusion

Buying your first home in Tennessee doesn’t have to be complicated. With the right knowledge, you can find home loans for first-time buyers that offer competitive Rates and easy approvals. Prepare your finances, understand your loan options, and follow this homebuyer guide for a smooth experience. Ready to start? Reach out to a trusted mortgage professional who can guide you every step of the way and help make your homeownership dream a reality.

Start your home buying journey confidently. Reach out to Heathrow Mortgage today for trusted advice and the best home loans for first time buyers in Tennessee.