FHA loans in Tennessee

FHA loans are government-backed mortgages with flexible credit and down payment requirements. Below, you’ll find the 2026 FHA loan limits for every Tennessee county, how the limits work, the qualifications for an FHA loan in Tennessee, and down payment assistance.

What are FHA loans?

FHA loans are government-backed mortgages for borrowers that offer low down payments, low closing costs, and easy credit qualification. FHA loans in Tennessee are insured by the Federal Housing Administration, which means the agency reimburses lenders if the borrower defaults. This backing helps lenders offer FHA loans to borrowers who may not qualify for a conventional loan.

How do FHA loans work?

FHA loans have specific rules that help make them more accessible than many conventional options. FHA loan requirements include steady income, a minimum credit score, a minimum down payment, property requirements, and a maximum loan amount that varies by county. FHA loan rates are competitive and often lower than for other loan types.

FHA loan limits are set each year by the Department of Housing and Urban Development, and vary by county within each state, including Tennessee.

Tennessee FHA loans can be used to buy various property unit types from single-family homes to multifamily properties with up to 4 units, including houses, condominiums, townhouses, and mobile or manufactured homes.

Properties must meet FHA guidelines, and borrowers must pay an up-front and an annual mortgage insurance premium (MIP). This insurance protects the lender if the borrower defaults and is part of what allows lenders to approve buyers with lower credit scores or smaller down payments.

Anyone who meets the requirements and agrees to live in the home they're buying as their primary residence can qualify.

What are the 2026 FHA loan limits in Tennessee?

FHA loan limits change every year, and Tennessee's limits vary by county based on local housing prices. Areas with higher home values qualify for higher limits, while lower-cost counties stay closer to the national floor.

The limits are based on median home prices in each county, up to 150% of the national conforming loan limit. Exceptions are made for homes in Alaska, Hawaii, Guam, and the U.S. Virgin Islands due to the higher construction costs.

For 2026, the FHA loan limits for a one-unit home range from $541,287 in low-cost areas to $1,249,125 in high-cost counties.

Here are the FHA loan limits by county in Tennessee for buying 1- to 4-unit homes. Use the HUD lookup tool to confirm your county’s current limit, then speak with a loan officer to see what you can qualify for.

FHA loan requirements

Requirements for FHA loans can vary by lender and by program, so the guidelines below reflect what you can generally expect through Rocket Mortgage. It’s always best to check with your lender to confirm the exact qualifications for your situation.

The chart below outlines what you’ll usually need to qualify for an FHA mortgage in Tennessee, including the minimum down payment, credit score, debt-to-income ratio, income, appraisal, and inspection, and more.

FHA loan down payment assistance programs in Tennessee

If you’re struggling to come up with the down payment for your FHA loan in Tennessee, you can look into down payment assistance programs that can help cover your costs. Programs like these often help cover down payments or closing costs, either as a grant, a forgivable loan, or a loan you must repay.

Here are some of the down payment assistance programs available to Tennessee homeowners:

Tennessee Housing Development Agency

The Tennessee Housing Development Agency has two different assistance options. The deferred option offers up to $6,000 in a forgivable, zero-interest loan. The amortizing option provides up to $15,000 at the same interest rate as your original loan.

The first step to qualify for a loan is to complete a THDA Homebuyer Education Course.

The Housing Fund Down Payment Assistance

The Housing Fund offers up to $35,000 of assistance for down payments, prepaids, and closing costs. There are income limits and a minimum credit score. It's a grant, which means you don't have to repay it. You have to contribute at least 1% of the sales price toward the purchase.

To qualify, you must be buying a primary residence that’s FHA-approved in Tennessee. You must complete a home buyer education course provided by a THDA-certified counselor before you close.

You can download your application from the Housing Fund’s website.

City of Memphis Down Payment Assistance Program

The City of Memphis offers down payment assistance for properties within the city to borrowers with income at or below 80% of the area median income, with sale prices up to $300,000. The maximum amount of assistance available is 10% of the sale price or $25,000, whichever is lower.

To qualify for the assistance program, you have to complete HUD-certified housing counseling and contribute at least 1% of the home’s sale price.

Clarksville Neighborhood and Community Services’ Down Payment Assistance

The City of Clarksville offers up to $25,000 in down payment assistance to low-income, first-time home buyers to help cover down payments and closing costs.

To apply, download an application from the city's website.

Pros and cons of buying a home in Tennessee with an FHA loan

Before you apply for an FHA loan in Tennessee, make sure to consider the pros and cons.

Pros

• Low credit requirements: You can qualify for an FHA loan with a credit score as low as 500, which is much lower than what’s required for conventional loans.
• Low down payment for many borrowers: If you have a credit score of 580, you could get an FHA loan with just 3.5% down.
• Competitive interest rates: Despite being for borrowers with lower credit scores, FHA loans still offer competitive interest rates.
• No income limits: Unlike some loan programs designed for borrowers with low credit scores, FHA loans don’t have income limits, meaning even higher earners can qualify.
• Flexible DTI requirements: FHA loans offer flexible DTI requirements, especially if you have compensating factors, such as cash reserves, additional income, or other strengths.

Cons

• Requires up-front and annual MIP: All FHA loans require a UFMIP and an annual MIP. Depending on your down payment amount, your annual MIP may last either 11 years or the entirety of the loan.
• Lower loan limits: FHA loans have lower limits in low-cost areas than conventional loans, meaning you can't afford as expensive a home.
• Strict property requirements: FHA loans must meet stringent property requirements to ensure their safety, soundness, and security.
• Only for primary residences: You can only use an FHA loan for a home you plan to live in. You can use it for multifamily properties where you plan to rent out one or more units, but only if you’ll also be living in one.

FAQ

If you’re preparing to buy a home in Tennessee, these frequently asked questions can help you decide if an FHA loan is right for you.

What if I need more than the FHA loan limit?

If you want to buy a home that’s more than the FHA loan limit, you’ll have to make a larger down payment to ensure your loan amount is under the limit. You can also explore other loan programs, such as conventional loans or VA loans, if you qualify.

How much down payment is required for an FHA loan?

The amount you'll need for your FHA loan down payment depends on your credit score. If your credit score is 580 or higher, you can put down as little as 3.5%. If your credit score is between 500 and 580, you'll need to put 10% down.

Is it hard to get approved for an FHA loan?

FHA loans are generally easier to qualify for than conventional loans, but they have additional requirements, such as up-front and annual MIP and strict property requirements.

What will disqualify you from getting an FHA loan?

You could be disqualified from getting an FHA loan if your credit score is too low, your DTI is too high, or the property doesn’t meet the minimum property standards.

The bottom line: Using an FHA loan to buy a home in Tennessee

An FHA loan can provide an excellent opportunity to buy a home in Tennessee when you otherwise wouldn’t qualify for a mortgage. But they have some special considerations, including their loan limits, property standards, and mortgage insurance.

If you think an FHA loan is right for you, apply with Rocket Mortgage today to start the home buying process.

¹To qualify for this offer, you must meet all standard FHA eligibility requirements. In addition, your total mortgage payment, including taxes and insurance, cannot exceed 38% of your income, your debt-to-income (DTI) ratio cannot exceed 45%, and you must have 12 months of verifiable housing history immediately prior to your application, no late payments 30 days or greater in the last 12-months, and no derogatory marks on your credit report. Not available on jumbo loans. Asset statements may be needed, no more than 1 day of non-sufficient fund fees are allowed in the most recent 2 months prior to application. Additional restrictions/conditions may apply.

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