How to Buy a Home in Tennessee in 2025

In 2025, Tennessee’s housing market presents a unique opportunity for home buyers. The average home sold with a price drop has increased by 27.6% creating a more balanced market.

This guide provides a detailed plan for buying a home in Tennessee, navigating its challenges while leveraging its benefits.

Current Tennessee Housing Market Overview (2025)

The Tennessee housing market takes a shift in 2025. Buyers have more leverage with a 58-day median market time and 18.04 % inventory growth. The median home sale price has reached $392,300, with a decreased average of homes sold above the listed price by 11.09%.

How to Buy a Home in Tennessee: 7 Steps

Step 1: Figure Out Your Finances

Before searching for homes for sale in Tennessee, set a clear budget. The state’s cost of living requires careful financial planning beyond typical home-buying expenses.

Tennessee’s effective property tax rate is 0.64%, which is below the national average. Homeowners insurance is not state-mandated, but it will be required by lenders. Flood insurance is extra if you’re in a flood zone, and sinkhole coverage is offered in many areas.

Get Your Down Payment Ready

In Tennessee, FHA loans typically require a minimum credit score of 580, while conventional loans usually need at least 620 or higher. Down payment requirements vary, ranging from as little as 3% to as much as 20%, depending on the loan type and buyer qualifications.

Take advantage of Tennessee’s first-time homebuyer programs, such as:

• Great Choice Home Loan (THDA): Affordable financing option for first-time buyers.
• Great Choice Plus: Provides down payment assistance.
• Homeownership for Heroes: Special support for military members and frontline workers.

Get Pre-Approved for a Mortgage

Current average mortgage rates in Tennessee are about 6.25% for a 30-year fixed loan and 5.50% for a 15-year fixed loan. To get pre-approved, buyers should prepare key financial documents, including pay stubs, tax returns, and bank statements, for lender review.

Step 2: Find Your Dream Home in Tennessee

With a set budget, you can find your dream home faster. Houzeo, Tennessee’s best home buying website, allows you to browse through the latest listings with smart filters for price, ZIP code, schools, etc.

Whether you are looking for homes for sale in Memphis, Nashville, or Knoxville, the best place to buy in Tennessee depends on your priorities:

• Memphis: more affordable housing options.
• Nashville: higher prices with strong growth.
• Knoxville: higher prices with strong growth.
• Chattanooga: mid-tier prices balancing cost and opportunity.

Step 3: Make an Offer That Wins

Tennessee’s housing inventory is tight, so buyers need competitive offers. Earnest money typically ranges from 1% to 3% of the purchase price. It’s smart to include financing and inspection contingencies to protect your deposit.

Basing your offer on current market data helps you stay realistic and avoid losing out in bidding wars.

Step 4: The Crucial Due Diligence Period

In Tennessee, the inspection contingency usually lasts 7 to 14 days after your offer is accepted. A general home inspection takes 2 to 4 hours and covers the basics, but you should also plan for specialized checks.

Key inspections include structural, electrical, and plumbing, along with radon testing, termite/pest evaluation, and a sewer scope—especially important for older homes.

Step 5: Secure Your Financing and Insurance

After inspections, your lender will order an appraisal to confirm the home’s value, which usually takes 7 to 14 days. Mortgage underwriting typically follows, lasting about 14 to 21 days.

Buyers must secure homeowners insurance that meets lender requirements, and in certain areas, flood or sinkhole coverage may also be mandatory.

Step 6: Prepare for Closing Day

In Tennessee, closing costs typically range from 2% to 5% of the home’s sale price. These costs cover lender fees, title insurance, prorated property taxes, and escrow fees. Buyers should carefully review their Closing Disclosure during the required 3-day review period before signing.

Step 7: Welcome Home!

Buyers should schedule a final walk-through 24 to 48 hours before closing. Tennessee homeowners can benefit from local property tax exemptions, even though there’s no statewide homestead exemption. Additionally, regional assistance programs provide financial relief and extra buyer protections.

Tips for Tennessee Homebuyers: Do’s and Don’ts

Do’s:

• Get pre-approved before house hunting.
• Work with a licensed Tennessee real estate agent.
• Schedule all inspections during your due diligence period.
• Understand your closing costs before signing.
• Explore first-time buyer programs for added savings.

Don’ts:

• Skip mortgage pre-approval—it weakens your offer.
• Ignore varying market trends in Tennessee metro areas.
• Waive inspection contingencies—you risk costly surprises.
• Overextend your budget beyond financial comfort.
• Neglect thorough review of your closing disclosure.

Conclusion

Buying a home in Tennessee in 2025 means navigating rising prices and tight inventory. The state offers affordable metro options, buyer assistance programs, and opportunities for growth.

Smart planning, attention to inspections and closing costs, and working with local experts can help you secure the right home while maximizing financial and lifestyle benefits.

Frequently Asked Questions