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FHA Loan Guide for Home Buyers in Tennessee

FHA loans are a popular path to homeownership for buyers across Tennessee. Here is how they work in the Volunteer State and how to maximize your buying power.

By Homexa® Team. Published May 25, 2026. Updated September 25, 2026.

FHA loans are one of the most commonly used mortgage products for first-time buyers in Tennessee, from Nashville and Memphis to Knoxville and Chattanooga. The FHA program's accessible down payment and credit requirements make it a natural fit for buyers entering Tennessee's relatively affordable housing market.

Tennessee FHA Loan Limits FHA loan limits in Tennessee vary by county. Nashville's Davidson County has higher limits than rural Tennessee counties, reflecting the city's rising home prices. Memphis and Shelby County, Knoxville and Knox County, and Chattanooga and Hamilton County each have their own limits updated annually by HUD.

Combining FHA with THDA Great Choice Plus The Tennessee Housing Development Agency's Great Choice Plus program provides 6 percent of the loan amount as down payment assistance and is specifically designed to work with FHA loans. For a buyer using a $250,000 FHA loan, this translates to $15,000 in assistance, which covers the 3.5 percent FHA down payment and contributes significantly to closing costs.

Tennessee's Tax Advantages and FHA Affordability Tennessee has no state income tax on wages, which meaningfully improves buyer affordability compared to states with income taxes. This should be factored into your overall affordability calculation when considering an FHA loan in Tennessee.

FHA Property Standards in Tennessee Tennessee has older housing stock in many markets, including Memphis and Knoxville. FHA appraisers will note condition issues that could affect safety or habitability. Buyers targeting older homes should budget for potential repairs identified during the appraisal or inspection.

Homexa® in Tennessee Homexa® agents in Tennessee are familiar with FHA financing, THDA programs, and the local market dynamics across Nashville, Memphis, and beyond. Connect with a Homexa® agent to start your FHA home search in Tennessee.

Frequently Asked Questions

How does THDA Great Choice Plus work with an FHA loan?

THDA's Great Choice Plus program provides 6 percent of the loan amount as down payment assistance and is specifically designed to work with FHA loans. On a $250,000 FHA loan, that is $15,000, which covers the 3.5 percent FHA down payment and contributes significantly to closing costs. Homexa® connects Tennessee buyers with experienced local agents.

How do FHA loan limits vary across Tennessee?

FHA loan limits vary by county. Nashville's Davidson County has higher limits than rural Tennessee counties, reflecting rising home prices, while Shelby, Knox, and Hamilton counties each have their own limits, updated annually by HUD. Homexa® can connect you with an experienced local agent in Tennessee.

What should FHA buyers know about older homes in Tennessee?

Tennessee has older housing stock in many markets, including Memphis and Knoxville, and FHA appraisers will note condition issues that could affect safety or habitability. Budget for potential repairs identified during the appraisal or inspection. Tennessee's lack of a state income tax on wages also helps overall affordability. Homexa® helps buyers find experienced local agents in Tennessee.