Best Mortgage Lenders for First Time Home Buyers in Tennessee

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Contributor, Benzinga
February 20, 2024

Jump straight to it: The best Tennessee mortgage lender for first time home buyers is CrossCountry Mortgage.

Tennessee’s southern charm, gorgeous mountains and legendary music scene make the Volunteer State a great place to call home. Tennessee offers lower-than-average home prices which can be a major attraction for first-time home buyers. Here’s everything you need to know about buying a home in Tennessee. 

Quick Look: Best Mortgage Lenders for First Time Home Buyers in TN

7 Best Mortgage Lenders in TN for First Time Home Buyers

Ready to find your lender? Here are the best mortgage companies for first time home buyers in Tennessee.

1. Best for Self-Employed: CrossCountry Mortgage

  • securely through CrossCountry Mortgage's website
    securely through CrossCountry Mortgage's website
    Best For:
    Self-employed Borrowers
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    Available in: CA, CO, CT, DC, FL, GA, IL, MD, MA, MI, NH, NJ, NY, NC, OH, PA, RI, SC, TN, TX, VA, WA 

If you’re a small business owner or a freelancer, your income likely fluctuates from year to year. This can make getting a mortgage more difficult, as lenders usually want to see proof of consistent income before they’ll offer you a loan. CrossCountry Mortgage’s Asset Qualifier loan is an excellent choice for self-employed men and women.

When you apply for an Asset Qualifier loan, CrossCountry Mortgage will look at the sum of your business assets — not just your income — when they underwrite your loan. This can make it easier to qualify if you’ve recently invested a large amount of money into your business or if you’re in the middle of a slow sales year. 

Loan types offered: Conventional, FHA, USDA and VA

Credit score requirement: 620

Average days to close a loan: 21

Pros

  • Long-term loan programs
  • Low minimum credit score
  • No minimum DTI

Cons

  • Relatively high minimum credit score
  • No HELOCs
  • No other home equity loan options

2. Best for Online Service: Rocket Mortgage®

The mortgage process is complicated, so Rocket Mortgage® simplifies it.

The lender offers an online, easy-to-complete application. It also offers top-notch customer service before and after you qualify for a mortgage. Rocket Mortgage® doesn’t have branches, but you can easily reach a loan expert by phone or chat.

Loan types offered: Conventional, FHA, USDA and VA

Credit score requirement: 620

Average days to close a loan: 30-45 days

Pros

  • Apply online through their website
  • Faster loan processing times
  • Variety of mortgage options

Cons

  • Lack of personal interaction
  • Inability to negotiate terms

3. Best for Bank Statement Loans: Angel Oak Mortgage Solutions

Angel Oak Mortgage Solutions is a full-service mortgage lender offering traditional and portfolio Non-QM mortgage loans. The mortgage company is licensed in 45 states and offers competitive rates and quick closing times. 

Angel Oak Mortgage Solutions offers a wide range of mortgage solutions for various needs. Whether you are looking to purchase a home, cash-out on your current property, or refinance at a different rate, they have options for you.

With loan amounts available up to $3.5 million, they can support you in financing properties of different values. They cater to primary residences, second homes, and investment properties, and accommodate various types of properties such as single-family homes, townhomes, and condos.

Loan types offered: Conventional, FHA, USDA and VA

Credit score requirement: 620

Average days to close a loan: 30

Pros

  • Asset qualifier home loans
  • ITIN home loans
  • Investor home loans

Cons

  • Bank statement loans not available for all buyer types

4. Best for Credit Monitoring: loanDepot

loanDepot is a non-bank lender that gives you convenience and efficiency online with the option to visit one or over 200 branches across the country. loanDepot offers fixed-rate and adjustable-rate conventional mortgages. You could also secure jumbo, FHA or VA loans, although conventional loans made up most of LoanDepot’s mortgage originations last year. LoanDepot also offers 10-, 15-, 20- and 30-year mortgage terms. 

In addition to mortgages and home refinancing, LoanDepot offers free credit score monitoring to help you prepare to apply for a mortgage. You'll need a minimum credit score of 620 and at least 5% downpayment. 

Loan types offered: Conventional, FHA, VA and Jumbo

Credit score requirement: 620

Average days to close a loan: 30 days

Pros

  • Choose shorter repayment terms 
  • $1,000 Close-on-Time Guarantee
  • Possible home security, moving and smart home product discounts 
  • Use its online loan calculator to compare monthly payments and lifetime interest before deciding on a mortgage lender

Cons

  • No mortgage rates listed online
  • No USDA loans

5. Best for In-Person Service: Bank of America

Many first time buyers like working with someone in person. Bank of America has branches throughout Tennessee.

You can easily meet with a loan officer and talk about your mortgage options. Bank of America also offers an online application. You can view its rates to make comparison shopping easier.

Loan types offered: Conventional, FHA, VA and USDA

Credit score requirement: 620

Average days to close a loan: 30

Pros

  • Easily accessible for customers across the United States
  • Wide range of banking and loan solutions
  • User-friendly online banking platform and mobile app

Cons

  • Higher loan origination fees 
  • Lengthy application and approval process

6. Best for Lender Comparison: Credible Mortgage

Unlike individual mortgage lenders, Credible is a lender marketplace that allows you to compare multiple lenders. You'll enter basic financial information and get quotes from several lenders on standard home mortgage products. Credible offers a free, fully online mortgage broker service that lets you get quotes from online lenders. It offers straightforward, convenient service with the possibility of finding the lowest interest rates.

Loan types offered: Conventional, FHA, VA USDA and Jumbo

Credit score requirement: 620 (depends on the lender)

Average days to close a loan: 30 - 45 (depends on the lender)

Pros

  • Free option to compare lenders
  • Inputting information won't affect your credit score
  • Get excellent customer support

Cons

  • You'll have to enter your info to get interest rate quotes
  • Origination fees may be higher than the average
  • No live chat feature for customer support

7. Best for Service Members: Veterans United

If you’ve logged some time in the military, Veterans United’s loans will likely be the best deal. Unlike other veteran-marketed loan programs, Veterans United only accepts active duty and veteran military members.

In addition to no-down-payment loans, you’ll also eliminate the private mortgage insurance you’ll have to pay with other mortgages.

Loan types offered: VA, USDA, FHA and Jumbo

Minimum credit score: 620

Average days to close a loan: 30

Pros

  • Streamlined loan application process
  • Competitive interest rates and loan terms
  • Excellent customer service

Cons

  • Funding fees
  • Limited physical locations

The Housing Market in Tennessee: An Overview

Before you start your housing search, it helps to know what’s going on in the housing market. Here’s an overview of the housing market facts and figures you’ll find in Tennessee:

Total households: 2,713,635

Median list price: $306,156

3 most expensive cities in Tennessee to buy a house:

  • Brentwood: $1,207,564
  • Arrington: $1,116,737
  • College Grover: $1,095,539

3 most affordable cities in Tennessee to buy a house:

  • La Follette is $87,500 
  • Johnson City is $148,800
  • Clarksville is around $159,300

Preparing for a Mortgage

How do you get ready for a mortgage? What does the process look like? Let’s take a closer look at what’s involved in getting a mortgage. 

Get Ready

Here are 2 important steps you’ll need to take when as you get ready to apply for a mortgage:

Check Your Credit

Your credit doesn’t have to be perfect to get a mortgage, but take the time to check your credit report for errors. You can get 1 free credit report from each of the 3 credit bureaus each year through annualcreditreport.com. Report any errors to the credit bureau. 

Prepare an Application Packet

Gather your financial documents and store them in a secure but easy-to-find place. Here are some of the documents you’ll need to apply for a mortgage. Your lender may ask for additional documents, but these will get you off to a good start:

  • A copy of your identification
  • Pay stubs from the last month
  • Your 2 most recent tax returns
  • Your W-2s from the past 2 years
  • Your 2 most recent bank statements
  • Documentation of your down payment source
  • Proof of any other income
  • Documentation of any name changes

Neither of these steps is required, but it’s a good idea to get organized so you help the mortgage process go more smoothly. 

Next Mortgage Steps

Next, contact at least 3 lenders and get a purchase quote. Review your quotes and choose a lender and apply for preapproval. A preapproval makes you more appealing to home sellers. 

Start home shopping once you have a preapproval letter. A knowledgeable real estate agent can be a big help. A real estate agent can sort through listings and help you narrow down your options. Put in an offer when you’ve found a promising home. If the seller accepts, it’s time to make a final decision on a lender and mortgage. 

Complete a full application with your lender of choice. Your credit score is an essential part of the whole process — and lenders have specific credit score minimums. Your credit score is a computer-generated number that gives lenders an at-a-glance understanding of your credit history. Here are the minimum credit scores for some Tennessee lenders.

LenderMinimum Credit Score Required
Bank of America620
BBVA620
Citibank620
Freedom Mortgage620
Keller Mortgage600

Mortgage Options

There are a lot of mortgage types on the market, which can lead to some confusion. But here’s a quick overview of the types of loans you may be able to find. Reading through the list may help demystify some of your options:

FHA Loans

Many first time home buyers opt for an FHA mortgage. Why? These mortgages are backed by the Federal Housing Administration. This means they have low down payment requirements and low minimum credit score requirements. If your credit score is 580 or higher, you can make a down payment as low as 3.5%. The FHA also allows borrowers with credit scores of 500–579 to qualify with a down payment of 10% or more. 

USDA Loans

USDA mortgages help borrowers with limited means obtain a mortgage. You can only use these mortgages in rural areas. If you meet the income criteria, you may not have to make a down payment. The Department of Agriculture oversees this program. 

VA Loans

VA mortgages help current and retired service members buy homes. The Department of Veterans Affairs supports and governs this program. Qualified service members may be able to get a mortgage with no down payment. These mortgages have limited fees and no mortgage insurance, which means you’ll be able to make a lower monthly payment. 

Conventional Loans

A conventional mortgage is a home loan that isn’t directly supported by a government program. You’ll see 2 types of conventional loans: conforming and non-conforming. Conforming mortgages meet Freddie Mac and Fannie Mae’s requirements. These 2 companies back conforming mortgages and help stabilize the housing market. They have a mortgage price limit, which varies depending on where you live. Non-conforming mortgages don’t meet Freddie Mac or Fannie Mae requirements. 

Jumbo Loans

A jumbo mortgage is a mortgage that exceeds Freddie Mac and Fannie Mae’s price limits. These mortgages can be $1-2 million or more. 

Private lenders offer these mortgages, including the government-sponsored ones. The backing government agency must approve lenders that offer FHA, USDA and VA mortgages. 

First Time Home Buyer Programs in Tennessee

Looking for some extra help? The Tennessee Housing Development Agency offers assistance programs. 

Great Choice Home Loans

These mortgages offer a fixed interest rate and a 30-year term. This means the interest rate will never change for the life of the loan. The program has income limits. All applicants must have a credit score of 640 or higher. 

Great Choice Plus Second Loan

Borrowers who qualify for a Great Choice Home Loan can also apply for a second loan. This loan provides up to 5% of your home’s purchase price to help with your down payment and closing costs. This is a no-interest second loan. You don’t have to make any payments on the loan until you sell or refinance the home. 

Contact a participating lender if you’re interested in Tennessee’s home buyer programs. 

Current Mortgage Rates in TN

Your mortgage rate is what you pay your lender to borrower money. Mortgage rates can be fixed or adjustable. An adjustable-rate mortgage (ARM) usually starts with an introductory fixed rate. After that, the lender changes your rate based on market conditions. This could increase or decrease your monthly payment. 

When you’re mortgage shopping, you might notice that rates change daily. Lenders change rates in response to what’s going on with the economy. At Benzinga, we update our rates frequently to reflect these changes. Here are the current mortgage rates in Tennessee:

Loan TypeRateAPR
30-year fixed 6.243% 6.329%
15-year fixed 6.049% 6.203%
7/1 ARM (adjustable rate) N/A N/A
5/1 ARM (adjustable rate) 6.062% 7.502%
Rates based on an average home price of $185,922 and a down payment of 20%.
See more mortgage rates on Zillow

Closing a Mortgage

Closing occurs at the end of the mortgage process. After your lender reviews and underwrites your mortgage, it lets you know whether you’re approved. If the mortgage is approved, the next step is closing. When you officially close on your mortgage, you meet with your lender and other parties. You do a lot of paperwork and pay your closing costs and down payment. 

Legally, your lender must have your documents ready 3 days before your closing meeting. If anything is confusing or unexpected, contact your lender. 

The underwriting process can be lengthy. Here are the average days to close for several Tennessee lenders: 

Choosing Your Tennessee Lender

Choosing a lender is a big decision. Sure, you can get a refinance quote down the road, but you want to start with the best terms possible. Take the time to get multiple quotes and review them carefully. Ask questions and trust your instincts. You’ll be in the right home — and have the right mortgage — in no time. 

Frequently Asked Questions

Q

How much down payment is required by mortgage lenders for first-time home buyers in Tennessee?

A

First-time home buyers in Tennessee generally need to put down a down payment of at least 3% to 5% of the home’s purchase price in order to secure a mortgage loan. However, some lenders may require a higher down payment depending on the buyer’s credit history, income, and other factors.

 

Q

What are the closing costs associated with a mortgage for first-time home buyers in Tennessee?

A

Closing costs associated with a mortgage for first-time home buyers in Tennessee typically include fees such as loan origination fees, appraisal fees, credit report fees, title search fees, and escrow fees. These costs can vary depending on the lender and the specific details of the mortgage agreement.

 

Q

Can I refinance my mortgage as a first-time home buyer in Tennessee?

A

Yes, as a first-time home buyer in Tennessee, you can refinance your mortgage just like any other homeowner. Refinancing can help you secure a lower interest rate, reduce your monthly payments, or access equity in your home for other financial needs.

 

Get Ready for Take Off

Rocket Mortgage® is an online mortgage experience developed by the firm formerly known as Quicken Loans®, America’s largest mortgage lender. Rocket Mortgage® makes it easy to get a mortgage — you just tell the company about yourself, your home, your finances and Rocket Mortgage® gives you real interest rates and numbers. You can use Rocket Mortgage® to get approved, ask questions about your mortgage, manage your payments and more.

You can work at your own pace and someone is always there to answer your questions — 24 hours a day, 7 days a week. Want a fast, convenient way to get a mortgage? Give Rocket Mortgage® a try.

About Melinda Sineriz

Melinda specializes in writing about mortgages. student loans, personal loans, insurance, managing credit and debt, and credit cards.