Current Mortgage Rates in Tennessee

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Contributor, Benzinga
February 18, 2022
Loan TypeRateAPR
30-year fixed N/A N/A
15-year fixed N/A N/A
7/1 ARM (adjustable rate) N/A N/A
5/1 ARM (adjustable rate) N/A N/A
Rates based on an average home price of $185,922 and a down payment of 20%.
See more mortgage rates on Zillow

Buying a home in Tennessee can be an exciting experience — as soon as you nail down the financial details. You can make the best decision for your future once you understand how mortgage rates can help you choose the best mortgage lender. Here’s how rates are calculated in the Volunteer State. 

Best Mortgage Lenders in Tennessee for Rates

You might have an idea about what type of mortgage and lender you’re looking for — particularly if you know your financial situation or credit score. We’ve compiled the top lenders in the Volunteer State to help you determine your ideal fit.

What is a Mortgage Rate?

Your mortgage rate is the interest rate you’ll be responsible for paying in addition to your mortgage principal. The lower the rate on your mortgage, the less interest you’ll pay over time. Let’s say you take out a mortgage for $300,000 at 4.25% interest. You’ll need to pay back the mortgage amount and also the 4.25% interest rate.

You’ll want to lock in a low mortgage rate to keep your payments and interest low. Here are the elements that can impact your mortgage rate in Tennessee.

What Factors Impact Your Mortgage Rate?

Let’s go over some key factors that impact mortgage rates.

  • Loan-to-value ratio: Loan-to-value (LTV) ratio looks at how much you borrow divided by the value of your home. The higher your LTV, the higher your mortgage rate is likely to be. High LTVs typically indicate riskier loans that are more likely to default.

You can calculate your LTV by dividing your mortgage amount by your home’s value. If your mortgage is for $300,000 and your home is worth $350,000, your LTV would be 0.86 or 86% ($300,000 / $350,000). 

  • Credit score: Your credit score plays a key role in determining your mortgage rate. Your credit score is a number that represents how well you pay off debt. It’s important to check your score before applying for a mortgage. Typically, the higher your credit score, the lower your mortgage rate will be.
  • Lender: Each lender has its own methods to determine mortgage rates. Some lenders are known for their low rates but may have high eligibility criteria. Compare rates among different lenders to help you make a more educated decision.
  • Location: Your local market can impact your mortgage rates. The health of the housing market determines whether rates are high or low. Let’s say you purchase during a healthy market. You can expect lower rates. Expect higher rates if the market is weak and mortgages are being defaulted on.

The market is hot in Tennessee — home values are on the rise which means that current rates should be fairly low.

  • Mortgage type and term: The type of mortgage you purchase can impact your rate. Some first time home loans have lower rates than other types of mortgage loans. Your mortgage term, which is the set amount of time before your mortgage will be paid off. Your mortgage term also affects the rate you’re offered.

Let’s look at how different mortgage products can impact your mortgage rate.

What is a Mortgage Type?

Before you choose your mortgage, it’s important to understand the types available in Tennessee: Conventional, FHA, USDA and VA loans are the 4 main types of mortgages you can choose from.

  • Conventional: This traditional type of mortgage is a loan financed by a bank or financial institution rather than the federal government. This type of mortgage tends to have a slightly higher mortgage rate than its counterparts and might be a little trickier to obtain because it’s not backed by the federal government, so there’s more risk to the lender.
  • FHA: The Federal Housing Administration, backed by the federal government, funds first-time home buyers and offers low mortgage rates. You can get an FHA mortgage through many conventional providers. You’ll be eligible for an FHA loan even if you have a low down payment (as low as 3%), low credit score (as low as 580). You will need to pay a mortgage insurance premium, however, if you put less than 20% down on your home.
  • USDA: You can get U.S. Department of Agriculture loans for homes purchased in designated rural areas of the country. You can see if your address qualifies for a USDA mortgage. You’re eligible for no down payment options (or low down payment options) and a more flexible credit requirement with a USDA loan.
  • VA: The Department of Veterans Affairs funds this mortgage to help active or former military members and their families receive affordable financing. You can obtain a VA mortgage through conventional and private lenders. You’re eligible for no down payment, no mortgage insurance requirement, low mortgage rates and flexible credit requirements with a VA loan. You won’t have to pay for mortgage insurance or a down payment but you’ll need to pay an origination fee for processing (typically 1% of the mortgage amount).

What is a Mortgage Term?

The length of your mortgage, or term, plays a large role in deciding your mortgage rate. Let’s look at the 3 most common mortgage terms to give you a better sense of your mortgage rate pricing.

  • 30-year fixed: This is the most common type of mortgage you’ll find in Tennessee. If you select this term, you’ll pay a set mortgage rate for 30 years. You can expect your monthly payments to be lower, but you’ll likely pay a higher mortgage rate than most other terms. Since payments are spread out over a longer period of time, you’ll ultimately pay more in interest.
  • 15-year fixed: The second most popular type of fixed loan allows you to pay a set mortgage rate over 15 years. The mortgage rate is typically lower than a 30-year fixed, and since you’re paying the loan off over half the time, you can expect higher monthly payments. Overall, you’ll pay less in interest with this type of loan.
  • 5/1 ARM: An adjustable-rate mortgage refers to any mortgage without a fixed rate. A 5/1 adjustable-rate mortgage locks in your introductory rate for 5 years. After that, the rate will change or fluctuate based on the market. You could end up paying the most interest with this type of mortgage, which is why buyers tend to opt for adjustable-rate terms if they plan on selling after 5 years.

Current Mortgage Rates in Tennessee

We’ve provided current mortgage rates in Tennessee. The housing market fluctuates from season to season and Benzinga constantly reviews local market data to bring you the most current rates.

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

Calculating Interest in Tennessee

It’s important to know average rate data but it can be hard to look at a percentage and understand how much interest you’ll actually pay. Benzinga has pulled average home values and used current rates and loan terms to give you a better picture of the total interest you can expect to pay for your home.

CityAverage Home ValueLoan TermCurrent RateDownpayment (20%)Monthly PaymentTotal Interest Paid
Nashville $263,30030-year fixed6.844%$52,660$1,379.39$285,940.40
Memphis $86,90030-year fixed0%$17,380$0.00-$69,520.00
Knoxville $174,40030-year fixed6.125%$34,880$847.74$165,666.40
Chattanooga $151,50030-year fixed6.125%$30,300$736.42$143,911.20
See more mortgage rates on Zillow

Lender Credit Score Minimums in Tennessee

You should know your credit score to gauge your expected mortgage rate and pre-approval chances. Below is a list of minimum credit scores required by these Tennessee mortgage lenders.

LenderMinimum Credit Score Required
Discover Home Equity620
Rocket Mortgage®620
PNC Financial Services700

Get the Best Rates in Tennessee

It’s important to understand how mortgage rates impact the amount of interest you’ll ultimately pay on your Tennessee home. Work to improve your credit or savings for a down payment to decrease your LTV ratio and consider our other cost-savings tips to lower your mortgage rate.

A low mortgage rate is important but make sure you research a lender before you commit to a mortgage. Talk to your real estate agent and weigh your options before you make a final decision.

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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.