First-Time Home Buyer in Tennessee? 10 Things You Should Know Before You Apply

Tennessee countryside home and community served by CFC Mortgage

Buying your first home is exciting: but it can also feel like a lot to figure out. How much do you need for a down payment? Which loan program is right for you? Can family members help? What if your credit or income doesn’t fit a traditional mortgage?

If you’re a first-time home buyer in Tennessee, you may have more options than you realize. FHA loans, USDA financing, THDA down payment assistance, gift funds, and non-occupying co-borrowers can all help make homeownership more manageable.

Here are 10 things to know before you apply.

1. You May Not Need 20% Down

One of the biggest misconceptions about buying a home is that you need a large down payment.

That’s not always the case.

Depending on your situation, you may qualify for:

  • FHA financing with as little as 3.5% down
  • USDA financing with 100% financing in eligible areas
  • THDA down payment assistance
  • Gift funds from an eligible family member
  • Conventional programs with flexible down payment options

Your down payment is only one part of the picture. Closing costs, credit, income, debt, property location, and loan program requirements also matter.

That’s why it helps to review your complete situation: not just your savings account: before deciding whether you’re ready to buy.

2. FHA Loans Can Make Buying More Accessible

FHA loans are a popular option for first-time buyers because they offer low down payment requirements and flexible qualifying guidelines.

For borrowers who meet the program requirements, an FHA loan may allow a down payment as low as 3.5%. That down payment may come from your own funds, eligible gift funds, or an approved down payment assistance program.

FHA financing may be a good fit if:

  • You have limited savings
  • Your credit history needs some flexibility
  • You’re buying a primary residence
  • You want a low-down-payment option
  • You may need help from a co-borrower

FHA is not automatically the best option for every buyer. A mortgage professional can compare FHA with USDA, conventional, and other programs to help you understand the total monthly payment and cash needed to close.

Learn more about available mortgage loan programs.

Hendersonville, Tennessee community and local homebuying market

3. USDA Loans May Offer 100% Financing

If you’re looking for a home in an eligible rural or suburban area, a USDA loan may allow you to purchase with 100% financing.

That means no down payment may be required for qualifying borrowers.

USDA loans are designed for primary residences in eligible areas. Income limits and property eligibility apply, and all applicants must meet the program’s underwriting requirements.

USDA financing may be worth exploring if:

  • You want to buy outside a major city
  • The property is in a USDA-eligible location
  • Your household income falls within the applicable limits
  • You plan to live in the home as your primary residence
  • You want to preserve your savings for moving, repairs, or emergencies

A home does not necessarily have to be far from town to qualify. Some suburban communities may be eligible, but the property must be checked using current USDA guidelines.

You can review the official USDA Single Family Housing Guaranteed Loan Program information, then ask us to help determine whether a property may fit.

4. THDA May Help With Your Down Payment and Closing Costs

The Tennessee Housing Development Agency, or THDA, created the Great Choice Home Loan program to help eligible Tennesseans purchase a home.

A Great Choice Home Loan generally offers a 30-year fixed-rate mortgage. Qualified borrowers may also be able to use Great Choice Plus assistance toward their down payment and/or closing costs.

THDA requirements can include:

  • Minimum credit score requirements
  • Household income limits
  • Purchase price limits
  • Homebuyer education
  • Home and occupancy requirements

THDA currently offers different assistance structures, including a deferred option and an amortizing second loan. The amortizing option may provide assistance of up to a percentage of the sales price, subject to program limits. Specific amounts and terms can change, so always confirm the current rules before making an offer.

Visit the official THDA Great Choice Home Loan page and THDA Down Payment Assistance page for current program information.

5. “First-Time Buyer” Does Not Always Mean You’ve Never Owned a Home

Many programs define a first-time homebuyer as someone who has not owned and occupied a primary residence within the past three years.

That means you may still qualify as a first-time buyer if:

  • You previously owned a home but have been renting for several years
  • You owned a home with a former spouse
  • You inherited a property but did not occupy it as your primary residence
  • You are buying a home again after a period of not owning

Program definitions vary. THDA, FHA, USDA, and conventional loans may each have different requirements.

If you’re unsure whether you qualify, don’t count yourself out. Let’s review the details together.

6. Gift Funds May Be Allowed

Saving for a down payment and closing costs can be one of the hardest parts of buying a home. Some loan programs allow eligible gift funds from a family member to help.

Gift funds may be used toward:

  • A down payment
  • Closing costs
  • Prepaid items
  • Other approved loan-related expenses

The money must be properly documented. Your lender may need a gift letter, proof of the donor’s ability to provide the funds, and evidence showing how the money moved into your account.

Do not accept money informally without checking first. The source and documentation matter, and requirements can vary by loan program.

At CFC Mortgage, gift funds are allowed on many loan programs, subject to program and underwriting guidelines.

Hendersonville, TN real estate and neighborhoods

7. A Non-Occupying Co-Borrower May Help You Qualify

Sometimes your income or credit profile is not quite enough to qualify on your own. A parent or another family member may be willing to help by applying with you.

A non-occupying co-borrower is someone who is on the loan but does not plan to live in the home.

This arrangement may help with:

  • Qualifying income
  • Debt-to-income ratios
  • Credit strength
  • Building a stronger overall application

Non-occupying co-borrower rules depend on the loan program. FHA financing commonly allows this structure, while USDA occupancy requirements are different. THDA assistance may also have additional requirements.

Before choosing a loan strategy, tell your lender if someone may be helping you qualify. We can help you understand which programs may allow a co-borrower and what documentation will be needed.

8. Pre-Approval Is More Than a Quick Estimate

A pre-qualification can be useful for an early conversation, but a pre-approval gives you a clearer picture of your buying power.

During the pre-approval process, your lender may review:

  • Income
  • Employment
  • Credit history
  • Monthly debts
  • Assets and savings
  • Gift funds
  • Loan program eligibility

A pre-approval can also help your real estate agent guide you toward homes that fit your budget. In a competitive market, it may give sellers more confidence that your offer is backed by a reviewed application.

You can begin by using CFC Mortgage’s online application or mortgage calculator.

9. Your Rate Is Important: but It Isn’t the Whole Story

When comparing mortgage options, it’s natural to focus on the interest rate. But the lowest advertised rate may not produce the lowest overall cost for your situation.

Ask about:

  • Monthly principal and interest
  • Mortgage insurance
  • Down payment requirements
  • Closing costs
  • Assistance repayment terms
  • Loan term
  • Seller credits
  • Cash needed at closing
  • Whether the rate requires discount points

The right mortgage is the one that fits your budget today and remains manageable over time.

As a mortgage broker, CFC Mortgage works for you: not the bank. We can shop dozens of lenders and compare programs based on your individual needs.

10. Local Guidance Can Make the Process Simpler

Buying your first home should not feel like you have to figure everything out alone.

A local mortgage professional can help you:

  • Compare FHA, USDA, conventional, and THDA options
  • Review your credit and income
  • Estimate your cash to close
  • Explain gift fund requirements
  • Discuss co-borrower options
  • Check whether a property may fit a program
  • Communicate with your real estate agent
  • Prepare for the next step

CFC Mortgage is based in Hendersonville and serves homebuyers throughout Tennessee, as well as Florida and South Carolina. We’ve spent more than two decades helping families understand their options, and we have access to more than 20 premium lenders.

We also charge no broker fees, no origination fees, no discount points, and no underwriting fees.

Ready to Take the First Step?

If you’re a first-time home buyer in Tennessee, start with a conversation. You don’t need to have every answer before you reach out.

Tell us about your goals, your budget, your savings, and any questions you have. We’ll help you explore the options and create a clear path forward.

Contact CFC Mortgage or apply online today.

We make mortgages simple: and we’re here to help you find the right way home.

Program availability, eligibility requirements, loan limits, rates, fees, and down payment assistance terms are subject to change and depend on lender, borrower, property, and program guidelines. This article is for general educational purposes and is not a commitment to lend. CFC Mortgage is a DBA of Coastal Funding Corporation Inc., NMLS 103035, licensed in Tennessee, Florida, and South Carolina. Equal Housing Lender.