FHA Loan Requirements in Tennessee

Quick answer

For 2026, the FHA one-unit loan limit in most Tennessee counties is $541,287 (the national floor); the 14 Nashville-metro counties (including Davidson, Williamson, Rutherford, Sumner, and Wilson) allow up to $1,029,250, per HUD Mortgagee Letter 2025-23 data effective for case numbers assigned on or after January 1, 2026. Borrowers need a 580 credit score for 3.5% down (500-579 needs 10% down), must occupy the home as a primary residence, and pay upfront plus annual mortgage insurance. THDA programs can help with the down payment. Estimate payments with the FHA loan calculator.

2026 Tennessee FHA loan limits by county

HUD sets FHA limits per county from area median prices each year. The national one-unit floor for 2026 is $541,287 and the national ceiling is $1,249,125 (Mortgagee Letter 2025-23, published December 11, 2025). Tennessee counties for 2026:

14 of 95 counties sit above the national floor — the widest spread of any state in this guide series. Verify any county at HUD's FHA Mortgage Limits lookup before relying on a figure.

FHA baseline requirements (national rules)

• Credit score 580+: 3.5% minimum down payment. Scores 500-579 require 10% down. Below 500 is generally ineligible.
• Debt-to-income: HUD guidance generally looks for housing payments within about 31% of gross income and total debts within about 43%, though automated approvals can stretch higher with compensating factors.
• Primary residence only: FHA insures one primary home at a time; investment properties and second homes are excluded.
• Mortgage insurance: upfront MIP (financed into the loan) plus annual MIP in the monthly payment — confirm current rates at HUD.
• Appraisal standards: the home must meet FHA minimum property requirements for safety, soundness, and security.

Official rules: HUD Handbook 4000.1 and the HUD single-family housing page; borrower guidance at the CFPB.

Tennessee down payment help: THDA

Tennessee's housing finance agency is the Tennessee Housing Development Agency (THDA), which offers its Great Choice first-mortgage program (FHA, VA, USDA, or conventional through participating lenders) plus down payment assistance options for eligible first-time and repeat buyers. Details: thda.org. Income limits, purchase price limits, credit minimums, and homebuyer education apply and vary by program.

Tennessee-specific notes

• Closing costs: Tennessee buyers typically pay roughly 2-5% of the price in closing costs; FHA allows seller concessions up to 6%. Tennessee has no state income tax but funds services partly through sales tax — no direct mortgage effect, but part of the affordability picture.
• Property types: Nashville-area condos must be in FHA-approved projects. Rural properties across much of the state may alternatively qualify for USDA loans with no down payment.
• Land and appraisal: properties on acreage or with outbuildings are common in Tennessee — appraisers must confirm residential use and FHA-acceptable water/sewage, and manufactured homes follow stricter foundation rules.
• Compare paths: run the numbers in the FHA loan calculator and the mortgage calculator, and read FHA vs. conventional loans for the crossover math.

Worked example: Memphis vs. Nashville metro

Take a $300,000 Shelby County purchase with 3.5% down ($10,500). The base loan of $289,500 fits easily under the $541,287 floor — payment and DTI decide the deal. Contrast a $950,000 Williamson County purchase with 3.5% down ($33,250): the $916,750 base loan dwarfs the floor but fits inside the $1,029,250 Nashville-metro limit — the same purchase would be impossible with FHA in a floor county. Run both in the FHA loan calculator with local tax and insurance, and check the mortgage rate benchmarks for cited national rate context.

Common Tennessee FHA mistakes to avoid

• Assuming Nashville prices fit FHA statewide. Only the 14 Nashville-metro counties reach $1,029,250 — Knoxville, Memphis, and Chattanooga sit at the floor, so verify the property's actual county.
• Skipping THDA pre-qualification. Great Choice plus down payment assistance can cover buyers who assume they lack cash — check thda.org before draining savings.
• Underwriting acreage on residential comps. Multi-acre parcels appraise on residential use with FHA-acceptable water and sewage — confirm the appraisal premise before offering over land value.
• Ignoring the MIP lifetime cost. With minimum down, annual MIP typically lasts the life of the loan — price the full payment and plan a future conventional refinance once equity reaches 20%.

THDA and FHA layered together

Tennessee buyers often pair THDA Great Choice first mortgages with THDA down payment assistance through participating lenders — the assistance covers part of the down payment while the FHA loan supplies the balance. Both approvals (THDA eligibility plus FHA underwriting) are needed, so begin the THDA conversation before house-hunting: income limits, price caps, and the education certificate all take time. In Nashville's competitive market, a fully underwritten pre-approval with documented assistance funds competes far better than a bare pre-qualification — sellers accept FHA-plus-assistance offers routinely when the paperwork proves the funds are real.

Frequently asked questions

What is the 2026 FHA loan limit in Tennessee?

Most TN counties use the $541,287 national floor for a one-unit home in 2026. The 14 Nashville-metro counties allow up to $1,029,250, per HUD Mortgagee Letter 2025-23 data. Verify your county at HUD's FHA Mortgage Limits lookup.

What credit score do I need for an FHA loan in Tennessee?

The same national rules apply: 580 or higher qualifies for 3.5% down; scores 500-579 require 10% down. Individual lenders may set higher minimums, so compare at least two disclosures.

What down payment help does THDA offer?

THDA offers the Great Choice first-mortgage program plus down payment assistance options for eligible buyers through participating lenders. See thda.org for current programs, income limits, and education requirements.

Can I use an FHA loan for a Nashville condo?

Only if the condo project is FHA-approved. Check the FHA-approved condo list through HUD before making an offer.

Where are official FHA loan limits published?

In HUD's annual Mortgagee Letter (2025-23 for 2026) and the county-level FHA Mortgage Limits lookup at entp.hud.gov — always confirm the current year before relying on any figure.

Cite this page

LoanMatchers Editorial Team. “FHA Loan Requirements in Tennessee.” https://loanmatchers.com/learn/fha-loan-requirements-tennessee/. Accessed 2026-09-10.

Sources

• Consumer Financial Protection Bureau — Ask CFPB — Consumer Financial Protection Bureau — consumerfinance.gov
• HUD Mortgagee Letter 2025-23 — 2026 Nationwide Forward Mortgage Loan Limits — U.S. Department of Housing and Urban Development — hud.gov
• HUD — single-family mortgage insurance and homeownership — U.S. Department of Housing and Urban Development — hud.gov
• THDA — Great Choice homebuyer programs — Tennessee Housing Development Agency — thda.org

Benchmarks are national averages from the publishers above, not offers. See our methodology.