What Credit Score Is Needed To Buy A House In Tennessee?

The state of Tennessee has been one of the hardest states hit by the sub-prime mortgage crisis of 2007-2008. Since then, the state has constantly fought to make homeownership more affordable for all Tennesseans. So, besides the well-known programs that apply nationwide such as FHA loans, VA loans, USDA loans and the like, you should be aware of the following state programs, too. Of course, each program has its own minimum credit score, so let’s check them out. 

Great choice home loan - it’s a program created by the Tennessee Housing Development Agency and is directed toward the households with a moderate income - neither below the poverty line nor high-earners. For example, first-time homebuyers in Tennessee benefit from a down payment as low as 3.5% and may even get down-payment assistance. But the minimum credit score of any applicant must be 640. Another advantage is the fixed interest rate for the life of the loan, which for this program is 30-years. 

Probably the best part of the loan application process is the homebuyer education class. By taking this course, future homeowners learn how to keep their budget under control, how to apply for a loan and how to maintain their house after they move in. The main goal is to help homeowners avoid foreclosure. And for the past 10 years, the foreclosure rate in Tennessee has dropped significantly. The highest foreclosure rate is in the Hickman county - 353 foreclosures in the second quarter of 2019, while five counties haven’t reported any active foreclosures for the same period. Real estate agents in Nashville TN are also proud of the Davidson county which occupies the 86th place among the 95 counties. 

Another program with similar requirements is called Homeownership for the Brave. As the name implies, it’s designed for those who serve our country in the military. The minimum credit score is still 640 and the 30-year loans have a fixed interest rate. 

If your credit score is low, don’t worry! Your credit score can be improved. Or you can try to apply for a federal loan program such as an FHA loan or a USDA loan. For the former, there isn’t a minimum credit score set in stone. However, if your credit score is below 580, you must be able to pay at least 10% down for the closing to go through. For the latter, the minimum credit score is 620, but these loans are aimed at rural areas so there are geographical restrictions in place. 

Looking to buy a house in Nashville with a conventional mortgage? Then your credit score should be really high and not lower than 640-620 points, especially if you want to take advantage of the best interest rate available. Now, you may feel confused since there are so many types of home loans you can choose from. Don’t make the final decision alone. Find a real estate agent in Nashville or anywhere in Tennessee and they will give you the best advice on the right financing for you.