Current FHA guidelines, updated from one source.
This snapshot carries the FHA purchase parameters: the minimum required investment, the decision score that opens maximum financing, the upfront and annual mortgage insurance, and the manual qualifying ratios, each read from Lendmire’s guideline source.
Up to 96.5% loan-to-value on a purchase
3.5% of the purchase price or appraised value, whichever is lower, is the minimum investment on an FHA purchase; the loan covers the rest, up to 96.5% loan-to-value, and a gift may cover the whole investment.
Decision score for maximum financing
580 is the decision score for maximum financing, and the floor of the wholesale programs behind these pages; the decision score is the lowest of the borrowers’ middle scores, and a thin or non-traditional credit file can still qualify under manual underwriting.
Plus 0.50%–0.55% a year on most thirty-year loans
FHA mortgage insurance has two parts: 1.75% upfront, which is added to the loan, and an annual premium of 0.50%–0.55% on most thirty-year loans, charged monthly; the ladder below shows the schedule by loan size, leverage, and duration.
Housing and total debt, manual reference
Housing and total debt ratios of 31/43 need no compensating factors; higher ratios are approvable with the factors in the ladder below, and files scored by HUD’s automated system follow the system’s finding rather than the manual table.
| Decision score | Housing / total | Compensating factors |
|---|---|---|
| 500–579 or no credit score | 31% / 43% | not applicable — ratios may not exceed 31/43 (energy efficient homes 33/45) |
| 580 and above | 31% / 43% | no compensating factors required (energy efficient homes 33/45) |
| 580 and above | 37% / 47% | one of: verified and documented cash reserves; minimal increase in housing payment; residual income |
| 580 and above | 40% / 40% | no discretionary debt |
| 580 and above | 40% / 50% | two of: verified cash reserves; minimal increase in housing payment; significant additional income not reflected in effective income; residual income |
| Base loan | Leverage | Annual premium | Duration |
|---|---|---|---|
| Standard base loan amounts | at or below 90% LTV | 0.50% | 11 years |
| Standard base loan amounts | above 90% to 95% LTV | 0.50% | mortgage term |
| Standard base loan amounts | above 95% LTV | 0.55% | mortgage term |
| Larger base loan amounts | at or below 90% LTV | 0.70% | 11 years |
| Larger base loan amounts | above 90% to 95% LTV | 0.70% | mortgage term |
| Larger base loan amounts | above 95% LTV | 0.75% | mortgage term |
Refinances: rate-and-term to 97.75% loan-to-value on a home occupied for the past year; cash-out to 80% after twelve months of ownership and occupancy; streamline refinances of an existing FHA loan without an appraisal. Sellers and other interested parties may contribute up to 6% of the price toward closing costs; the entire minimum investment may be a gift.
Current FHA snapshot · updated October 1, 2026 · owner-occupied principal residences, one to four units · county loan limits apply — ask a Lendmire loan officer for the limit where you are buying · FHA loans are assumable · Lendmire is not affiliated with FHA or HUD.
This page describes program parameters, not an offer. The investment, the premiums, the score tiers, and the ratios are FHA guidelines and lender overlays, subject to change without notice and to full underwriting; the appraisal, the credit report, the property, and the county limit decide every file. No rate, payment, or cost is stated here; a licensed Lendmire loan officer provides them in writing. Lendmire is a mortgage broker, never the lender, licensed for consumer mortgage lending in sixteen states, and not affiliated with FHA, HUD, or the federal government. Lendmire, LLC, NMLS #2371349. Equal Housing Opportunity.
What an FHA loan is — and how the file is qualified.
An FHA loan is a conventional-looking mortgage with a federal insurance policy attached: HUD insures the lender against loss, and in exchange the program sets the minimum investment, the credit rules, the premiums, and the ratios. The four cards below cover each piece as it applies to a Tennessee file.
For the program overview, see Lendmire’s FHA loan program; for help with the minimum investment, the down payment assistance program.
The minimum required investment
Unlike a conventional down payment, the FHA minimum investment can come entirely from an acceptable gift, which is why a Tennessee first purchase can close with help from family. The investment is fixed by HUD; what varies is where it comes from.
The decision score sets the leverage
FHA reads credit through the decision score, and the threshold for maximum financing is far below conventional norms. A thin file or a non-traditional credit history is not a bar: it is underwritten manually on rent, utilities, and other payment records, with the ratios held to the base table.
Two premiums: upfront and annual
Two numbers to know: the upfront premium added to the loan at closing, and the annual premium paid monthly. The schedule in the snapshot shows how the annual premium steps with leverage and loan size, and the calculator applies it to a Tennessee price.
Qualifying ratios and compensating factors
Two ratios decide the payment the file supports: the housing payment alone, and the housing payment plus every other monthly obligation, each as a share of effective income. The ladder in the snapshot shows the manual tiers; the calculator shows where a Tennessee scenario lands.
The result is an estimate, not a decision: the appraisal may land below the contract price, the lender sets the rate at lock, and the ratios are measured on effective income. What does not change is the program structure the calculator reproduces.
Where Tennessee’s first-time and moderate-income buyers shop — and how FHA fits.
The statewide figures below frame every Tennessee FHA file: how many households own, what their homes are worth on the latest estimate, and what they earn. They are context for sizing, not inputs to a credit decision.
Statewide figures provide general market context, not an appraisal or an income calculation. A high median value means a larger minimum investment and a larger premium in dollars; a modest median value means a file that clears the county limit easily. Neither changes the program’s percentages, only what they amount to.
Data sources: U.S. Census Bureau — ACS 5-Year (2024) housing and population estimates, including tenure, home values, gross rents, and household income.
Where Tennessee’s FHA buyers shop — market by market.
Six Tennessee markets, each with its own price picture and its own guide. The minimum investment, the decision score, and the premium schedule do not change from one to the next; the prices, the county limits, and the typical files do.
Nashville
Nashville holds one of the largest pools of owner households among Lendmire’s Tennessee markets — roughly 164,334, about 52% of households — a metropolitan market where FHA financing is the everyday route into a first home. Census context: median value near $413,600, median household income near $77,371, population near 690K.
Memphis
Roughly 113,608 Memphis households own their homes (45% of the total), which makes it a metropolitan market where FHA purchases close across a wide range of prices and property types. Census context: median value near $169,000, median household income near $51,736, population near 619K.
Chattanooga
Chattanooga holds one of the largest pools of owner households among Lendmire’s Tennessee markets — roughly 41,437, about 52% of households — a metropolitan market where FHA financing is the everyday route into a first home. Census context: median value near $283,200, median household income near $64,523, population near 186K.
Knoxville
Knoxville holds one of the largest pools of owner households among Lendmire’s Tennessee markets — roughly 40,240, about 47% of households — a metropolitan market where FHA financing is the everyday route into a first home. Census context: median value near $239,700, median household income near $54,039, population near 195K.
Clarksville
In Clarksville, owner households number near 37,683, about 56% of households, and the metropolitan market there produces a steady flow of FHA purchases and refinances. Census context: median value near $263,600, median household income near $69,303, population near 176K.
Murfreesboro
Roughly 31,783 Murfreesboro households own their homes (52% of the total), which makes it a metropolitan market where FHA purchases close across a wide range of prices and property types. Census context: median value near $402,100, median household income near $80,108, population near 161K.
Statewide, the program rules are the same in every Tennessee market: the minimum investment, the decision score for maximum financing, the premium schedule, the ratio ladder, the occupancy rule, and HUD’s property standards. What changes by county is the loan limit, which a Lendmire loan officer confirms for the county where you are buying.
Four ways Tennessee buyers put an FHA loan to work.
A good use of FHA is one the program’s shape fits: a modest investment, a forgiving score, ratios with room to stretch, and insurance that makes the leverage possible. Four common Tennessee uses follow.
Buy on a recovering credit profile
A Tennessee buyer whose credit has recovered from a bankruptcy, a foreclosure, or a stretch of late payments can qualify once the event is seasoned under HUD’s rules and the recent history is clean; the decision score sets the leverage and the ratios follow the manual ladder.
Buy a condominium in an approved project
Condominiums are a common first purchase in Tennessee, and FHA finances them in approved projects or through single-unit approval. The approval question is handled on the lender’s side; the buyer’s file is the same as for a house.
Buy a small multi-unit home and live in one unit
FHA finances owner-occupied homes of up to four units with the same minimum investment as a house. A Tennessee buyer who lives in one unit and rents the others can count part of the rental income toward qualifying, within HUD’s rules for multi-unit purchases.
Buy a first home with the minimum investment
For a first purchase in Tennessee, FHA pairs a small investment with a forgiving score and a ratio ladder that stretches with compensating factors; the file closes on the appraisal, the income, and the decision score.
Estimate the FHA payment on a Tennessee price before requesting a quote.
This estimator runs the program’s own math on your Tennessee inputs: price less the investment, plus the financed premium, amortized at the benchmark rate, with the monthly premium and escrows added. A licensed loan officer provides the actual rate, payment, and costs in writing.
Tennessee FHA payment estimate
The defaults are Tennessee context, not your file: enter the real price, the real down payment, and the real escrows.
Editable benchmark: 7.03% as of September 24, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not an FHA loan quote.
Illustrative starting assumptions: a $285,000 price near Tennessee’s median owner-occupied home value (kept where an FHA loan is realistic in most counties), the FHA minimum investment as the down payment, a thirty-year term at the current Freddie Mac benchmark, property taxes and insurance estimated for Tennessee (U.S. Census Bureau). Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not an FHA loan quote; your rate is set by the lender at lock. FHA mortgage insurance follows HUD’s published schedule for the term, leverage and loan size entered; taxes, insurance and dues are editable estimates; closing costs are not included; county loan limits are not checked here. Licensed in sixteen states for consumer mortgages. Lendmire is not affiliated with or acting on behalf of FHA, HUD, or the federal government.
Same buyer, three very different closings.
The same buyer can often close three ways, and the structures differ more than the headlines suggest: FHA with its insurance schedule, a conventional loan with private mortgage insurance that cancels, or a VA loan for an eligible borrower with no mortgage insurance at all.
FHA, conventional with mortgage insurance, or VA.
FHA fits the Tennessee buyer whose profile a conventional file would turn away or price heavily: the leverage is high, the score threshold is low, and the premiums do not rise with a weaker score. The cost is insurance that stays for the term at full leverage.
Where FHA charges by schedule, conventional charges by score. A Tennessee buyer with strong credit and a small down payment may find the private premium smaller and the payment lower; a buyer with a modest score will not. See Lendmire’s conventional loan program.
A Tennessee buyer with VA eligibility rarely needs FHA: the VA loan carries no down payment and no monthly insurance, and the funding fee is the only program cost. FHA is the fallback where entitlement is used up or the property does not fit. See Lendmire’s VA loan program.
Where each one fits: FHA for the small investment and the forgiving score; conventional for the strong score that wants cancellable insurance; VA for the eligible borrower who can skip both the down payment and the insurance.
What to prepare for a Tennessee scenario review.
Most of this is standard mortgage documentation; have these ready for a Tennessee review all the same.
This is a general preparation guide, not a universal checklist. The selected lender may request additional information based on the transaction, the property, the credit profile, and the income picture. Nothing here is legal or tax advice.
Local details that can change the loan.
The program’s percentages are only part of the answer; these are the details that decide what a Tennessee FHA file actually becomes once the appraisal and the credit report arrive.
Use these checks to keep the Tennessee file clean and fundable.
Run these before asking for a quote: know where the decision score lands, know how long the annual premium runs at your leverage, and know that the property and the price fit the program and the county limit.
- Confirm the score: the threshold in the snapshot opens maximum financing and the ratio ladder.
- Know the premium: at full leverage the annual premium runs for the term of a thirty-year loan.
- Check the limit: the county limit caps the loan amount; ask a loan officer for the current figure.
The decision score decides the leverage
The score the program uses is the lender’s, not an app’s. A Tennessee file lands on maximum financing at the threshold shown in the snapshot, and the threshold is also where the compensating-factor ladder opens; below it the ratios are held to the base table.
How long the annual premium runs
Unlike private mortgage insurance, the FHA annual premium does not cancel as the home gains value. On a Tennessee full-leverage loan the exit is a refinance; the calculator shows the premium’s rate and duration for the leverage entered.
The county loan limit
The county limit is a ceiling on the loan amount, not on the price. A Tennessee buyer shopping above it either brings the difference as a larger investment or moves to a conventional loan; ask a loan officer for the limit in the county where you are buying.
Seller contributions and the minimum investment
Sellers and other interested parties may pay closing costs, prepaids, and discount points up to HUD’s limit as a share of the price; above it, the excess reduces the price for loan-sizing. The minimum investment itself cannot come from the seller, but it can come from an acceptable gift.
The appraisal and HUD’s property standards
The appraiser on a Tennessee FHA file is on HUD’s roster and reports on condition as well as value. Required repairs are common on older homes and are usually settled by the seller before closing; where they cannot be, the file may not close as an FHA loan.
From a Tennessee pre-approval to keys in hand.
The Tennessee process is a standard mortgage process with FHA’s checks layered on: the decision score, the property standards, the project approval where it applies, and the premium schedule. Here is what happens at each step and what the buyer does.
Pre-approval
The first conversation settles the shape: where the decision score lands, what the ratios support, whether a gift will cover the investment, and whether FHA is the right program next to conventional and VA for the Tennessee purchase.
Contract and appraisal
The Tennessee contract sets the price and the contributions; the appraisal sets the value and the condition. Both feed the loan amount, and the lender confirms the county limit and the project approval before underwriting begins.
Underwriting
An automated approval follows the system’s finding; a manual file follows the ratio ladder. Either way, the Tennessee underwriter verifies the income, the assets, the credit history, and the property, and issues the approval with its conditions.
Closing
The Tennessee closing applies the program’s structure: the financed upfront premium, the monthly annual premium, and the escrow account. The buyer moves in within two months and keeps the home as a principal residence for at least a year.
A brokerage that matches the program to the buyer.
A brokerage sees several wholesale programs and all three government and agency routes; a single lender sees its own. For a Tennessee buyer that difference shows up in which program is recommended, because Lendmire runs them side by side and says which one costs less.
Three programs, one set of numbers
A single-program lender recommends its program; a brokerage recommends the one that fits. For a Tennessee buyer with a modest score that is usually FHA, with a strong score often conventional, with eligibility almost always VA.
The premium explained before the offer
No Tennessee buyer should learn at the closing table that the premium lasts for the term. The loan officer walks through the upfront premium, the annual premium, and the duration for the leverage chosen, and shows the conventional alternative on the same numbers.
Licensed, consumer-purpose, in writing
The parameters on this page are HUD’s and the wholesale overlays’; the terms for a specific Tennessee loan come from a licensed loan officer, in writing, after the review. Lendmire is a broker, never the lender, and not affiliated with the federal government.
Trusted by first-time buyers & families alike.
Tennessee FHA loan FAQs
The questions below come up on nearly every Tennessee FHA conversation. The answers are general; the figures in the snapshot above are the program’s current parameters.
What is an FHA loan, and who is it for?
Think of it as a conventional mortgage with a federal insurance policy attached. The policy costs a premium, and it buys a smaller investment, a lower score threshold, and more room in the ratios than the agencies allow. Owner-occupied homes only, up to four units.
How much do I need to put down on an FHA loan in Tennessee?
HUD sets the minimum investment as a small share of the price or value, whichever is lower; the snapshot and the calculator show it on a Tennessee price. The whole investment can be a gift from a family member or another acceptable donor.
What credit score do I need for an FHA loan?
Maximum financing opens at the decision score shown in the snapshot, which is the lowest of the borrowers’ middle scores on the lender’s report. HUD’s rules allow lower scores at reduced leverage, but the wholesale programs behind these pages start at the threshold, so that is the working floor in Tennessee.
How does FHA mortgage insurance work, and how long do I pay it?
Two parts, both in the snapshot: the upfront premium on the base loan and the annual premium on most thirty-year loans. The duration is the detail to know before the contract: eleven years at or below ninety percent leverage, the loan term above it.
What is the FHA loan limit in Tennessee?
There is a county limit, and it is the first thing confirmed on a Tennessee file near the top of the market. The loan officer provides the current figure; above it the options are a larger investment or a conventional loan.
What debt-to-income ratio does FHA allow?
The manual-underwriting reference ratios are in the snapshot: the housing payment and the total debt as shares of effective income. With documented compensating factors the ladder stretches them tier by tier, and files scored by HUD’s automated system follow the system’s finding, which commonly allows more than the manual table.
Can I get an FHA loan after a bankruptcy or foreclosure?
Yes, with seasoning. Bankruptcy, foreclosure, deed-in-lieu, and short sale each carry their own waiting period, and a Tennessee buyer with the event seasoned and the recent history clean qualifies on the decision score and the ratios.
Can the down payment be a gift?
Gifts are allowed for the full minimum investment and for closing costs, from family members and other acceptable donors, documented by letter and transfer. What a gift cannot do is come from the seller or another party with an interest in the sale.
Do I have to live in the home to use an FHA loan?
FHA insures owner-occupied homes only. Occupancy is documented at closing and expected to last at least a year; a non-occupying co-borrower is allowed, but someone on the loan has to live in the Tennessee home.
Can I use an FHA loan to buy a condominium?
An FHA condominium file adds the project question to the house file. Confirm the approval path before paying for the appraisal; the rest of the file is standard.
FHA, conventional, or VA in Tennessee: compared on your numbers.
Enter your Tennessee figures in the calculator, then request a review. The minimum investment, the premiums, the ratios, and the county limit are confirmed against the program rules, and the terms come in writing from a licensed loan officer.
This guide covers Tennessee — for the program overview, see Lendmire’s FHA loan program.
All Tennessee city guides (6): Chattanooga · Clarksville · Knoxville · Memphis · Murfreesboro · Nashville
Related programs: Down Payment Assistance · FHA 203(k) Rehab Loans · Conventional Loans