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FHA Home Loans in Tennessee

Does the home financing process make your stomach churn and your palms sweat? If so, Dash Home Loans is here to the rescue. At Dash, we make securing a Tennessee FHA loan fast. Like, Richard Petty fast.

Guaranteed by the Federal Housing Administration, FHA home loans are perfect for homebuyers with less-than-perfect credit and limited cash reserves. If you’ve struggled to get approved for a Tennessee conventional loan in the past, an FHA loan could be your golden ticket to homeownership. 

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What Is An FHA Loan?

An FHA loan1 is a government-backed financing tool that helps a homebuyer with a shaky credit history and limited savings afford their dream house.  

Approved FHA lenders can offer you competitive loan terms (think: uber low-interest rates) because these loans are guaranteed by the Federal Housing Administration.

That means if you ever default on your loan, the federal government will write a check for the remaining balance.

Because of this, even families with credit scores below 580 may be eligible for FHA financing.

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Not sure if you qualify? Contact us today to talk with one of our friendly Mortgage Coaches.

What Are FHA Loan Requirements in Tennessee?

To receive an FHA loan in Tennessee, you must meet Tennessee FHA loan requirements.

In the Volunteer State, these requirements are:

  • A credit score of at least 580. If you have a FICO* score in the 500 to 579 range, don’t despair. You may still be eligible for financing if you put 10% or more down. 
  • Putting at least 3.5% down. To receive an FHA loan, you must be able to fork out at least 3.5% of the total loan amount for a down payment. 
  • Choosing a home with a 15-year or 30-year term.
  • Purchasing mortgage insurance. This premium will depend on the loan amount and term.
  • A debt-to-income ratio less than 57% in some circumstances. To calculate your debt-to-income ratio, divide your monthly debt payments by your gross income. 
  • A housing ratio of 31% or less. Your housing ratio is calculated by dividing the sum of all property expenses by pretax income.  

Not sure if your finances are up to snuff? Contact us. We’ll team you up with a Mortgage Coach who can review your application.

Income Requirements for Tennessee FHA Loans

Many borrowers confuse FHA loans with USDA loans in Tennessee, another type of government-backed mortgage.

Though these two lending options are similar, Tennessee FHA loans don’t have any income restrictions. That means you can make a little or a lot and still qualify for an FHA loan. 

The catch?

To determine your lending eligibility, mortgage lenders will still evaluate your debt-to-income ratio. Your DTI is calculated by dividing your total monthly debt payments by your monthly gross income. To qualify for an FHA loan in Tennessee, this figure must typically be less than 57%.

Lenders will also consider your housing ratio, which measures how much of your gross income is allocated to housing-related expenses. Lenders look for a housing ratio of 31% or less.   

In short, there aren’t any income thresholds associated with FHA loans. But a larger salary will offset any debts you may have, helping you become a more promising applicant. 

Recommended Reading

How to Buy a Home With Bad Credit

Types of Tennessee FHA Home Loans

Are you hoping to buy a palatial estate in east Tennessee? Or maybe a wallet-friendly condo in downtown Chattanooga? No matter your vision, Dash will help you select an appropriate FHA home loan.

After scrolling through the Tennessee FHA loans we offer, give us a shout. We’ll connect you with a Mortgage Coach who will have you approved2 for an FHA loan in no time.

  • Fixed-Rate Loan: A conventional lending option with predictable interest rates.
  • Tennessee Adjustable-Rate Loan: Designed for homebuyers who want to start with lower monthly payments.
  • Manufactured Home Loan: Short-term financing for a mobile home. 
  • FHA 203b Loan: A lending option for buyers who are purchasing any home. 
  • FHA 203k Dream Loan: Provides financing to buy a fixer-upper plus the funds for needed renovations. 
  • FHA 245a Loan: Helps homebuyers who expect their income to increase in the future.
  • Energy-Efficient Mortgage (EEM): The FHA’s EEM program funds energy-efficient home improvements.
  • Home Equity Conversion Mortgage (HECM): A reverse loan that allows seniors to capitalize on their home equity. 
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FHA Loan vs. Conventional Loan: Which Is Right for You?

We know what you’re thinking: “Aren’t FHA loans just for first-time homebuyers?” But that’s a common misconception.

An FHA loan is appropriate for real estate newbies and seasoned gurus alike.

When you reach out to a Mortgage Coach at Dash, they’ll dispel any other misconceptions you may have about FHA loans. They’ll also help you weigh the pros and cons of pursuing a Tennessee FHA loan as opposed to a Tennessee conventional loan.

Though your Mortgage Coach can offer more detailed insight, here’s a quick comparison of the two:

  • Conventional loans require a higher minimum credit score – 620 instead of 500. 
  • FHA loans require just 3.5% down. Some conventional loans allow borrowers to scrape by with 3%, but you’ll need a stellar credit score to do so. 
  • FHA lenders are more understanding of high debt-to-income ratios than conventional lenders.
  • PMI, or private mortgage insurance, is required with an FHA loan. Conventional loans require PMI only if you put down less than 20%.
  • FHA loan terms come in two flavors: 15 or 30 years. You’ll have more flexibility with a conventional loan.
  • You must purchase a primary residence with an FHA loan – no vacation homes or investment properties.
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Benefits & Disadvantages of FHA Loans 

If you’re worried about getting approved for a conventional loan because of credit card debt or limited cash reserves, an FHA loan could be the answer.

After all, since these loans are guaranteed by the federal government, lenders are more willing to offer financing to “risky” borrowers. They’re also more willing to offer favorable loan terms. 

The caveat?

FHA loans require private mortgage insurance. Should you default on your loan, this insurance protects lenders. But it’s pretty pricey. Annual premiums range from 0.45% to 1.05% of your original loan amount. So, if you buy a house for $250,000, expect to fork out between $1,125 and $2,625 each year.

An FHA loan is probably a good fit if:

  • You can put at least 3.5% down
  • Your credit history is shakey
  • You have a fair amount of debt

FHA loans are designed to make homeownership more attainable for families with less-than-stellar credit and limited savings. However, it’s not appropriate for all borrowers. 

Still unsure which loan option is the right fit? Contact Dash online or call 615-249-1568 to get in touch with a Mortgage Coach.

The Dash Home Loans Process

Let’s be frank: Securing an FHA loan in Tennessee is terrible.

Why?

Because the average mortgage lender dawdles, resting on their laurels for weeks – if not months – until someone else nabs that Cape Cod down by the Cumberland River. 

What makes Dash better than big banks? A lot.

Namely, we’ve simplified the home loan approval process by firing external loan processors and nixing unneeded paperwork.

Plus, our Mortgage Coaches actually care about you. (A weird concept these days, right?) Their success is reflective of your success, so they’ll work hard to see that you close on your dream house. 

But what if you don’t qualify for a Tennessee FHA home loan?

That’s okie dokie. Since we offer more than a dozen loan types, our Mortgage Coaches will keep digging until they find a lending option that suits your needs.

Want to learn more? Reach out to Dash Home Loans by calling 615-249-1568 for assistance with FHA loans in Tennessee.

Work With Dash Home Loans for Tennessee FHA Loans

Does applying for an FHA loan in Tennessee stress you out?

Relax.

When you work with Dash Home Loans, our Mortgage Coaches will provide step-by-step guidance and much-needed reassurance. They’ll answer each and every question you have about FHA loans in Tennessee. They’ll also find you super awesome rates.

But what if you’re still in the daydreaming phase? Not a problem.

Once you apply, we’ll connect you with a Mortgage Coach who will review your deets (millennial speak for “details”) and give you an approximate lending limit.

If you’ve already locked eyes with a house, your Mortgage Coach can also give you an idea of what your monthly payment will look like.

It’s plain and simple, really: Dash does home financing differently. We’ve cut all the BS out of mortgage lending so that you enjoy a faster and better lending experience.

Don’t believe us? Just read a few (or a few hundred) of our five-star reviews.

A homeowner using their computer

With Dash, You’ll Close In a Hurry

Still have questions about the Tennessee FHA loan eligibility requirements? Want to learn more about what makes Dash Home Loans so great? Contact us to chat with a Mortgage Coach.

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FAQs

Tennessee FHA Home Loan FAQs

How do you get rid of PMI on an FHA loan?

All FHA loans require PMI, or private mortgage insurance (PMI). However, once you’ve paid 22% of your FHA loan balance, you can bid adieu to that recurring expense.

Where can I apply for an FHA loan in Tennessee?

Applying for an FHA loan is quick and easy. Just connect with an FHA approved lender like Dash Home Loans. From there, your lender will determine if you qualify. If you do, congrats! After completing some additional paperwork, you’ll be on your way to homeownership.

Who qualifies for a Tennessee FHA loan?

Anybody can secure an FHA loan. You’ll just need a credit score of at least 580. If your FICO* score is lower, don’t fret. You may still qualify if you put more money down. To secure an FHA loan, you’ll also need a DTI of 57% or less and a housing ratio of 31% or less. 

What’s the difference between an FHA loan and a conventional loan?

An FHA loan is a government-guaranteed home loan that makes homeownership more achievable for borrowers with less-than-awesome credit. For comparison, a Tennessee conventional loan is offered by a private lender and isn’t insured by the federal government.

When can you refinance an FHA loan?

You must wait six months from the first payment due date to refinance your FHA loan in Tennessee*.

When can you drop PMI on an FHA loan?

You can drop PMI once you pay off 22% of your loan amount.

Legal information

*FICO® is a registered trademark of Fair Isaac Corporation.

This ad is not from HUD or FHA and was not approved by HUD or any government agency.

1 FICO® Disclaimer: FICO® is a registered trademark of Fair Isaac Corporation.This ad is not from HUD or FHA and was not approved by HUD or any government agency.

2 Dash Loan Closing Guarantee Disclaimer: Guarantee is based on loan closing; restrictions apply.

No-Down-Payment Disclaimer: Closing costs and fees may still apply.

Lending Disclaimer: Mortgage rates are subject to change and are subject to borrower(s) qualification. APR rate(s) quoted is/are based upon a (loan amount), (loan term, including whether fixed or ARM) year.

Refinancing Disclaimer: When it comes to refinancing your home loan, you can generally reduce your monthly payment amount. However, your total finance charges may be greater over the life of your loan. Your PRMI loan professional will provide you with a comprehensive refinance comparison analysis to determine your total life loan savings.

Down Payment Assistance Disclaimer: First lien interest rates may be higher when using a DPA second.

Pre-Approval Disclaimer: Pre-approvals are given to clients who have met qualifying approval criteria and specific loan requirements at the time of applications. Results may vary.

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