Zero-down USDA Guaranteed Loans are the most popular rural development mortgage program in Tennessee. These loans are available for anyone with low to moderate income to purchase a home in approved rural areas with no down payment.  The USDA Guaranteed Loan Program is also the favorite no-down payment mortgage in Tennessee for non-veterans today, and can be used for a broader range of applicant incomes than USDA Direct Loans.

What are Tennessee USDA Loans?

The USDA loan program was created by the United States Department of Agriculture Rural Development, also known as “USDA RD”. USDA Guaranteed Loans (also known as USDA Section 502 Guaranteed Loans) are a mortgage program for low and moderate income mortgage applicants. Tennessee USDA loans provide low-cost, government insured mortgage options that suit a variety of home buying needs. The most common mortgages offered through USDA are known as “Guaranteed” loans. USDA Guaranteed Loans are 100% financing mortgages, which means you can use them to buy a home with no down payment.

Tennessee USDA Loan Requirements

USDA loan requirements mainly focus on the home loan applicant and the property. First off, the home must be located in an approved rural areas to be considered eligible for USDA financing. Second off, the home buyer must meet all income requirements set forth by USDA. These income limits are established through a combination of debt-to-income ratios and income ceilings that equal 115% of the area median income (AMI) for the particular area. Statewide, Tennessee carries a median household income of $53,320, but that can vary from county to county. Ultimately, the applicant must also meet all lender requirements for mortgage approval which include:

  • Credit Requirements
  • Income Requirements
  • Documentation Requirements

Tennessee USDA Loan Limits

USDA doesn’t set specific maximum loan amounts for guaranteed mortgages. Instead, local limits are determined by a combination of the area USDA maximum income limit and the borrower’s debt-to-income ratios. This approach means that guaranteed Tennessee USDA loan limits are fluid and based upon numerous factors. The limits listed below are based on approximate calculations. Actual guaranteed loan limits may vary.

1-4 Person Households
5-8 Person Households
Bedford County, TN$306,000$391,000
Benton County, TN$306,000$391,000
Bledsoe County, TN$306,000$391,000
Campbell County, TN HUD Metro FMR Area$306,000$391,000
Carroll County, TN$306,000$391,000
Chattanooga, TN-GA MSA$306,000$391,000
Claiborne County, TN$306,000$391,000
Clarksville, TN-KY MSA$306,000$391,000
Clay County, TN$306,000$391,000
Cleveland, TN MSA$306,000$391,000
Cocke County, TN$306,000$391,000
Coffee County, TN$306,000$391,000
Crockett County, TN HUD Metro FMR Area$306,000$391,000
Cumberland County, TN$306,000$391,000
Decatur County, TN$306,000$391,000
DeKalb County, TN$306,000$391,000
Dyer County, TN$306,000$391,000
Fentress County, TN$306,000$391,000
Franklin County, TN$306,000$391,000
Gibson County, TN$306,000$391,000
Giles County, TN$306,000$391,000
Grainger County, TN HUD Metro FMR Area$306,000$391,000
Greene County, TN$306,000$391,000
Grundy County, TN$306,000$391,000
Hancock County, TN$306,000$391,000
Hardeman County, TN$306,000$391,000
Hardin County, TN$306,000$391,000
Haywood County, TN$306,000$391,000
Henderson County, TN$306,000$391,000
Henry County, TN$306,000$391,000
Hickman County, TN HUD Metro FMR Area$306,000$391,000
Houston County, TN$306,000$391,000
Humphreys County, TN$306,000$391,000
Jackson County, TN$306,000$391,000
Jackson, TN HUD Metro FMR Area$306,000$391,000
Johnson City, TN MSA$306,000$391,000
Johnson County, TN$306,000$391,000
Kingsport-Bristol-Bristol, TN-VA MSA$306,000$391,000
Knoxville, TN HUD Metro FMR Area$306,000$391,000
Lake County, TN$306,000$391,000
Lauderdale County, TN$306,000$391,000
Lawrence County, TN$306,000$391,000
Lewis County, TN$306,000$391,000
Lincoln County, TN$306,000$391,000
Macon County, TN HUD Metro FMR Area$306,000$391,000
Marshall County, TN$306,000$391,000
Maury County, TN HUD Metro FMR Area$306,000$391,000
McMinn County, TN$306,000$391,000
McNairy County, TN$306,000$391,000
Meigs County, TN$306,000$391,000
Memphis, TN-MS-AR HUD Metro FMR Area$306,000$391,000
Monroe County, TN$306,000$391,000
Moore County, TN$306,000$391,000
Morgan County, TN HUD Metro FMR Area$306,000$391,000
Morristown, TN MSA$306,000$391,000
Nashville-Davidson--Murfreesboro--Franklin, TN HUD Metro FMR$323,000$417,000
Obion County, TN$306,000$391,000
Overton County, TN$306,000$391,000
Perry County, TN$306,000$391,000
Pickett County, TN$306,000$391,000
Putnam County, TN$306,000$391,000
Rhea County, TN$306,000$391,000
Roane County, TN HUD Metro FMR Area$306,000$391,000
Scott County, TN$306,000$391,000
Sevier County, TN$306,000$391,000
Smith County, TN HUD Metro FMR Area$306,000$391,000
Stewart County, TN$306,000$391,000
Van Buren County, TN$306,000$391,000
Warren County, TN$306,000$391,000
Wayne County, TN$306,000$391,000
Weakley County, TN$306,000$391,000
White County, TN$306,000$391,000

Additional USDA Limits

What is the maximum amount that I can borrow with a USDA Loan?

The maximum amount for a USDA home loan in Tennessee is determined by:

  • Maximum Loan Amount: There’s no set maximum loan amount for USDA rural home loans in TN. Instead, your debt-to-income ratios dictate how much home your can afford (29/41 ratios). Additionally, your total household monthly income must be within USDA allowed maximum income limits for your area. Maximum USDA Guaranteed Loan income limits for all areas can be found at here.
  • Maximum Financing: The maximum USDA Rural Development Loan amount in TN is 100% of the home’s appraised value plus the 1% USDA RD Loan guarantee fee.

What types of loans does USDA offer in Tennessee?

Two USDA home loan options are presently available in Tennessee for single family households. These programs are backed by the U.S. Department of Agriculture by way of its Rural Development Housing Loans:

  • Tennessee USDA Guaranteed Home Loans – Guaranteed Loans the most common Rural Housing Loans in Tennessee, because they accommodate higher income limits and 100% financing for home purchases. USDA Guaranteed applicants may have an income of up to 115% of the median household income for the area, which average $53,320 across the state. Specific area income limits for the program can be viewed here. All USDA Guaranteed Loans carry 30 year terms and are set at a fixed rate.
  • Tennessee USDA Direct Home Loans – USDA Direct Housing Loans in Tennessee are less common than USDA Guaranteed Loans and are only available for low and very low income households to obtain homeownership, as defined by the USDA. Very low income is defined as below 50 percent of the area median income (AMI); low income is between 50 and 80 percent of AMI; moderate income is 80 to 100 percent of AMI. Click here to see area income limits for this program.

What factors determine if I’m eligible for a USDA Loan in Tennessee?

To be eligible for a USDA loan in Tennessee, your monthly housing costs (mortgage principal and interest, property taxes, and insurance) must meet a specified percentage of your gross monthly income (29% ratio). Your credit background will be fairly considered. A 620 FICO credit score is generally required to obtain a USDA Rural Housing Loan approval through most lenders. You must also have enough income to pay your housing costs plus all additional monthly debt (41% ratio). These ratios can be exceeded somewhat with compensating factors. Applicants for loans may have an income of up to 115% of the median income for the area. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance.

How much money will I need for the down payment and closing costs?

Rural Development Mortgages in Tennessee require no down payment and they allow for the closing costs to be included in the loan amount (appraisal permitting).

What property types are allowed for USDA Mortgages?

While USDA Guidelines do require that the property be Owner Occupied (OO), they also allow you to purchase condos, planned unit developments, manufactured homes, and single family residences.

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