FHA Loan Tennessee 2026: Floor Limits + the THDA Great Choice Stack
Nearly all of Tennessee runs at the ~$541K FHA floor — Nashville metro edges above. The real TN play: FHA + THDA Great Choice Plus, deferred DPA covering the entire down payment - plus a 6% amortizing lane for bigger checks.
Get FHA Pre-Approved in TN — Free
3.5% down, 580+ credit, THDA stack check. 2 minutes.
~$541K
FHA Limit (most of TN)
floor counties
3.5%
Min Down
at 580+ credit
$6K/6%
THDA Great Choice+
deferred
1.75%
Upfront MIP
financed in
TN FHA Limits by Metro — October 2026
| Metro Area | 1-Unit Limit | What To Know |
|---|---|---|
| Nashville metro (Davidson + collar) | ~$541-620K | TN's highest limits — metro adjustment |
| Memphis, Knoxville, Chattanooga | ~$541K | Floor — all starter inventory fits |
| Tri-Cities, Clarksville, Murfreesboro ring | ~$541K | Floor — full market coverage |
| Rural East & West TN | ~$541K | Floor — cheapest FHA entry in the Southeast |
Approximate 2026 figures — HUD revises annually. Verify at HUD.gov. Or check your real approval amount →
The THDA Stack: Deferred vs Amortizing Lanes
Great Choice Plus: deferred DPA (~$6K or 6% of price) paired with FHA — covers the full down on most TN purchases. 0%, due on sale/refi/payoff.
The 6% lane: an amortizing second at the same rate as your first - bigger assistance than the flat $6K deferred, with a small monthly cost added. On $300K that's ~$18K vs $6K: the difference between covering the down and covering the down plus closing.
Acquisition-price caps bind the THDA side — typically ~$350K depending on county. Nashville's newest listings can clear FHA but fail THDA's cap. Check both gates.
Quick check: THDA pairs with FHA in Tennessee — see which lenders actually run the stack.
The Tennessee Reality Check: Nashville vs the Rest
Davidson County is its own economy. Nashville's median runs near ~$430K as of late 2026 while Knoxville and Chattanooga sit ~$290-330K and Memphis ~$210K. The ~$524K FHA floor never binds — but THDA's county income caps DO in Williamson and the Nashville ring, where two-earner households blow past eligibility.
THDA Great Choice runs two real lanes. The ~$6K fixed-amount deferred lane covers the 3.5% down on a ~$170K home; the 6% amortizing lane at the first-mortgage rate scales with the price — on a $320K Chattanooga purchase that's ~$19K, wiping out down payment AND most of closing.
The no-income-tax advantage: Tennessee's lack of state income tax effectively boosts qualifying income vs peer states at the same salary — useful on marginal DTI files. Pair that with THDA's below-market first-mortgage rate and TN becomes one of the cheapest carry-cost states for FHA buyers.
5 FHA Gotchas in Tennessee
1. Lifetime MIP under 10% down
3.5% down = MIP for the loan's life. Nashville's run means the refi exit is fastest there — 4-6 years is realistic in the growth corridors.
2. Nashville's price-cap squeeze
FHA clears most Davidson-area inventory; THDA's acquisition cap (~$350K) is tighter. New-construction Nashville often clears HUD but fails the agency cap.
3. Appraisal condition rules
FHA health/safety minimums hit TN's older rural stock — roof age, handrails, well/septic inspections flag fast.
4. Volunteer-state overlays
HUD allows 580; TN lenders overlay 620-640, THDA runs 640. A 615 denial is a lender choice — shop the participating list.
5. Nashville condo towers
Nashville's condo boom means many newer projects lack FHA approval — check HUD's list before offering, or use single-unit approval.
Frequently Asked Questions
Q1. What are the FHA loan limits in Tennessee for 2026?
Most of Tennessee sits at the national floor (~$541K single-family for 2026); the Nashville metro carries a modest adjustment (~$541-620K). With TN prices still under the ceiling outside Williamson County, the limit rarely blocks a deal. Verify your county at HUD.gov.Get FHA pre-approved →
Q2. Can I stack THDA with an FHA loan?
Yes — the standard TN play. Great Choice Plus pairs deferred DPA (typically $6K or 6% of price) with FHA first mortgages; the 6% amortizing lane adds a bigger second for closing costs. On a $300K Chattanooga starter, the deferred stack covers the $10.5K down.Check THDA stacking →
Q3. What credit score do I need for FHA in TN?
HUD floor: 580 for 3.5% down, 500-579 at 10%. TN reality: lender overlays at 620-640, and THDA pairs run 640. In the 580-639 band you can FHA without THDA; at 640+ the full stack opens.
Q4. How does FHA MIP work on a Tennessee purchase?
1.75% upfront financed + ~0.55% annual monthly. On $300K: ~$5.25K rolled in + ~$135/mo. With 3.5% down it's lifetime — the exit is conventional refi at 20% equity, which Nashville's appreciation reaches fastest in the state.Compare FHA vs conventional →
Q5. Can I use FHA for a duplex in Tennessee?
Yes — 2-4 unit owner-occupied properties qualify at 3.5% down with higher multi-unit limits. Memphis duplexes are among the cheapest house-hack entries in the Southeast — rental income can help qualify.
Q6. What if my score is under 580?
Below 580 rules out FHA and THDA. The fast path back: utilization under 30% and dispute errors — 20-40 points in a couple of months. Free Tennessee HUD counseling runs statewide.Spike my score →
Related Tennessee Guides
FHA + Great Choice Plus = TN's Deferred Stack
DPA covers the down payment - deferred or amortized. Check both gates.
Check My FHA + DPA Eligibility →Compare Lender Offers →