First-Time Homebuyer Guide for East Tennessee
Buying your first home is exciting and intimidating. This guide helps you navigate the process in East Tennessee with confidence—from understanding programs designed for first-timers to making smart decisions that set you up for success.
Last Updated: November 18, 2025 | By Tracy Southard
First-Time Buyer Checklist
Before You Start
- • Check your credit score
- • Save for down payment & closing costs
- • Review your budget honestly
- • Research first-time buyer programs
Getting Started
- • Get pre-approved for a mortgage
- • Find an experienced buyer's agent
- • Define your must-haves vs. nice-to-haves
- • Research neighborhoods and schools
First-Time Buyer Programs in Tennessee
Several programs help first-time buyers overcome the biggest obstacle: saving enough for down payment and closing costs.
Tennessee Housing Development Agency (THDA)
THDA offers two main programs for first-time buyers in Tennessee:
Great Choice: Provides down payment assistance and competitive interest rates. Available to buyers who haven't owned a home in the past three years. Income limits apply based on county and household size.
Great Choice Plus: Offers additional down payment assistance (up to $15,000 in some areas) for moderate-income buyers. Requires homebuyer education course.
Both programs offer below-market interest rates and can significantly reduce the cash needed to buy. Talk to THDA-approved lenders about qualification.
FHA Loans
Federal Housing Administration (FHA) loans are popular with first-time buyers because they require only 3.5% down payment and accept lower credit scores (580+). FHA loans do require mortgage insurance (both upfront and monthly), which increases costs but makes homeownership accessible sooner.
VA Loans
If you're a veteran or active military, VA loans offer incredible benefits: 0% down payment, no mortgage insurance, competitive rates, and limited closing costs. This is one of the best loan programs available and should be your first choice if you qualify.
USDA Loans
For properties in eligible rural areas, USDA loans offer 0% down for qualifying buyers. Parts of East Tennessee qualify. Income limits apply. Check the USDA eligibility map to see if your target area qualifies.
Conventional 3% Down
Fannie Mae and Freddie Mac offer conventional loans with just 3% down for first-time buyers. These require higher credit scores (typically 620+) than FHA but may have lower overall costs depending on your situation.
Common First-Time Buyer Mistakes (and How to Avoid Them)
Mistake #1: Not Getting Pre-Approved
Searching for homes without pre-approval wastes time and leads to heartbreak when you can't qualify. Get pre-approved FIRST to know exactly what you can afford and strengthen your offers.
Mistake #2: Maxing Out Your Budget
Just because you're approved for $350,000 doesn't mean you should spend it all. Leave room in your budget for furniture, repairs, higher utilities, and unexpected expenses. Buy less house than you can "afford" to maintain financial flexibility.
Mistake #3: Skipping the Home Inspection
Never waive your inspection contingency to make your offer more competitive. The $400-600 inspection fee could save you from buying a home with $50,000 in hidden problems. Inspect. Every. Time.
Mistake #4: Ignoring School Zones
Even if you don't have kids now, school zones dramatically affect resale value. Homes in top school districts appreciate faster and sell easier. Research schools even if you're childless—your future buyer will care.
Mistake #5: Making Major Financial Changes
Don't change jobs, finance a car, open new credit cards, or make large purchases during the home buying process. These can derail your mortgage approval even days before closing. Wait until after you close to make any major financial moves.
Mistake #6: Falling for Cosmetic Issues
Don't pass on a great home because of ugly paint, dated light fixtures, or worn carpet. Cosmetics are easy and inexpensive to change. Focus on location, structure, layout, and features you can't easily change. Paint can always be updated—location cannot.
Understanding First-Time Buyer Costs
Upfront Costs
Earnest Money: 1-3% of purchase price, held in escrow and applied to down payment at closing.
Down Payment: 3.5% (FHA), 3% (conventional), or 0% (VA/USDA). Plus closing costs of 2-5%.
Inspection: $350-600 for home inspection, plus potential specialized inspections.
Monthly Costs (PITI)
Principal & Interest: Your mortgage payment. On a $240,000 loan at 7% for 30 years: ~$1,600/month.
Property Taxes: In East Tennessee, budget $200-300/month for a $300,000 home.
Homeowners Insurance: Approximately $100-150/month depending on coverage.
PMI (if applicable): $50-200/month depending on loan amount and down payment.
Beyond the Mortgage
First-time buyers often underestimate costs beyond the mortgage. Budget for utilities (often higher than renting), maintenance and repairs (1-2% of home value annually), HOA fees (if applicable), lawn care, and furnishing. These add up quickly.
Real Budget Example
For a $250,000 home in Maryville with 3.5% FHA down payment:
• Mortgage Payment (P&I): $1,630/month
• Property Taxes: $220/month
• Homeowners Insurance: $125/month
• PMI: $125/month
• Total PITI: $2,100/month
Plus utilities (~$200-300), maintenance reserves, and HOA if applicable. Make sure your budget handles this comfortably.
The Process for First-Time Buyers
Step 1: Get Your Finances in Order
Check your credit score and review your credit report for errors. Pay down high-interest debt. Save for down payment and closing costs. Calculate how much house you can truly afford—not just what the lender will approve, but what you can comfortably pay while maintaining your lifestyle.
Step 2: Get Pre-Approved
Meet with 2-3 lenders to compare rates, fees, and programs. Provide required documentation (tax returns, pay stubs, bank statements, ID). The lender will pull your credit and issue a pre-approval letter showing exactly what you qualify for. This letter is essential when making offers—sellers won't take you seriously without it.
Step 3: Find the Right Agent
Look for an agent experienced with first-time buyers who will educate and guide you patiently. The right agent explains every step, answers countless questions, helps you understand market dynamics, and ensures you make informed decisions. This is likely your largest purchase ever—work with someone who treats it that way.
Step 4: House Hunting
Your agent sets up MLS searches and schedules showings. As a first-timer, you may not know exactly what you want initially. That's normal. Viewing homes helps you refine preferences. Take notes and photos (with agent permission) to remember properties. Don't rush—finding the right home takes time.
Step 5: Make an Offer
When you find "the one," your agent will guide you through making an offer. In East Tennessee, buyers typically pay earnest money (1-3% of price), request standard contingencies (financing, inspection, appraisal), and negotiate terms. Your agent's expertise is crucial here—they know what offers sellers will take seriously.
Step 6: Inspection & Due Diligence
Hire a professional home inspector immediately after your offer is accepted. Attend the inspection if possible—you'll learn about your future home's systems and maintenance needs. Review the report with your agent and decide what to request from the seller. Don't sweat minor issues, but address major problems or safety concerns.
Step 7: Finalize Financing
Your lender orders the appraisal and processes final underwriting. Respond quickly to any requests for additional documentation. Lock your interest rate when it's favorable. Review your Closing Disclosure carefully—it shows your final loan terms and costs.
Step 8: Close and Move In!
Attend closing with your ID and closing funds (wire transfer or cashier's check). Sign documents, get your keys, and celebrate—you're a homeowner! Then the real work begins: moving, setting up utilities, changing locks, and making your new house a home.
Tips for First-Time Buyer Success
1. Buy for 5+ Years
Real estate transaction costs are high (8-10% to sell). To recoup costs and build equity, plan to own the home at least 5 years. Don't buy if you might relocate soon.
2. Prioritize Location
You can change everything about a house except its location. Choose the best location and school zone you can afford, even if it means a smaller or less updated home. Location drives long-term value.
3. Don't Wait for Perfect
The perfect home doesn't exist. If a property checks 80% of your boxes, is in your budget, and in a good location, strongly consider it. Waiting for perfection often means missing good opportunities.
4. Build an Emergency Fund
After buying, maintain 3-6 months of expenses in savings. Homeownership brings unexpected costs—HVAC failures, roof leaks, appliance replacements. Be financially prepared.
5. Think Resale
Even buying your "starter home," consider resale. Homes in good school zones, with 3+ bedrooms, 2+ bathrooms, and garages sell easiest. Avoid the most unique or highly personalized properties.
Tracy's Advice for First-Time Buyers
"I love working with first-time buyers because helping someone achieve homeownership is incredibly rewarding. My advice: educate yourself, but don't get paralyzed by information overload. Trust your agent, ask questions (there are no dumb questions), and don't let fear prevent you from making a good decision. Buying your first home is a big step, but with proper preparation and good guidance, it's absolutely achievable. I'll walk you through every step and ensure you're confident in your decisions."
Frequently Asked Questions
How much do I need saved to buy my first home in Tennessee?
For a $250,000 home with an FHA loan (3.5% down), you'll need approximately $8,750 for down payment plus $5,000-$7,500 for closing costs, totaling $13,750-$16,250. First-time buyer programs may offer down payment assistance, potentially reducing this amount.
What is the THDA Great Choice loan program?
The Tennessee Housing Development Agency (THDA) Great Choice program offers first-time buyers down payment assistance and competitive interest rates. It's designed to help buyers who have steady income but limited savings. Your lender can determine if you qualify.
Can I buy a house with bad credit as a first-time buyer?
It's challenging but possible. FHA loans may accept credit scores as low as 580 (500 with 10% down). However, lower scores mean higher interest rates. Consider improving your credit before buying if possible, as even small score increases can save thousands over the life of the loan.
What is PMI and can I avoid it?
Private Mortgage Insurance (PMI) is required on conventional loans when you put down less than 20%. It protects the lender if you default. PMI typically costs 0.5-1% of the loan amount annually. You can avoid it by putting 20% down, using a VA or USDA loan, or choosing a piggyback loan structure.
Should I buy a fixer-upper as a first-time buyer?
Fixer-uppers can offer value but require expertise, time, and additional money for repairs. Most first-time buyers are better served by move-in ready homes, especially if you're not handy or don't have renovation budgets and experience. Your agent can help assess whether a particular fixer-upper makes sense.
Ready to Buy Your First Home?
I specialize in helping first-time buyers navigate the process with confidence. From understanding programs to finding the perfect starter home, I'll guide you every step of the way.
Contact Tracy Today:
Get in TouchAbout the Author: Tracy Southard is a licensed real estate agent with Realty Executives Associates who specializes in helping first-time homebuyers achieve homeownership in East Tennessee. With patience, expertise, and commitment to client education, Tracy has guided hundreds of first-time buyers through successful purchases.
Published: November 18, 2025 | Last Updated: November 18, 2025