Buying a Home in Tennessee in 2026
Nashville's boom gets the headlines, but Memphis and Knoxville still offer genuine affordability within the same state lines.
Nashville runs hottest with the music-industry influx, Knoxville offers Smoky Mountain access at lower prices, and Memphis remains the value leader. If you are moving to Tennessee from out of state, spend a weekend driving the areas you can afford; the feel of a neighborhood tells you things no listing ever will.
Tennessee Property Taxes: The Number That Changes Your Payment
Tennessee funds itself with sales tax instead, leaving a 0.52% effective property tax rate, one of the lowest in the country. On a $389,000 home, that works out to roughly $2,023 a year, or $169 a month, which is one of the lowest in the nation.
Property tax is part of PITI, the full monthly figure lenders actually underwrite, so it directly limits how much you can borrow. Because Tennessee lenders escrow it, the tax shows up inside the monthly figure you budget around instead of as a separate yearly shock.
First-Time Home Buyer Programs in Tennessee
The Tennessee Housing Development Agency (THDA) runs the state's main programs. Its Great Choice Loan Program competitive 30-year fixed rates for first-time buyers, which can meaningfully lower the monthly payment from day one.
The agency's Great Choice Plus down payment assistance paired with the first mortgage. Check Tennessee income and price caps first; they are the gatekeepers, and everything else follows from them.
Worked Example: Buying the Median Tennessee Home
Here is what the median Tennessee purchase looks like with 20% down and a 30-year fixed rate near 7.4%, the Freddie Mac average in October 2026:
| Item | Monthly / Amount |
| Home price | $389,000 |
| Down payment (20%) | $77,800 |
| Loan amount | $311,200 |
| Principal and interest (7.4%, 30-yr) | $2,155 |
| Property tax (0.52% effective) | $169 |
| Homeowners insurance (est.) | $113 |
| Total PITI | $2,437 |
With only 10% down on a $389,000 Tennessee purchase, private mortgage insurance would stack on top of PITI until you hit 20% equity, so test that scenario in the calculator before you decide.
Closing Costs, Transfer Taxes, and Homestead Rules in Tennessee
Tennessee's recordation tax is $0.37 per $100 of price, or $3.70 per $1,000. With no state income tax, run your take-home pay through our Tennessee paycheck calculator to see exactly how much house your salary supports.
Tennessee has no broad homestead exemption; low rates are the benefit instead. Plan on 2% to 5% of the purchase price all-in for closing in Tennessee, and compare loan estimates line by line rather than trusting the headline rate.
Frequently Asked Questions
What is the median home price in Tennessee in 2026?
Roughly $389,000, based on median single-family sale price data. Prices vary widely by city, so treat the statewide figure as a starting point rather than a quote for any specific neighborhood.
How much are property taxes on a $389,000 Tennessee home?
At the 0.52% effective rate, about $2,023 a year, or $169 a month before any exemptions. Your county and school district set the actual levy, so individual bills differ.
How much house can I afford in Tennessee?
A common rule caps housing costs near 28% of gross monthly income. Check your take-home pay with the Tennessee Paycheck Calculator, then test price points in the calculator above to find a payment that fits.
Does Tennessee have a state income tax?
No. Tennessee eliminated its Hall tax on investment income in 2021, so there is now no state income tax of any kind. Sales and property taxes carry the load.
What is THDA's Great Choice program?
It is the state's flagship first-time buyer loan with a competitive fixed rate, and Great Choice Plus adds down payment assistance on top for buyers who need it.
Related Calculators
Start with the main Mortgage Calculator to compare Tennessee against national figures, or see how nearby states stack up with the North Carolina Mortgage Calculator, Virginia Mortgage Calculator, Texas Mortgage Calculator. To budget the payment against real take-home pay, use the Tennessee Paycheck Calculator. Browse more free tools at USACalculator.
Sources: Bankrate (Redfin median single-family prices), Tax Foundation via CountryTaxCalc (effective property tax rates), Freddie Mac (30-year fixed rate). State figures: Tennessee median $389,000, 0.52% effective rate. Figures reviewed for 2026. This calculator provides an estimate for planning purposes and is not financial advice. Confirm program details with the state housing agency.