Mortgage rates in Tennessee

Quick insights

• The mortgage rates in Tennessee are updated frequently; for the most up-to-date information, view current mortgage rates in the zip code you’re looking to buy a home in.
• Many factors influence Tennessee mortgage rates, including (but not limited to) personal factors such as your credit score and broader market conditions.
• Prioritizing a low interest rate on your mortgage can make your monthly payments and lifetime costs more affordable.

 If you’re planning to buy a home in Tennessee, the current mortgage rates are probably close to top of mind. Many homeowners prioritize the lowest interest rates when shopping for a home loan, as this rate can majorly impact your monthly and lifetime mortgage costs. However, these rates are constantly in flux, determined by a number of personal and macro factors. In this article, we’ll explain the factors affecting Tennessee mortgage rates and point you toward resources that can inform your search.

How to find Tennessee mortgage rates

Mortgage rates can vary across the state. For the most up-to-date information, enter your zip code to find current mortgage rates in the area. We update our interest rate table every day, Monday through Friday. You can also experiment with our mortgage calculator for customized rate and payment estimates. Keep in mind, mortgage refinance rates tend to differ from the rates associated with buying a home.refinance-hl000061

As you become more serious about buying a home, you may want to consider getting preapproved for a mortgage or contacting a Home Lending Advisor in Tennessee for support.affordability-hl000008

U.S. mortgage rate trends

Current 30-year mortgage rates have been between 5% and 10%. Here’s a view of the annual averages for 30-year fixed-rate mortgage rates since 1971:ec-30-year-fixed-rate-ma

• 1974: 9.19%
• 1982: 16.04%
• 1990: 10.13%
• 1998: 6.94%
• 2006: 6.41%
• 2014: 4.17%
• 2020: 3.11%
• 2024: 6.72%

What factors affect mortgage rates in TN and nationwide?

You may be wondering why rates change nationwide, and what causes individuals to qualify for the varied rates that they do. The answer is somewhat complex, as there are both personal details and economic factors influencing the interest rates you see when you apply for a mortgage.

Consumer impacts

Lenders typically require potential borrowers to submit many pieces of information about their personal finances as part of the application process. Using these items, the lender draws conclusions about the applicant’s likelihood of repaying the loan—and the potential risk of loaning them money. Aspects commonly considered include:

• Credit score: Having a high credit score can help improve your chances of being approved for a loan with a lower interest rate. This is because a high credit score (and solid credit history) can indicate your likelihood of making timely payments on a future loan.
• Debt-to-income (DTI) ratio: Your DTI ratio (the proportion of your income that goes to existing debts) can also affect the interest rates you are approved for. Having a higher DTI ratio may lead to higher interest rates, while having a lower DTI may help you be approved for a lower rate.
• Down payment: Making a larger down payment reduces the amount you need to finance with a mortgage. A smaller mortgage lessens the amount the lender has to provide, which can result in a lower interest rate. Likewise, a smaller down payment may result in a higher interest rate.
• Income: Those with higher incomes may be more likely to qualify for a lower interest rate. Someone earning less may be perceived as less financially stable and therefore a riskier candidate for a loan.

Market conditions

The U.S. Federal Reserve (commonly called “the Fed”) moderates the rate environment by raising and lowering the federal funds rate. When the rate increases, borrowing costs increase for banks, which can help steady economic activity in times of volatility. Lowering the federal funds rate typically results in lower borrowing costs and better interest rates for mortgages. Paying attention to news from the Fed can help inform your understanding of the current rate environment.

How rates vary by mortgage type

Different types of mortgages come with unique features and terms, which may affect the way interest rates are applied and expressed. A few common mortgage types include:

• Fixed-rate loans: A fixed-rate loan is a common type of mortgage that maintains a single interest rate throughout its lifetime, resulting in predictable monthly payments.
• Adjustable-rate mortgages (ARMs): ARMs generally have an introductory rate period with a fixed interest rate before transitioning to a variable rate structure. After the introductory period, the rate will be updated regularly in accordance with market changes.
• Federal Housing Administration (FHA) loans: FHA loans, insured by the federal government, make it easier for certain individuals to qualify. These loans often have lower interest rates compared to conventional mortgage options.
• Veteran’s Affairs (VA) loans: VA loans are provided as part of a federal program intended to make buying a home more affordable for active-duty servicemembers and veterans.
• Jumbo loans: A “jumbo loan” refers to a mortgage that’s larger than the current conforming loan size. These loans typically have higher interest rates due to their size.

How rates affect affordability in TN?

So, why do homebuyers focus so much on interest rates? While your interest rate is not the only factor affecting the financials of your loan, it can definitely make an impact. For example, a $330,000 loan in Tennessee with a 20% down payment and 30-year term could have very different costs depending on the rate:

• With an 8% fixed interest rate: Estimated monthly payments would be $1,940, with a total lifetime cost of $697,370.
• With a 7% fixed interest rate: Approximate monthly payments would be $1,760, with a total lifetime cost of $632,300.
• With a 6% fixed interest rate: Estimated monthly payments would be $1,580, with a total lifetime cost of $569,810.

While these are just quick examples, it can be helpful to experiment with a mortgage affordability calculator to deepen your understanding of how different mortgage variables interact. By using figures relevant to your homebuying budget, you may get closer to determining what rates and terms would be affordable for you.

In summary

Mortgage rates in Tennessee are updated on a regular basis and can vary widely across the state. For the most up-to-date information, search by zip code to view interest rates in the area you’re considering buying a home in. For one-on-one attention, you may want to enlist the help of a local Home Lending Advisor who can discuss your mortgage options with you directly.