Loan Program
An FHA loan is a mortgage insured by the Federal Housing Administration and made by an approved lender. The insurance protects the lender if the borrower defaults, and in exchange the program allows qualification standards that can help buyers whose credit or savings would make a conventional loan difficult right now. On the Heathrow Mortgage site, FHA financing is described with 3.5 percent down, and a 580 credit score guideline is mentioned for that down payment level. Those two facts explain why FHA is often the first program discussed with first-time buyers in Tennessee and with buyers who are rebuilding credit.
Loan limits matter with FHA, and they are set by county. The 2026 FHA limit for a one-unit home in Davidson County and Williamson County is $1,029,250, according to the answer published on this site. That limit is high enough to cover a wide range of homes in Nashville, Franklin, and Brentwood, but buyers shopping in other Tennessee counties should check the limit for that county before they assume a price range works. FHA loans are for homes you will live in, and the program can be used for a single family home and for some multi-unit properties where you live in one unit.
The mechanics include an upfront mortgage insurance premium that is usually financed into the loan and a monthly mortgage insurance premium that is part of the payment. The property must meet FHA standards for safety and soundness, and the appraisal includes a review of condition items such as the roof, mechanical systems, and access. If the appraiser flags a condition item, the seller or the buyer may need to address it before closing, which can affect negotiations on older homes. FHA also allows the loan to be paired in some cases with assistance from the Tennessee Housing Development Agency, which is discussed below and on the THDA page.
FHA tends to fit Tennessee buyers who have a smaller down payment saved, buyers whose credit scores are in a range where conventional pricing would be difficult, and buyers who have had a past credit event and have re-established a record since then. It can also fit a buyer who wants to live in one unit of a small multi-unit property and use rent from the other units as part of the picture, subject to program rules. Buyers with strong credit and a larger down payment should still compare FHA with conventional financing, because the mortgage insurance structure may make conventional financing a better fit over time for their situation.
Expect to provide identification, income records, tax returns where required, bank statements, and documentation for debts and for the source of your down payment. If you are using gift funds, a gift letter and a paper trail are needed. If you plan to use THDA assistance, there is additional program paperwork and, for some buyers, a homebuyer education step. Buyers who have been through bankruptcy or foreclosure should be ready to discuss dates and documentation, and our answer on buying after bankruptcy or foreclosure covers the waiting period discussion in general terms.
The tradeoff with FHA is the cost and the duration of mortgage insurance, along with the property condition standards. Mortgage insurance protects the lender, not the borrower, and it raises the monthly payment compared with a loan that does not carry it. On some FHA loans the monthly premium stays for a long period, which is one reason borrowers sometimes refinance later if their credit and equity improve and if a refinance makes sense at that time. That later move is never a given, and you should buy a home because the payment works today, not because you are counting on a future refinance to fix the payment.
Related answers on this site cover the FHA loan limit in Nashville and Franklin, Tennessee first-time homebuyer programs, and how much down payment you need in Tennessee. The conventional loans page is the natural comparison. Those pages let a reader who starts with the statewide program move to the question that matches the home they are actually considering, rather than relying on a general description.
FHA financing is described on this site with 3.5 percent down, and a 580 credit score guideline is mentioned for that level. Your actual eligibility depends on the lender review of your credit history, income, debts, and the property. Closing costs are separate from the down payment, and assistance programs may help with part of the cash needed for eligible buyers.
The 2026 FHA limit for a one-unit home in Davidson County and Williamson County is $1,029,250, as published in the FHA limits answer on this site. Limits are set by county and by the number of units, so a property in another Tennessee county or a multi-unit property would be checked against a different figure.
THDA Great Choice loans, down payment assistance, and mortgage credit certificates exist for eligible Tennessee buyers, and FHA financing is one of the program types that buyers discuss when they look at that assistance. Eligibility, property rules, and required steps are set by THDA and the participating lender, so the pairing needs to be confirmed for your specific purchase before you write an offer.
The answer depends on when the loan was made, the down payment, and the terms of that loan. For many recent FHA loans the monthly premium continues for a long period, which is why the comparison with conventional financing matters. If your credit and equity change later, you can review whether a refinance may be worth a look at that time, with no promise that it will be available or that it will help.
FHA financing can be used for some small multi-unit properties when you live in one unit as your primary residence and the property meets program rules. Rent from the other units may be considered under the guidelines that apply to your file. Our answer on using rental income from a duplex explains how lenders tend to look at that income.
If you are weighing this program against another one, a short conversation with your actual income, debts, credit, and property in view will tell you more than any general page can. There is no cost to asking, and there is no obligation to proceed if the numbers do not work for you.
Call (615) 495-6594, email travis@heathrowmtg.com, Travis Jost, loan officer, NMLS #2191646, Heathrow Mortgage NMLS #1849599, office 1850 General George Patton Dr Ste B209, Franklin, TN 37067.
This page is for general information only. It is not mortgage advice, and it is not a promise of approval, a rate, or loan terms. Program guidelines change, and your options depend on your full financial picture, the property, and the lender that reviews your file.
