The First-Time Homebuyer Guide

How much house can you actually afford?

Banks will tell you what you qualify for. That's not the same as what you can comfortably afford. A common guideline is that your total monthly housing cost (mortgage, taxes, insurance) shouldn't exceed about 28% of your gross monthly income. But your real number depends on your debts, savings goals, and lifestyle.

Here's a quick sanity check: take your current rent, add $300-500 for the additional costs of ownership (maintenance, taxes above what's in your payment, etc.), and ask yourself if that number feels comfortable. If it does, you're probably in the right range.

Down payment: you don't need 20%

This is the biggest myth in homebuying. You do not need 20% down to buy a home. Here are the real minimums:

Conventional loans: as low as 3% down. On a $350,000 home, that's $10,500 instead of $70,000.

FHA loans: 3.5% down with a credit score of 580+. These are popular with first-time buyers because the qualification standards are more flexible.

VA loans: 0% down for eligible veterans and active military. No PMI either.

USDA loans: 0% down in qualifying rural areas. Parts of Middle Tennessee outside Nashville proper qualify.

Yes, putting less than 20% down means you'll pay private mortgage insurance (PMI). But PMI on a conventional loan is typically $50-150/month and drops off automatically once you reach 20% equity. In a market where home values appreciate 5-8% annually like Middle Tennessee, that can happen faster than you'd think.

Pre-approval: what it is and why it matters

A pre-approval is a letter from a lender saying they've reviewed your finances and you're approved to borrow up to a certain amount. It's different from a pre-qualification, which is just an estimate based on self-reported info.

For a pre-approval, the lender will look at your income (pay stubs, W-2s, tax returns), your debts (student loans, car payments, credit cards), your credit history, and your assets (bank statements, retirement accounts).

Why it matters: in Middle Tennessee's competitive market, most sellers and agents won't take your offer seriously without one. It tells them you're a real buyer who can actually close.

What the process looks like

Understanding loan types

Conventional: The most common loan type. Requires decent credit (usually 620+), offers competitive rates, and PMI drops off at 20% equity. Best for buyers with good credit and some savings.

FHA: Government-backed with more flexible credit requirements (580+). Lower down payment (3.5%). The trade-off is mortgage insurance for the life of the loan on most FHA loans, and slightly different appraisal standards.

VA: If you've served, this is almost always the best option. No down payment, no PMI, competitive rates. I work with veterans regularly and know how to navigate VA appraisals.

USDA: For properties in qualifying rural areas. No down payment required. Income limits apply. Worth checking if you're looking outside of downtown Nashville.

Which one is right for you depends on your credit, savings, location, and veteran status. That's exactly the kind of thing we'd figure out together in a planning call.

Closing costs: what to expect

On top of your down payment, you'll need to budget for closing costs, which typically run 2-3% of the purchase price. On a $350,000 home, that's roughly $7,000-10,500.

Closing costs include things like the appraisal fee, title insurance, recording fees, attorney fees (Tennessee uses attorneys for closings), prepaid taxes and insurance, and lender fees.

Here's something most buyers don't realize: you can often negotiate for the seller to pay some or all of your closing costs, especially in a balanced market. This is called a "seller concession" and it's something your agent and I coordinate together.

Common myths, debunked

What's different about Middle Tennessee

Middle Tennessee has unique characteristics that first-time buyers should know about. Property taxes vary significantly by county. Davidson County's effective rate is around 0.57%, while Williamson County is closer to 0.43%. That difference adds up to hundreds of dollars per month on a $400,000 home.

The region has seen strong appreciation over the past decade, with most counties averaging 5-9% annually over the last 5 years. Areas like Maury and Wilson counties have seen some of the strongest growth as Nashville's footprint expands outward.

Tennessee uses attorneys (not title companies) for real estate closings. The closing process here is straightforward, but it's one more reason to have a lender who knows the local system.

There's no state income tax in Tennessee, which means more of your paycheck goes toward building wealth through homeownership.

Mistakes to avoid

Opening new credit accounts before closing. That new credit card or car loan can torpedo your mortgage approval. Don't change anything about your credit between pre-approval and closing day.

Changing jobs mid-process. Lenders want to see employment stability. If you can wait until after closing to make a career move, do it.

Skipping the home inspection. Even in a competitive market, a home inspection protects you from expensive surprises. The $400-500 cost is worth it every time.

Not understanding your Loan Estimate. Your lender controls Sections A and B. Everything else is set by third parties. Understanding this upfront saves you stress at the closing table.

Draining your savings for the down payment. You need reserves after closing for repairs, emergencies, and the inevitable things that come up in a new home. Keep 3-6 months of expenses in the bank after close.