Market Overview: Tennessee Housing Mid-Range
Tennessee ranks as a mid-range housing market, with a median home price of $319,167. The state's effective property tax rate of 0.60% is lower than the national average of 1.00%, and annual homeowners insurance averaging $2,499 falls above the US median of $2,201.
These three factors — price level, tax burden, and insurance costs — combine to shape the true monthly cost of homeownership in Tennessee. Below we break down a realistic purchase scenario using state-specific data.
🏡 Purchase Example: Buying a $319,167 Home in Tennessee
Using the state's median home price of $319,167, a 20% down payment, and a 6.5% 30-year fixed rate, here is the complete picture of what it costs to buy in Tennessee:
| Cost Component | Amount |
|---|---|
| Home Price | $319,167 |
| Down Payment (20%) | $63,833 |
| Loan Amount | $255,334 |
| Estimated Closing Costs (3.5%) | $11,171 |
| Total Cash Needed at Closing | $75,004 |
Monthly Payment (20% Down)
| Item | Monthly |
|---|---|
| Principal & Interest | $1,614 |
| Property Taxes (0.60%) | $160 |
| Homeowners Insurance | $208 |
| PMI (not needed at 20% down) | $0 |
| Total Monthly Payment | $1,982 |
Annual income needed (28% DTI): $85,000/yr
PMI Scenario: What If You Put Only 10% Down?
With a 10% down payment ($31,917), you'd have a loan of $287,250 and would need to pay Private Mortgage Insurance (PMI) at roughly 0.7% of the loan annually:
| Item | 10% Down | 20% Down (savings) |
|---|---|---|
| Principal & Interest | $1,816 | $1,614 |
| Monthly PMI | $168 | $0 |
| Total PITI+PMI | $2,351 | $1,982 |
The lower down payment costs you an extra $369/month (P&I + PMI). You would need $101,000/yr to qualify under the 28% DTI rule. PMI can typically be canceled once you reach 20% equity.
First-year interest: In year one, $16,513 of your payments go to interest alone. Over the full 30-year term, you'll pay $325,664 in total interest.
💰 State-Specific Cost Notes for Tennessee
Property taxes in Tennessee are 0.60%, meaning about $1,915/year ($160/month) on the median-priced home.Homeowners insurance in Tennessee averages $2,499/year ($208/month).
Closing costs in a mid-range market like Tennessee typically run 2%–4% of the purchase price — roughly $11,171 on a $319,167 home. This includes loan origination, appraisal, title insurance, escrow fees, and prepaid taxes/insurance.
Monthly Payment on a $319,167 Home in Tennessee
With a standard 20% down payment ($255,334 loan) and a 6.5% interest rate on a 30-year fixed-rate mortgage, your estimated total monthly payment comes to $1,982.
Monthly Payment Breakdown (PITI)
| Component | Monthly Cost | Annual Cost |
|---|---|---|
| Principal & Interest | $1,614 | $19,368 |
| Property Taxes (0.60% est.) | $160 | $1,920 |
| Home Insurance | $208 | $2,496 |
| Total Monthly Payment | $1,982 | $23,784 |
Income Required in Tennessee
Using the standard 28% front-end DTI rule, you'd need a gross annual income of approximately $85,000 to comfortably afford the median-priced home in Tennessee with 20% down at 6.5%.
How Interest Shapes Your Payments
In your first year, approximately $16,513 goes toward interest alone. Over the full 30-year term, you'll pay a total of $325,664 in interest.
Amortization Schedule — First 10 Years
| Year | Principal Paid | Interest Paid | Balance Remaining |
|---|---|---|---|
| Year 1 | $2,854 | $16,513 | $252,480 |
| Year 2 | $3,045 | $16,322 | $249,435 |
| Year 3 | $3,249 | $16,118 | $246,186 |
| Year 4 | $3,467 | $15,900 | $242,719 |
| Year 5 | $3,699 | $15,668 | $239,021 |
| Year 6 | $3,946 | $15,420 | $235,074 |
| Year 7 | $4,211 | $15,156 | $230,863 |
| Year 8 | $4,493 | $14,874 | $226,371 |
| Year 9 | $4,794 | $14,573 | $221,577 |
| Year 10 | $5,115 | $14,252 | $216,462 |
* Full 30-year amortization available in our interactive calculator.
❓ Frequently Asked Questions — Buying a Home in Tennessee
How much income do I need to buy a house in Tennessee?
With the median home price in Tennessee at $319,167 and a 20% down payment, you need roughly $85,000/year based on the 28% front-end DTI rule (total monthly housing costs of $1,982). If you put down 10%, the income requirement rises to about $101,000/year due to the higher loan amount and PMI.
What's the minimum down payment in Tennessee?
While 20% down ($63,833) avoids PMI, many Tennessee buyers opt for lower down payments. FHA loans require as little as 3.5% ($11,171), and conventional loans can go as low as 3%–5% ($9,575–$15,958). However, a 10% down payment ($31,917) would cost you $2,351/month — about $369 more than 20% down — due to PMI and a larger principal.
What are property taxes like in Tennessee?
Tennessee's effective property tax rate is 0.60%, which is moderate the national average of 1.00. On a $319,167 home, you'd pay approximately $1,915/year in property taxes ($160/month).
How much is homeowners insurance in Tennessee?
The average annual premium in Tennessee is $2,499, which is roughly in line with the US median of $2,201. This is a relatively affordable insurance market for homeowners. This adds $208/month to your payment.
What are the total closing costs for a home in Tennessee?
On a $319,167 home in Tennessee, expect to pay about $11,171 in closing costs. Combined with a 20% down payment ($63,833), you'd need approximately $75,004 in cash at closing. First-time buyers in Tennessee may qualify for down payment assistance programs or reduced closing costs through local housing authorities — check your state housing agency for available grants and low-interest loan programs.
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Disclaimer: This is an estimate for informational purposes only. Actual mortgage payments depend on your credit score, exact interest rate, property taxes, insurance premiums, PMI, and other factors. Sources: Zillow Q1 2025 (median home prices), ATTOM 2025 (property tax rates), Quadrant Information Services Feb 2025 (insurance premiums). Consult a qualified mortgage professional for personalized advice. See our full Disclaimer.