Nashville Homebuyer’s Guide: How to Buy a House with Little to No Money Down

Want to buy a home in Nashville with minimal savings? Discover low down payment mortgage options, including FHA, VA, USDA, and THDA loans, plus down payment assistance programs to make homeownership affordable.

Nashville’s real estate market is thriving, but rising home prices can make saving for a traditional 20% down payment feel impossible. The good news? You don’t need a huge upfront payment to buy a home in Music City.

As a mortgage expert with over 20 years of experience, I’ve helped countless buyers secure low down payment mortgages in Nashville—some with as little as 0-3.5% down. In this guide, I’ll break down the best loan programs, eligibility requirements, and down payment assistance options to help you get into your dream home sooner.

Why a Low Down Payment Mortgage Could Be Right for You

Many buyers assume they need 20% down to purchase a home, but that’s not the case. Here’s why a low down payment mortgage in Nashville might be the smarter choice:

✔ Buy sooner – Stop renting and build equity faster.
✔ Keep savings intact – Avoid draining your emergency fund.
✔ Take advantage of low interest rates – Lock in affordable monthly payments.
✔ Qualify for first-time buyer perks – Many programs offer grants and reduced fees.

Common Myths About Low Down Payment Mortgages

❌ Myth: "You need perfect credit."
✅ Fact: Some loans (like FHA) accept scores as low as 500-580.

❌ Myth: "Mortgage insurance makes it too expensive."
✅ Fact: PMI can be removed later (unlike FHA’s lifetime MIP).

❌ Myth: "Only first-time buyers qualify."
✅ Fact: Some programs (like VA and USDA loans) are available to repeat buyers.

Top 5 Low Down Payment Mortgage Programs in Nashville

1. FHA Loans (3.5% Down) – Best for Buyers with Lower Credit

• Minimum down payment: 3.5%
• Credit score needed: 580+ (500-579 with 10% down)
• Mortgage insurance: Required (MIP)
• Best for: First-time buyers, those with past credit challenges

2. VA Loans (0% Down) – Exclusive to Veterans & Military

• Minimum down payment: 0%
• Credit score needed: Typically 620+
• No PMI required (but a funding fee applies)
• Best for: Active-duty military, veterans, eligible spouses

3. USDA Loans (0% Down) – Ideal for Rural & Suburban Homes

• Minimum down payment: 0%
• Income limits apply (based on county)
• Property must be in USDA-eligible zones (check maps)
• Best for: Buyers outside downtown Nashville

4. Conventional 97 Loans (3% Down) – Best for Stronger Credit

• Minimum down payment: 3%
• Credit score needed: 620+
• PMI required (can be canceled at 20% equity)
• Best for: Buyers with good credit who want flexibility

5. THDA Great Choice Loans (Down Payment Help for Tennesseans)

• Down payment assistance: Up to 4% (forgivable after 10 years)
• Credit score needed: 640+
• Must complete homebuyer education course
• Best for: First-time buyers, moderate-income households

How to Get Down Payment Assistance in Nashville

If you’re struggling to save for closing costs, these programs can help:

🔹 THDA Great Choice Plus – Up to 4% of the loan amount in assistance.
🔹 Metropolitan Development and Housing Agency (MDHA) – Grants up to $15,000.
🔹 NeighborhoodLIFT Program – $15,000 grants for qualifying buyers.

Pro Tip: Some programs are forgivable (you don’t repay if you stay in the home long enough).

Steps to Qualify for a Low Down Payment Mortgage

1. Check Your Credit Score

• FHA loans: 580+ (3.5% down)
• Conventional loans: 620+ (3% down)
• VA/USDA loans: 620+ (varies by lender)

2. Calculate Your Debt-to-Income (DTI) Ratio

• Most lenders prefer DTI below 43% (some allow up to 50%).

3. Save for Closing Costs (Even with 0% Down Loans)

• Expect to pay 2-5% of the home price in closing costs.
• Some programs (like THDA) offer closing cost assistance.

4. Get Pre-Approved Before House Hunting

• Shows sellers you’re serious.
• Helps you shop within your budget.

Frequently Asked Questions (FAQs)

1. Can I really buy a house in Nashville with no money down?

Yes! VA and USDA loans offer 0% down payment options for eligible buyers.

2. What’s the minimum credit score for a low down payment mortgage?

• FHA: 580 (3.5% down) or 500 (10% down).
• Conventional: 620 (3% down).
• VA/USDA: Typically 620+.

3. Are there income limits for down payment assistance?

Yes—programs like THDA and MDHA have income caps based on household size.

4. How does mortgage insurance work with low down payment loans?

• FHA loans: Lifetime MIP (unless you refinance).
• Conventional loans: PMI can be removed at 20% equity.

5. What’s the difference between FHA and conventional loans?

6. Do I have to be a first-time buyer to qualify for assistance?

Not always—some programs (like VA loans) are available to repeat buyers.

7. Can I use gift funds for my down payment?

Yes! Most loan programs allow gift money from family or employers.

8. How long does it take to get approved for a mortgage?

Typically 30-45 days, but pre-approval can happen in 1-3 days.

9. Are there special loans for teachers or healthcare workers?

Some local programs (like Homes for Heroes) offer discounts for essential workers.

10. What’s the best loan for a self-employed buyer?

FHA and bank statement loans are often the most flexible.

Final Thoughts: Your Nashville Home Is Within Reach

You don’t need a fortune saved to buy a home in Nashville. With low down payment mortgages and down payment assistance programs, you can secure your dream home with as little as 0-3.5% down.

Next Steps:

1. Check your credit score.
2. Compare loan programs.
3. Get pre-approved with a trusted lender.

Ready to start? Contact Shop Rates today to explore your best low down payment mortgage options in Nashville! 🏡