FHA, VA, and Conventional Loans: What’s the Difference in Tennessee?
If you’re planning to buy a home in Tennessee, you’ll quickly come across three main types of mortgages—FHA, VA, and Conventional. Each has its own benefits and ideal borrower profile. Knowing the difference can help you pick the one that truly fits your situation instead of just going with whatever’s most common.
FHA Loans
FHA loans are backed by the Federal Housing Administration. They’re a great option for buyers with lower credit scores or higher debt ratios who might not qualify for a Conventional loan.
Highlights:
Minimum down payment of 3.5 percent
Flexible credit score and debt ratio requirements
Gift funds allowed for down payment and closing costs
Competitive interest rates
Considerations:
Mortgage insurance is required both upfront and monthly (called MIP)
Property must meet FHA’s safety and condition standards
Slightly tighter limits on loan size and property type
Tennessee example:
An FHA loan might fit a buyer in Antioch or Murfreesboro who’s rebuilding credit but wants to purchase soon rather than waiting another year. The lower credit threshold makes approval more achievable even with a small down payment.
VA Loans
VA loans are backed by the U.S. Department of Veterans Affairs and are available to eligible veterans, active-duty service members, and some surviving spouses. They’re one of the strongest loan programs available if you qualify.
Highlights:
No down payment required in most cases
No monthly mortgage insurance (PMI)
Competitive interest rates
More forgiving credit and debt standards
Considerations:
A one-time VA funding fee applies (can be financed into the loan)
The property must be a primary residence
VA appraisers can be slightly stricter on property condition
Tennessee example:
A veteran moving to the Nashville area from Fort Campbell could buy a $450,000 home with zero down and no PMI, freeing up funds for moving costs or updates.
Conventional Loans
Conventional loans aren’t government-backed. They’re the standard programs offered through Fannie Mae and Freddie Mac, and they tend to reward borrowers with stronger credit histories and stable income.
Highlights:
Down payments as low as 3 percent (same as FHA in many cases)
Private mortgage insurance (PMI) drops off automatically once you reach 20 percent equity
Flexible options for condos, second homes, and investment properties
Considerations:
Credit score and debt ratio standards are tighter than FHA
Rates and PMI costs increase for lower credit scores or smaller down payments
Tennessee example:
A buyer in Spring Hill or Mount Juliet with a credit score above 700 and 5 percent down may find a Conventional loan offers a better long-term deal than FHA due to cheaper PMI and easier removal once equity builds.
Comparing all three at a glance
FeatureFHAVAConventionalMinimum Down Payment3.5%0%3%Credit FlexibilityHighHighModerateMortgage InsuranceYes (MIP)NoneYes, but removableEligible BorrowersAnyoneVeterans / MilitaryAnyoneOccupancyPrimary homes onlyPrimary homes onlyPrimary, second, or investmentTypical TN Use CaseBuyer with lower credit or higher debtVeteran / active-dutyBuyer with stronger credit or higher equity
Why local advice matters
Choosing between FHA, VA, and Conventional loans isn’t just about comparing down payments—it’s about understanding how each fits your credit, income, and long-term goals. Property values, local tax rates, and even appraisal standards can vary widely across Tennessee.
That’s where Home Loan Locals makes it simple. It’s a free service that connects you with one or two trusted local lenders who’ll compare your options side by side, help you understand the pros and cons, and guide you toward the loan that actually fits—not just the one that closes fastest.
Unlike national lead sites that send your info to a dozen companies, Home Loan Locals keeps it local and private. You’ll only hear from one or two experienced professionals who know Tennessee’s market and lending programs inside and out.
The bottom line
FHA, VA, and Conventional loans each have their place. FHA can be a lifesaver for buyers rebuilding credit, VA loans reward those who’ve served, and Conventional loans can offer the best long-term savings for strong-credit borrowers.
If you’re buying in Tennessee and want help figuring out which fits best, visit HomeLoanLocals.com. You’ll get connected with one or two trusted lenders who’ll walk you through your real options clearly and without the spam.