Tennessee has no state income tax on wages and salaries — one of only a handful of states with this advantage — combined with a low property tax rate of 0.71%, making it one of the most tax-efficient states for homeowners. Nashville has emerged as one of the fastest-growing major metros in the country, attracting corporate headquarters, healthcare giants, and music industry wealth that has pushed home prices well above the state median. Knoxville and Chattanooga offer strong value propositions, while Memphis remains one of the most affordable major cities in the South.
Calculate Your Monthly Payment
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Select a program to apply FHA/VA/USDA rules.
Funding fee is often financed into the loan.
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20.0% of home price
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Used to estimate potential Year‑2 escrow shock if taxes reset after purchase.
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Used for Conventional PMI estimates and FHA minimum down rules
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Extra payments reduce balance faster and can end PMI sooner.
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Principal & Interest • Tax • Insurance • PMI • HOA
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Note: This is an estimate. Tax timing, exemptions, and escrow rules vary by county and lender. Always verify with your county assessor and your lender’s escrow analysis.
Extra Payment Savings
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Disclaimer: Results shown are estimates for educational purposes only and do not constitute financial, tax, legal, or investment advice. Actual payments vary based on lender, credit score, loan type, and local assessments. Consult a licensed mortgage professional for your specific situation.
Tennessee Mortgage Calculator Guide
Buying a home in Tennessee requires understanding local costs. The median home price in the state sits around $336,000, which means your down payment and loan amount will heavily dictate your monthly expenses. Because Tennessee has an average property tax rate of 0.71%, factoring this into your monthly mortgage payment is essential for an accurate budget.
Beyond principal and interest, homeowners insurance in Tennessee averages $2,600 per year. Local weather risks and property age can push this number higher. By using our pre-loaded local averages, you get a realistic view of your true housing costs rather than just a basic principal calculation.
If you put down less than 20%, you will also need to pay Private Mortgage Insurance (PMI). Adjust the down payment field above to see exactly how your PMI drops off once you reach that 20% equity threshold in Tennessee.
Tennessee's average property tax rate of 0.71% is well below the national average of 1.07%. Tennessee eliminated its tax on investment income (Hall Income Tax) in 2021, leaving the state with no income tax on wages. Property is assessed at 25% of appraised value for residential properties, which reduces the taxable base before the local rate is applied. The state also offers a Property Tax Relief Program for qualifying seniors and disabled homeowners. On a $336,000 home, annual property taxes average approximately $2,386.
Frequently Asked Questions
Tennessee does not tax wages or salaries at the state level. The Hall Income Tax on investment income was fully repealed in 2021. This makes Tennessee one of the most tax-efficient states for wage earners, and combined with low property taxes at 0.71%, creates a favorable total tax environment for homeowners.
Tennessee's statewide median is approximately $336,000. Nashville exceeds $480,000 and continues to appreciate. Knoxville averages around $340,000, Chattanooga near $330,000, and Memphis remains very affordable at approximately $195,000. Tennessee offers a wide range of market dynamics across its major cities.
The Tennessee Housing Development Agency (THDA) offers the Great Choice Home Loan with competitive rates, Great Choice Plus providing down payment assistance of up to 6% as a forgivable second mortgage, and the Homeownership for the Brave program with reduced rates for veterans. Income and purchase price limits apply.
Nashville's strong long-term fundamentals — corporate headquarters relocation, healthcare sector dominance, no state income tax, and persistent population in-migration — support continued demand. However, affordability has deteriorated significantly since 2020. Buyers should carefully model their full monthly costs and consider whether suburban markets like Murfreesboro, Hendersonville, or Franklin offer better value for their budget.
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