Financing is where a lot of buyers get stuck — not because it's truly complicated, but because nobody explains it plainly. Here's the straight version for the Memphis area. (Quick disclaimer: I'm a REALTOR, not a lender, so treat this as general education, not financial advice — your lender gives you real numbers.)
Start with a pre-approval — before you tour
A pre-approval is a lender's written estimate of what you can borrow, based on your income, credit, and debts. Get it first. It tells you your real budget, makes your offers credible to sellers, and in a market where good homes still move fast, it's the difference between winning and watching. It's more than a pre-qualification, which is just a quick, unverified estimate.
The common loan types
- Conventional — the most common; as little as 3–5% down for many buyers, with private mortgage insurance (PMI) until you reach 20% equity.
- FHA — flexible credit requirements and about 3.5% down; popular with first-time buyers.
- VA — for eligible veterans and service members; often zero down and no PMI.
- USDA Rural — zero-down loans for eligible rural areas, which can include parts of the metro's outer edges like around Eads and the Arlington fringe.
The right one depends on your finances and the home — a good lender walks you through the tradeoffs.
How much do you really need down?
Less than most people think. Many first-time buyers put down 3–5%, not 20%. Putting 20% down lets you skip PMI and lowers your payment, but it isn't required — and tying up every dollar in a down payment isn't always the smart move. Don't forget closing costs (typically a few percent of the price) and a cushion for moving and repairs.
First-time buyer programs
Tennessee's housing agency (THDA) runs first-time-buyer programs — including down-payment assistance and competitive fixed-rate loans through its Great Choice program — and there are other local and lender options too. Eligibility depends on income, price limits, and a homebuyer education course. I'll point you to lenders who know these programs cold, so you don't leave help on the table.
What today's rates mean for your payment
Rates have been in the mid-6% range lately, and while that's higher than the pandemic lows, there are real ways to manage it: seller-paid rate buydowns, adjustable options for shorter-term owners, and simply buying at today's more reasonable prices. The best way to see it clearly is to run your own numbers — try my mortgage & affordability calculator to see a real monthly payment and roughly how much home fits your budget.
FAQ
Financing questions, answered
How much down payment do I need to buy a home?
Often far less than 20%. Many first-time buyers use 3-5% down on a conventional or FHA loan, and VA and USDA loans can be zero down for those who qualify. Putting 20% down avoids PMI and lowers your payment, but it isn't required. Budget for closing costs too.
What credit score do I need to buy a house?
It varies by loan type - FHA loans are more flexible than conventional, and your rate improves as your score rises. Rather than guess, a quick pre-approval with a local lender tells you exactly where you stand. I'm glad to introduce you to one.
What's the difference between pre-qualified and pre-approved?
Pre-qualification is a quick, unverified estimate. Pre-approval is a lender's written commitment after reviewing your income, credit, and debts - it's what makes your offer credible to sellers. Always get pre-approved before you start touring.
Are there first-time home buyer programs in Tennessee?
Yes. The Tennessee Housing Development Agency (THDA) offers first-time-buyer programs including down-payment assistance and its Great Choice fixed-rate loans, subject to income and price limits and a homebuyer education course. I'll connect you with lenders who handle these regularly.
Work With Me Directly
Matt Mitchell, REALTOR®
I'm a REALTOR® and part of a third-generation Memphis-area real estate family. I confirm the exact school zoning for every home my clients tour — no guessing, no surprises. I'm the one who answers the phone.
Ready to Get Pre-Approved?
Let me connect you with a lender who delivers.
I work with strong local lenders who close on time and answer their phones. Tell me your situation and I'll make an introduction - then help you find the right home. Call or text (901) 701-8738.