A 40-point difference in credit scores can lead to thousands of dollars in interest over a 30-year loan. As of early July 2026, the fixed interest rate for a 30-year mortgage is 6.59% for credit scores above 780, 6.66% for the 760 range, 6.75% for the 740 range, and 6.91% for the 700 range. If you're preparing to buy your first home in Chattanooga, it's wise to check these numbers before looking at properties.

Recent market trends show that Chattanooga is in a mild adjustment phase. According to Zillow, the average home value is $324,364, which has decreased by 1.1% over the past year (as of June 30, 2026). Just because prices have dropped slightly doesn't mean loan conditions will become more favorable, so it's important to check your credit score and down payment separately.

Items to check before signing a contract include the following:

• Credit score and any errors on the credit report
• Down payment requirements for different types of loans
• DTI, debt-to-income ratio
• Property tax and insurance costs
• Closing cost budget

For loan types, FHA loans require a credit score of at least 580 with a 3.5% down payment, while those with scores between 500 and 579 need a 10% down payment. Conventional loans can start at 3% for first-time homebuyers, but if the down payment is less than 20%, PMI will be added monthly. The DTI generally should not exceed 43% of monthly income.

Tennessee's property tax rate is about 0.55% based on the effective tax rate, which is lower than the national average. However, there is significant variation by county; for example, Sevier County's rate can drop to 0.28%, while Shelby County's can rise to 0.98%. The actual tax rate for Hamilton County, where Chattanooga is located, should be verified through property-specific tax bills.

Documents needed for pre-approval include the last two years of tax returns, two months of pay stubs, bank statements, and identification. It's efficient to check your credit score in advance and correct any errors before applying for pre-approval. Lowering credit card balances can sometimes improve your score in a short period.

Closing costs typically range from 2% to 5% of the loan amount. For a loan in the $300,000 range, you would need an additional $6,000 to $15,000. Between fixed-rate and ARM loans, if you plan to stay long-term, a fixed-rate loan appears to be a stable choice.

After signing the contract, a home inspection and escrow process will follow. The escrow company manages the funds and documents between the buyer and seller and prorates taxes and insurance on the closing date.

If you need down payment assistance, consider the Tennessee Housing Development Agency's Great Choice home loan and Great Choice Plus program. They offer up to $6,000 in 0% interest deferred loans for down payments and closing costs on FHA or USDA loans with a minimum 3.5% down payment. Completing a homebuyer education course is mandatory before applying.

For Korean families in Chattanooga, it's advisable to refer to GreatSchools ratings for preferred school districts, but since boundaries change frequently, it's best to verify the assigned school for the specific address before purchasing.

Fixed-rate loans provide stability with the same monthly payment over 30 years, while ARMs start with lower rates for the first 5 or 7 years but adjust according to market rates afterward. If you plan to stay long-term, a fixed-rate loan seems to be a stable choice, but if there's a possibility of relocating, utilizing the initial low-rate period of an ARM could be a strategy worth considering.

During the home inspection after the contract, it's advisable to pay special attention to drainage systems and foundation conditions, considering Chattanooga's unique humidity and hilly terrain. Just as managing your credit score is important, ensuring the condition of the property itself should not be overlooked. The escrow company manages the funds and documents between the buyer and seller and settles taxes and insurance on the closing date.

This information is not investment or legal advice, and it is recommended to consult with lenders and real estate professionals before finalizing any contracts.