Tennessee buyer closing costs, explained

Closing costs are the fees and taxes you pay to finish a home purchase, on top of your down payment. In Tennessee, two of them are state taxes with fixed rates you can figure yourself. The rest depend on your lender, your title company or attorney, and your loan.

This guide explains each piece in plain language. It's general information, not legal or financial advice. Rates and rules below were checked on September 17, 2026, against the sources linked in each section. Confirm current figures with your lender and your closing attorney or title company.

To put your own numbers in, use our buyer cost calculator.

The big picture

The Consumer Financial Protection Bureau says closing costs, not counting the down payment, typically run 2% to 5% of the purchase price (CFPB, "Determine your down payment," updated October 1, 2025). Where you land in that range depends mostly on your loan type, your lender's fees, whether you buy down your rate, and how much you prepay for taxes and insurance.

Your lender must give you a Loan Estimate within three business days of your application, and a Closing Disclosure at least three business days before closing. Those two forms are where you'll see your real numbers, line by line.

Tennessee's two closing taxes

Realty transfer tax

Tennessee taxes the transfer of real estate at $0.37 per $100 of the purchase price, or of the property's value if that's higher (Tennessee Department of Revenue, recordation tax rates; Tenn. Code Ann. § 67-4-409(a)). On a $400,000 home, that's $1,480.

Mortgage tax

If you borrow, Tennessee taxes the loan at $0.115 per $100 of principal, and the first $2,000 is exempt (same source; § 67-4-409(b)). On a $360,000 loan, that's ($360,000 − $2,000) ÷ 100 × $0.115 = $411.70. If an FHA upfront premium or VA funding fee is added to your loan, ask your closing attorney whether the tax is figured on the larger amount.

Who pays them

By law the buyer pays the transfer tax and the borrower pays the mortgage tax (Tennessee Department of Revenue, Recordation Tax manual, June 2026). Your contract can shift who bears the cost. Confirm with your closing attorney or title company.

Mortgage insurance

Mortgage insurance protects the lender, not you, but you pay for it. What it costs depends on your loan type.

• Conventional loans. Private mortgage insurance (PMI) usually applies when you put less than 20% down. Freddie Mac says to expect roughly $30 to $70 a month for every $100,000 borrowed, depending on your credit and down payment (Freddie Mac, "Breaking down PMI," checked September 17, 2026). You can ask to cancel it once your balance is scheduled to reach 80% of the home's original value, and it ends automatically at 78% if you're current on payments (CFPB, reviewed August 28, 2026).
• FHA loans. You pay an upfront premium of 1.75% of the base loan, usually added to the loan, plus an annual premium paid monthly. For most 30-year FHA loans with less than 5% down, the annual premium is 0.55% of the loan and lasts the life of the loan (HUD Mortgagee Letter 2023-05, effective March 20, 2023).
• VA loans. No monthly mortgage insurance. Instead there's a one-time funding fee: 2.15% of the loan for first-time use with less than 5% down, 1.5% with 5% down, and 1.25% with 10% down. Later uses cost 3.3% with less than 5% down. Veterans receiving VA disability compensation, and some others, are exempt (VA.gov, funding fee and closing costs). With Fort Campbell next door, this matters for many Clarksville buyers.

Lender charges

These vary the most between lenders, which is why comparing Loan Estimates pays off:

• Origination or underwriting fees, charged for making the loan.
• Discount points, optional upfront payments to lower your interest rate.
• Appraisal and credit report fees, for third-party services the lender orders.

Ask two or three lenders for a Loan Estimate on the same day, for the same loan amount and type, and compare section A (origination charges) directly.

Title and closing charges

Your closing attorney or title company handles the parts that make ownership official:

• Title search and title insurance. The lender's policy is usually required. An owner's policy is optional but protects you if an old claim against the property surfaces later.
• Settlement or closing fee, for running the closing and handling the money.
• Recording fees, paid to the county register of deeds to record your deed and mortgage.

Ask for their fee schedule early. It's fair to compare.

Prepaid costs and escrow

Many buyers are surprised by this part. At closing you usually prepay:

• Homeowners insurance for the first year.
• Interest from your closing date to the end of that month.
• An escrow deposit so your lender can pay future property tax and insurance bills.

Property tax is a big driver. In Tennessee, residential property is assessed at 25% of its appraised value, and the tax rate depends on your county and whether you're inside city limits (Tennessee Comptroller, how to figure your tax bill). Our calculator does this math for each county we serve.

Buying direct from an owner

Without agents on either side, you still need a closing attorney or title company. They review or draft the contract, hold the earnest money, run the title search, and handle the closing. Nashville Buys doesn't write contracts, hold money, or take part in your closing.

Work through our buyer checklist so nothing falls through the cracks, and always confirm wiring instructions by calling your title company or attorney at a number you already had, never one from an email.