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Buying a House in Chattanooga | Guide to Chattanooga Real Estate & Tips for First Time Buyers

Buying a House in Chattanooga 📑 | Guide to Chattanooga Real Estate & Tips for First Time Buyers

Last Updated on: 8th March 2024, 04:18 pm

Living in Chattanooga is great! Its crime rate is low considering its size; the Chattanooga crime rate is 7,101 per 100,000 people, and the cost of living in Chattanooga is 5.3% more affordable than the average US city! People of all ages love this city, but CNBC named Chattanooga the “all-around best city to retire in.”

House hunting can be stressful, especially if you don’t live near the city or state you’re relocating to. But that’s where All Out Moving comes in! We’re moving experts and have all the information you’ll need when buying a house in Chattanooga and all the manpower for when you’re ready to relocate. You can find plenty of safe places to live and countless unique Chattanooga neighborhoods to call home. Our complete guide discusses how to buy a house in Chattanooga, TN, a breakdown of its real estate market, and tips for first-time buyers.

Ariel of downtown Chattanooga

How Much Does It Cost to Buy a House in Chattanooga?

Understanding what you can afford is the first step to buying a house in Chattanooga. While the price of your new home is a major factor, it’s not everything; there are other costs you must consider when formulating your budget. Along with your projected mortgage payment, you’ll want to consider your new city’s overall cost of living compared to your current city, homeowners insurance, and property taxes.

To know how much you can spend on your new home, you must know your gross income and monthly debt payments. Most mortgage lenders require a debt-to-income ratio (the percentage of your income that will go towards your mortgage payment) of 36% or lower. HOA fees, homeowners insurance, and property taxes are all considered part of your monthly mortgage.

Doing all of this math on your own can feel intimidating, but luckily, Zillow provides a handy affordability calculator. The median household income in Chattanooga is $57,703. If you put down 20% and had a $250 monthly debt, you could comfortably afford a $187,927 home in Chattanooga. 

Hamilton County Assessor of Property and the Board of Commissioners set the property taxes in Hamilton County and its cities—Chattanooga is located in Hamilton County. The Assessor evaluates your property and provides you with a property value. The value of your home is then multiplied by the Board of Commissioners set rate. This rate can change every four years, as the county is on a four-year property reappraisal cycle. In 2021, the Chattanooga (Hamilton County) property tax was 25% of the property’s assessed value. This rate may change in 2025.

Before buying a house in Chattanooga, you should evaluate its cost of living. The Cost of Living Index in Chattanooga is 93, making it 7% more affordable than the average US city. The median HOA fee is $150 per month, and you can expect your Chattanooga utilities to cost $317.

What Is the Average Home Price in Chattanooga?

According to RedFin, the Chattanooga real estate market is affordable; the median home price in Chattanooga is $315,000, and while prices are up 4.1% since last year, they’re still well below the US median home price of $431,000. Most homes sit on the market for 46 days, meaning Chattanooga real estate is competitive, but not impossible to find a good deal.

Where is the best place to buy a house in Chattanooga? The best Chattanooga suburbs and neighborhoods are Avondale ($55,000 average home price), Southside ($405,000 average home price), and Lookout Mountain ($688,000 average home price. These neighborhoods are safe, offer proximity to the city’s attractions, and are part of top-rated school districts.

Find the Right Mortgage and Get Pre Approved

What is needed to buy a house in Chattanooga? You’ll next have to find a mortgage lender and start the pre-approval process. Getting officially approved is more time-consuming than pre-approval, but both can feel intimidating. Getting pre-approved lets the buyer know you’re ready to buy a home in Chattanooga.

There are different types of loans you can apply for (conventional, fixed-rate, and adjustable-rate loans), so it’s crucial you do your research on all of them. A conventional loan isn’t insured or government-guaranteed. Fixed-rate loans will have the same interest for the entirety of the loan, and the interest rate on an adjustable-rate loan can change depending on the current Chattanooga real estate market.

Factors that can affect your pre-approval:

  • Credit score: You want a high credit score when applying for any type of loan. Anything between between 690 and 719 is considered good.
  • Down payment: Many lenders require you to put 10% down on the home’s total cost. First-time home buyers can put down as little as 3%, but 20% is the suggested amount. The more you put down, the lower your monthly payment will be.
  • 28/36 rule: Your total housing costs should be below 28% of your gross income, and your total debt should be below 36%.
  • Mortgage payment: Your chosen lender will evaluate your income and assets to determine what mortgage (monthly payment) you can afford.

Chattanooga First Time Homebuyer Programs

If you’re house hunting in Chattanooga and are a first time home buyer in Chattanooga, we’ve got just the resources for you!

  • FHA Loan: FHA loans are government-backed mortgage loans allowing low-income individuals who don’t have adequate savings for a downpayment; these loans are backed by the Federal Housing Administration (FHA). The amount you can borrow is credit score-based. If your credit score is 580 or higher, you can borrow up to 96.5% of the cost of the home.
  • Great Choice Home Loans: Great Choice Home Loans was created by THDA for middle to moderate-income individuals and families. To qualify for a 30-year term, fixed interest rate loan, you must have a credit score of 640 or greater and have at least 3.5% to put down. Great Choice Home Loans cover off-site manufactured homes, too.

The city of Chattanooga launched its own first-time home buyer grant in the spring of 2023. These first time home buyer Chattanooga grants will encompass 0% interest rates and small sums of money to help citizens who earn below 100% Area Median Income (AMI) purchase a home.

Here is what you will qualify for depending on the below factors:

Per household 80% AMI 100% AMI
One person $42,150 $52,688
Two persons $48,150 $60,188
Three persons $54,150 $67,688
Four  persons $60,150 $75,188
Five persons $65,000 $81,250

The sale price of homes must be $300,000 or below. You can apply for this grant online.

Find a Chattanooga Real Estate Agent

Buying a house in Chattanooga is a tricky process; you’ll want an expert on your side! If you’re working with one of the best real estate agents in Chattanooga, they will show you homes, talk to the seller, and work tirelessly to get you the best deal! If you’re buying a home in Chattanooga, you’ll want to work with a buyer’s agent, not a listing agent; Buyer’s agents are legally bound to help you!

House Hunting in Chattanooga

Before you buy a house in Chattanooga, you should consider its areas and what best fits your needs and budget.

If you’re young and are interested in the city’s nightlife, you’ll want to live closer to its downtown (heart); downtown Chattanooga has a median sale price of $420,000, meaning it’s a little more pricey. If you have children, maybe find a neighborhood that has well-renowned schools!

Keep your budget, style, and preferred size in mind! Your real estate agent will gather all of this information from you and do their best to find a home that checks all your boxes.

Submit an Offer

You’ve found your dream home! Now, it’s not to make an offer. While exciting, this can be the scariest part of this process. Your buyer’s agent will assist you with writing up an offer; sometimes, it will be below the asking price and other times above. Your agent will know what will likely get accepted.

You may negotiate a little before going under contract, which is an important step when buying a house in Chattanooga, TN. Once the appraisal and inspection are complete (if everything checks out), it’s time to close the deal!

Close on Your Chattanooga Home

The appraisal and inspection are done, and you’re two steps closer to getting the keys. Next, the underwriting process will begin. Once you and your buyer’s agent evaluate the documents together one last time, you will sign the closing documents.

The entire closing process can take anywhere from four weeks to three months, so you may not have access to your new home right away.

Congratulations; now you know how to buy a house in Chattanooga! We’re confident you’ll find your dream home soon, and after you buy a house in Chattanooga, we can help move you there! Call All Out Moving & Storage at (423) 716-3025 for your relocation needs; we’re the best Chattanooga movers!


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