Legacy Mortgage Services, Inc.

FHA

Not Everyone Needs a VA Loan. That Does Not Mean You Are Out of Options.

If you are buying a home in Clarksville and you are not eligible for a VA loan or if your situation makes a different loan product the smarter choice the FHA loan may be exactly what gets you to closing.

The Federal Housing Administration has been backing home loans since 1934. The program exists for one reason: to make homeownership accessible to people who are ready to own but may not fit the tight mold of a conventional loan. Lower down payments, more flexible credit requirements, and the ability to use gift funds from family FHA opens doors that conventional financing sometimes closes.

At Legacy Mortgage Services, we have helped Clarksville families use FHA loans for 26 years. We know who this loan is right for, when it makes more sense than other options, and how to structure it so you are not leaving money on the table.

Is an FHA Loan Right for You?

FHA tends to be the right conversation when:

You do not qualify for a VA loan or prefer not to use your VA benefit on this purchase
Your credit score is below what conventional loans typically require
You have limited funds saved for a down payment
You are recovering from past financial hardship and have rebuilt your payment history
A family member wants to gift you funds toward your down payment
You are buying a multi-unit property and plan to live in one of the units

If you are an eligible veteran or active duty service member, we will always walk through both options with you. In most cases the VA loan will come out ahead no monthly mortgage insurance is a significant advantage. But every situation is different, and we will give you an honest comparison, not just the easy answer.

Down Payment Requirements

FHA loans allow you to purchase a home with as little as 3.5% down provided your credit score is 580 or higher.

If your credit score falls between 500 and 579, you may still qualify for an FHA loan with a 10% down payment.

Your down payment funds can come from personal savings, a gift from a family member, certain grant programs, or eligible down payment assistance programs including Tennessee's THDA program, which we can walk you through separately.

Understanding FHA Mortgage Insurance

This is the most important thing to understand about FHA loans and the part most lenders gloss over.

Because the FHA guarantees your loan, they require mortgage insurance. Unlike a VA loan, which has a one-time funding fee and no monthly insurance, FHA has two layers:

Upfront Mortgage Insurance Premium (UFMIP) A one-time charge of 1.75% of your loan amount at closing. On a $300,000 loan, that is $5,250. The good news is this can be financed into your loan you do not have to bring it to the closing table in cash.

Annual Mortgage Insurance Premium (MIP) An ongoing monthly charge ranging from 0.15% to 0.75% of your loan amount annually, depending on your loan size, term, and down payment. This is divided across your 12 monthly payments and added to your mortgage payment.

How long do you pay it?

If you put less than 10% down, mortgage insurance stays for the life of the loan
If you put 10% or more down, mortgage insurance falls off after 11 years

This is an important distinction. One of the most common conversations we have is helping FHA borrowers understand when it makes sense to refinance out of an FHA loan once their equity and credit improve potentially eliminating that monthly mortgage insurance entirely.

2026 FHA Loan Limits in Tennessee

FHA loan limits are set by county and updated annually. For 2026, most Tennessee counties including Montgomery County have a single-family home limit of $541,287. Higher-cost counties may have limits up to $1,029,250.

If the home you are buying exceeds the FHA limit for your county, we will talk through conventional or other options that may still work for your situation.

Always verify current limits at HUD's official FHA loan limits lookup tool or speak with our team.

Beyond the Standard FHA Purchase Loan

FHA Streamline Refinance Already have an FHA loan? If interest rates have dropped since you closed, the FHA Streamline allows you to refinance with minimal documentation and no appraisal required in most cases. It is one of the faster refinance paths available.

Multi-Unit Properties FHA will finance properties with up to four units as long as you live in one of them as your primary residence. If you are interested in building equity while having rental income offset your mortgage, this is a conversation worth having.

What We Look at Beyond Credit Score

FHA underwriting takes a full-picture approach. While credit scores matter, your recent payment history carries significant weight. If you experienced financial hardship in the past but have maintained a solid payment record over the last 12 to 24 months, you may qualify even if a conventional lender has said no.

We have helped clients in exactly that situation. We know how to document your story clearly and present your file in the strongest possible light. That is not something an automated system does well. It takes an experienced loan officer who actually reads the file.

Working With a Local Lender Makes a Difference

The FHA process is straightforward when you have the right person guiding it. We know the Clarksville and surrounding market, the local appraisers, and the timelines that work here. We will tell you upfront what to expect, what to prepare, and when to move.

You will not be talking to a call center. You will be talking to us.

Ready to find out if an FHA loan is the right fit? Call us at (931) 551-8999 or apply online to get started.

FHA Loans

FHA