Tennessee HELOC Rates & Lenders: Your 2026 Guide to Home Equity Lines of Credit

Tennessee's housing market has been one of the country's standout performers. Nashville's explosive growth, Knoxville's steady appreciation, and Memphis's affordability-driven demand have pushed home values up dramatically—giving Tennessee homeowners a deep well of equity to draw from.

If you're a Tennessee homeowner considering a HELOC, you're in a solid position. The state's no-income-tax status, competitive lending landscape, and strong equity gains make this a favorable market for [home equity borrowing](/blog/home-equity-loan-vs-heloc-2026). Here's everything you need to know.

Tennessee Housing Market Overview

Tennessee's real estate market varies significantly by metro area, but the overall trajectory has been upward:

• Median home value (statewide): Approximately $320,000
• Nashville-Davidson metro: $420,000–$450,000
• Knoxville metro: $320,000–$340,000
• Memphis metro: $220,000–$250,000
• Chattanooga metro: $310,000–$330,000
• Clarksville: $280,000–$300,000

Nashville has been the state's growth engine, attracting corporate relocations (Oracle, Amazon operations hub, AllianceBernstein) and driving population growth of roughly 100 people per day across the metro. This growth has pushed prices up over 40% in the past five years in some Nashville neighborhoods.

Even in more affordable markets like Memphis, appreciation of 20–25% over five years means many homeowners have built meaningful equity.

Current HELOC Rates in Tennessee

Tennessee HELOC rates are competitive with national averages, and local lenders often beat big-bank pricing. As of early 2026:

The prime rate sits around 7.50%, and most HELOC rates are expressed as prime plus a margin. Well-qualified borrowers (740+ credit, under 70% CLTV) can often get rates at or near prime. Borrowers with lower credit scores or higher CLTV ratios will see margins of 1%–2.5% above prime.

[HELOC Requirements](/blog/heloc-application-process-step-by-step) in Tennessee

Standard qualification criteria apply across most Tennessee lenders:

• Credit score: 680+ preferred; 620 minimum at many lenders
• Combined loan-to-value (CLTV): 80%–85% standard; some lenders go to 90% for strong borrowers
• [Debt-to-income ratio](/blog/dti-ratio-explained) (DTI): 43% or below is the general target
• Minimum equity: 15%–20% after accounting for all liens
• Income documentation: W-2s, pay stubs, or two years of tax returns for self-employed
• Property type: Primary residences get the best terms

Nashville-specific note: Given the rapid appreciation in Nashville, appraisals are critical. If you purchased in 2020–2021, your home may appraise significantly higher than your purchase price, unlocking more borrowing capacity than you might expect. Make sure your lender uses appraisers familiar with Nashville's micro-markets.

Best HELOC Lenders in Tennessee

Local and Regional Lenders

Pinnacle Financial Partners Nashville-headquartered and consistently ranked among the best banks to work for, Pinnacle offers competitive HELOC products with a relationship-focused approach. Their underwriting is known for flexibility, and they offer both variable and fixed-rate HELOC options. Strong presence across middle Tennessee.

First Horizon Bank One of Tennessee's largest banks, First Horizon (headquartered in Memphis) offers HELOCs with competitive rates and extensive branch access statewide. They frequently waive closing costs on HELOCs above certain thresholds and offer rate discounts for autopay enrollment.

Tennessee Valley Federal Credit Union (TVFCU) Serving the Chattanooga area and beyond, TVFCU offers some of the [lowest HELOC rates](/blog/best-heloc-rates-2026) in the state. Their membership is open to residents of several Tennessee counties, and their application process is straightforward.

Orion Federal Credit Union Memphis's largest credit union, Orion FCU offers HELOCs with minimal fees and rates that consistently beat big-bank competition. They're particularly popular with Memphis-area homeowners.

Y-12 Federal Credit Union Serving the Knoxville and Oak Ridge area, Y-12 FCU offers competitive HELOC products with low or no closing costs. Membership has expanded beyond the original DOE employee base.

National Lenders Active in Tennessee

Regions Bank With deep roots in the Southeast, Regions has a massive Tennessee branch network. Their HELOC products include a fixed-rate lock option and competitive pricing for existing customers.

U.S. Bank Offers HELOCs up to $750,000 with no closing costs on many products. Their rate-lock feature allows you to convert portions of your variable balance to fixed rate.

Bank of America Preferred Rewards members can save up to 0.375% on HELOC rates. Fully available in Tennessee with a growing digital-first approach.

Figure Online lender offering HELOCs with a fully digital process. Funding can happen in as little as 5 days. Their product is technically a fixed-rate HELOC, which provides payment predictability.

Spring EQ Specializes in home equity products and offers higher CLTV options (up to 95% in some cases) for well-qualified borrowers. Worth checking if you have less equity to work with.

Tennessee HELOC Regulations

Tennessee's regulatory environment is moderately borrower-friendly:

• Homestead exemption (legal protection): Tennessee provides a $5,000 individual / $7,500 couple homestead exemption for bankruptcy purposes. This doesn't directly affect HELOCs but is worth understanding—it's one of the lower exemptions nationally.
• Foreclosure process: Tennessee primarily uses non-judicial foreclosure (deed of trust/power of sale), which is faster than judicial foreclosure—typically 30–60 days after the notice period. Since your home secures the HELOC, understand this risk.
• Right of rescission: Federal 3-day right to cancel applies to all Tennessee HELOCs on primary residences.
• No [prepayment penalty](/blog/dscr-loan-prepayment-penalty) restrictions: Tennessee law doesn't prohibit HELOC prepayment penalties. Most lenders don't charge them, but check your terms.
• Recording requirements: HELOC deeds of trust must be recorded with the county Register of Deeds, which incurs recording fees (typically $25–$50).
• Mortgage tax: Tennessee imposes a mortgage recording tax of $0.115 per $100 of indebtedness. On a $100,000 HELOC, that's $115. Some lenders absorb this cost.

Tax Implications of a Tennessee HELOC

Tennessee's tax situation is a significant advantage for HELOC borrowers:

• No state income tax: Tennessee has no tax on wages or salary (the Hall Tax on investment income was fully repealed in 2021). This means HELOC interest deductibility is entirely a federal matter.
• Federal interest deduction: HELOC interest is deductible if funds are used to buy, build, or substantially improve the home securing the loan. The combined mortgage debt cap is $750,000.
• Non-qualified use: [Using HELOC funds](/blog/heloc-draw-period-explained) for debt consolidation, tuition, or other purposes means the interest isn't federally deductible. The funds still work—you just lose the tax benefit.
• Record keeping: Track HELOC draws and their purposes carefully. Mixed-use borrowing requires allocation between deductible and non-deductible portions.

Tennessee Property Tax Context

Tennessee property taxes are among the lowest in the nation:

• Average effective property tax rate: Approximately 0.56%
• Median annual property tax: Around $1,200–$1,500 statewide
• Nashville (Davidson County): Higher at roughly 0.75%–0.85% effective rate due to urban services
• Assessment ratio: Residential property is assessed at 25% of appraised value
• Tax relief programs: Tennessee offers property tax relief for elderly, disabled, and veteran homeowners through the Tax Relief Program

Tennessee's low property taxes—combined with no income tax—make the overall cost of homeownership very competitive. When you add a HELOC payment, your total housing costs still tend to be well below what you'd pay in states like New Jersey, Illinois, or Connecticut.

How to Get the Best HELOC Rate in Tennessee

1. Start with credit unions. Tennessee has excellent credit unions that consistently offer the lowest HELOC rates. TVFCU, Orion FCU, and Y-12 FCU are strong starting points depending on your location.

2. Get at least 3–4 quotes. Don't just go with your current bank. Rate shopping within a 14-day window counts as one credit inquiry.

3. Leverage your equity position. If your CLTV is under 70%, you're in the best pricing tier at most lenders. Make sure your lender knows your home's current value—Nashville and Knoxville homes may have appreciated more than you think.

4. Ask about fee waivers. Closing costs on Tennessee HELOCs typically run $400–$2,500. Many lenders waive these for lines above $50,000 or for borrowers who keep the line open for at least 3 years.

5. Consider the mortgage recording tax. Tennessee's mortgage tax adds cost. Some lenders absorb it; others don't. This should be part of your comparison.

6. Negotiate. Tennessee's competitive lending market means lenders are willing to match or beat competing offers. Get a quote from a credit union and ask your bank to match it.

Frequently Asked Questions

How long does it take to get a HELOC in Tennessee?

Most Tennessee lenders close HELOCs in 2–5 weeks. The timeline depends on the [appraisal process](/blog/appraisal-process-explained) (full appraisals take longer than automated valuations), title search, and lender volume. Online lenders like Figure can close in under a week. Nashville-area applications may take slightly longer due to high volume.

Can I use a Tennessee HELOC for a rental property down payment?

Yes, you can use HELOC funds from your primary residence for any purpose, including a down payment on a rental property. However, the interest won't be deductible as mortgage interest (since the funds aren't improving the secured home). You may be able to deduct the interest as an investment expense—consult a tax professional.

What's the difference between a HELOC and a home equity loan in Tennessee?

A HELOC is a revolving line of credit with a variable rate—you draw what you need, when you need it, and only pay interest on what you borrow. A home equity loan is a lump sum with a fixed rate and fixed monthly payments. Choose a HELOC if your borrowing needs are ongoing or uncertain; choose a home equity loan if you need a specific amount and want payment predictability.

Does Tennessee's fast foreclosure process make HELOCs riskier?

Tennessee's non-judicial foreclosure process is faster than many states—the entire process can complete in about 60–90 days after default notices begin. This makes it important to borrow responsibly and maintain a financial cushion. However, lenders typically don't begin foreclosure proceedings until you're 90–120+ days delinquent, and most will work with you on modifications or forbearance first.

Are HELOC rates in Nashville higher than the rest of Tennessee?

Not typically. HELOC rates are determined primarily by your creditworthiness and CLTV ratio, not your specific location within the state. However, Nashville borrowers may get more favorable appraisals (due to higher home values), which can lead to lower CLTV ratios and thus better rates. Nashville also has more lender competition, which can drive better offers.

The Bottom Line

Tennessee is an excellent state for HELOC borrowers. No state income tax, low property taxes, strong home appreciation, and a competitive lending market all work in your favor. Nashville homeowners in particular may be sitting on substantial equity gains that a HELOC can unlock.

Start your search with Tennessee's credit unions—they consistently deliver the best rates. Then compare against regional players like Pinnacle and First Horizon, which offer strong products with local expertise. Don't overlook the mortgage recording tax as a cost factor, and make sure your appraisal reflects current market values, especially if you've been in your home for several years.

Use the funds wisely—home improvements that boost value create a virtuous cycle of equity growth—and always borrow with a clear repayment plan in mind.

Related Articles

• Using a HELOC as a Down Payment for Rental Property
• [Home [Equity Explained](/blog/home-equity-explained): What It Is and How to Build It](/blog/home-equity-explained)
• Property Taxes Explained: How They Work and How to Reduce Them