Buying your first house means finding a home you can afford, getting pre-approved for a mortgage, understanding down payment assistance programs, and working with a builder or agent who knows the local market. In Memphis and DeSoto County in 2026, first-time buyers can put down as little as 3.5%, access builder incentives worth thousands, and save $1,000 to $1,500 annually on property taxes in Mississippi.
Mortgage rates briefly touched 5.5% this spring for the first time since 2022. Rates are now around 6.2%, significantly better than the 7%+ we saw a year ago. Builder inventories climbed to a 9.7-month supply, and 60% of Memphis homes are selling below asking. If you’ve been waiting for better conditions, this is what improvement looks like.
What Does It Actually Cost to Buy Your First House?
Your total cost to buy a house includes your down payment (typically 3.5% to 5% for first-time buyers), closing costs (2% to 5% of the purchase price), and your monthly mortgage payment. On a $350,000 home with a 3.5% FHA down payment, you’ll need roughly $10,500 down plus $6,000 to $15,000 for closing costs. With a 6.2% interest rate, your monthly payment runs about $1,840 for principal and interest, plus property taxes and insurance.
Here’s what catches people off guard. Property taxes in Shelby County, Tennessee run about 2.2% of your home’s assessed value annually. That same house across the state line in DeSoto County, Mississippi? You’ll pay roughly 1.5%, saving $1,000 to $1,500 per year. Over a 30-year mortgage, that’s $30,000 to $45,000 in real money.
The median home price in Memphis is $199,000, but new construction homes where we build typically range from $350,000 to $450,000. You’re getting more square footage, modern efficiency, and warranties that resale homes don’t offer. When you factor in builder incentives, the price gap between new and resale has narrowed to just 7.8% in 2026, the smallest difference in years.
How Much Do I Need Saved for a Down Payment?
You need 3.5% down for FHA or 3% for conventional loans as a first-time buyer. On a $350,000 home, that’s $12,250 or $10,500. Tennessee’s down payment assistance programs can cover up to $15,000, meaning some buyers move in with less than $5,000 out of pocket.
THDA offers two Great Choice Plus options. The first is $6,000 forgivable at 0% interest with no monthly payment, forgiven after 30 years. The second provides 5% of sales price (up to $15,000) as a second mortgage with monthly payments. To qualify, you need a 640 credit score and completion of a homebuyer education course.
What First-Time Buyer Programs Are Available in Memphis?
Tennessee’s Great Choice Home Loan offers 30-year fixed-rate mortgages through FHA, USDA, VA, or conventional financing. Requirements include a 640 credit score, homebuyer education completion, and income within county limits. Down payment assistance comes in two forms: $6,000 forgivable at 0% interest, or 5% of sales price (up to $15,000) with monthly payments.
Military, veterans, law enforcement, firefighters, teachers, and EMTs qualify for Homeownership for Heroes, which reduces your rate by 0.5%. On a $350,000 loan, that saves $60 monthly or $21,600 over 30 years. USDA loans require zero down for eligible rural areas around Memphis, including parts of Fayette County.
How to Buy a House as a First-Time Buyer: Step-by-Step Process
Check Your Credit and Get Pre-Approved
Pull your credit report from all three bureaus and verify your score is 640 or higher. Fix any errors, which takes 30 to 60 days. Then get pre-approved with a THDA-approved lender if using their programs. Pre-approval shows exactly what you can afford and proves to builders you’re serious. Get this done first, then start shopping.
Complete Homebuyer Education
Tennessee requires a homebuyer education course for all assistance programs. Take it online through eHome America for $99 or in person for $25 to $75. The eight-hour course covers budgeting, mortgage types, and avoiding foreclosure. You’ll receive a certificate needed for loan approval.
Choose Between New Construction and Resale
New construction homes in Memphis start around $300,000 and include warranties, modern energy efficiency, and customizable finishes. Resale homes may cost less upfront but need repairs and lack builder incentives worth $10,000 to $20,000. In 2026, the median resale home is actually more expensive than median new construction nationally. Builders have 9.7 months of inventory and are offering aggressive incentives. Spec homes close in 30 to 60 days if you need quick possession.
Compare Builder Incentives and Negotiate
Builder incentives in spring 2026 include closing cost assistance ($5,000 to $15,000), interest rate buydowns (0.5% to 1% reduction), free upgrades, and spec home discounts. Using a builder’s program lender can help unlock unique programs tailored to meet the needs of the buyer. A rate buydown from 6.2% to 5.7% saves $100 monthly on a $350,000 loan, totaling $36,000 over 30 years. Get all incentives in writing with specific dollar amounts.
Close and Move In
Closing takes 30 to 60 days for spec homes or when construction completes for ground-up builds. Do a final walk-through 24 hours before closing. Bring a cashier’s check for down payment and closing costs plus government ID. New construction homes include a one-year builder warranty.
Why Choose New Construction for Your First Home?
New construction homes offer first-time buyers builder incentives worth $10,000 to $20,000, everything under warranty, and better energy efficiency than resale homes. A 2,000-square-foot home built in 2026 costs $120 to $160 monthly to heat and cool in Memphis compared to $200 to $250 for a 1990s home. That’s $960 to $1,440 in annual savings.
You also choose your finishes before construction rather than renovating after purchase. The warranty coverage protects you from expensive repairs. If your HVAC fails in a resale home, you pay $8,000 to $12,000 out of pocket. In new construction, it’s covered under warranty for the first year.
Common Mistakes First-Time Buyers Make
Shopping for homes before getting pre-approved wastes time and weakens your negotiating position. Maxing out your budget leaves no room for unexpected expenses. Keep your housing payment under 28% of gross income. Skipping the home inspection on new construction is risky even though everything is new. Construction defects happen, and a $400 to $600 inspection finds them before closing. Finally, compare total cost of ownership, not just purchase price. Lower property taxes in DeSoto County save $1,500 annually, which adds up to $45,000 over 30 years.
Frequently Asked Questions
Can I buy a house with bad credit as a first-time buyer?
You need a 640 credit score minimum for Tennessee’s Great Choice program and most FHA loans. Below 640, spend three to six months improving your score by paying down credit cards and fixing errors on your credit report.
How much income do I need to buy a $350,000 house?
You need roughly $60,000 annual income with no other debt. Lenders want your total debt payments under 43% of gross monthly income. With a 6.2% rate and 3.5% down, your monthly payment runs about $2,140 including taxes and insurance.
Is now a good time to buy as a first-time buyer in Memphis?
Spring 2026 is one of the better windows in three years. Rates dropped from 7%+ to 6.2%, builder inventories are high, and 59.4% of Memphis homes are selling below asking. First-time buyers represent only 26% of the market, meaning less competition.
What is the Tennessee Great Choice Home Loan program?
Great Choice offers 30-year fixed-rate mortgages through FHA, USDA, VA, or conventional financing. You need a 640 credit score, homebuyer education completion, and income within county limits. The program includes down payment assistance up to $15,000.
Do I need 20% down to buy a house?
No. First-time buyers can put down 3% on conventional loans, 3.5% on FHA, or 0% on USDA rural loans. You’ll pay mortgage insurance with less than 20% down, but buying now beats waiting years to save 20%.
Can I use gift money for my down payment?
Yes. FHA allows 100% of your down payment from family gift funds. Conventional loans require you to contribute at least 3% from your own funds. The gift must be documented with a letter stating it’s not a loan.
Should I buy in Tennessee or Mississippi as a first-time buyer?
DeSoto County, Mississippi saves $1,000 to $1,500 annually in property taxes on a $350,000 home compared to Shelby County, Tennessee. Calculate your commute cost, school preferences, and the 30-year tax difference before deciding.
Memphis Communities for First-Time Buyers
Meridian builds in four primary communities around Memphis. Southbranch in Olive Branch, Mississippi offers DeSoto County tax advantages and quarter to half-acre lots starting at $350,000. The Preserve at Cedar Bluff has one remaining home available in Olive Branch. Carrington Estates and Hedge Rose in Oakland and Fayette County, Tennessee provide quarter to half-acre lots and access to highly-rated county schools, with homes ranging from $360,000 to $480,000.
What to Expect When Working with Meridian Premier Homes
We’ve built over 400 homes since 2014, with several going to first-time buyers. Our process starts with understanding your budget and timeline, then helping you select your lot, floor plan, and finishes. We provide transparent pricing upfront with no surprises at closing. Construction takes six to eight months with regular walk-throughs scheduled. Your home includes warranty coverage.
Take Your First Step Toward Homeownership
Buying your first house feels overwhelming until you break it into steps. Check your credit, get pre-approved, complete the homebuyer education course, compare your options, and make a decision. Thousands of first-time buyers close on homes every month, and there’s no reason you can’t be one of them.
The market conditions in spring 2026 favor buyers more than they have in years. Lower rates, higher inventory, and builder incentives are aligning to create opportunities for people who are prepared. If you’ve been renting and watching home prices climb, this window won’t stay open forever.
Visit our communities to see the floor plans and lot options available. Talk to our team about what programs you qualify for and what your monthly payment would look like. Or reach out if you just have questions about the process. We’ve guided hundreds of first-time buyers through this, and we can help you figure out if now is your time to buy.
