VA Loans in East Tennessee: A 2026 Guide

East Tennessee has always been a magnet for Veterans. Between the lack of state income tax, the proximity to the Great Smoky Mountains, and the strong veteran communities in places like Knoxville and Chattanooga, it’s a natural fit for life after service.

But the housing market here has shifted. If you were looking a few years ago, it was a frenzy. Now, as we move through 2026, we are seeing a more balanced market with better inventory levels in the Tri-Cities and the suburbs of Knox County. That shift creates a massive opportunity for buyers using what is arguably the most powerful mortgage tool in existence: the VA loan.

The main draw is still the financials—0% down and no private mortgage insurance (PMI). However, using a VA loan in this specific region comes with its own set of rules, especially if you are eyeing a mountain cabin or a downtown condo. Here is how the numbers and rules shake out for 2026.

Tennessee VA Loan Limits in 2026

There is a lot of confusion regarding “loan limits.” You might read somewhere that there is a cap on how much you can borrow, but that isn’t the whole story.

Let’s clear up the “No Limit” rule first. If you are a Veteran with your full loan entitlement available—meaning you don’t have another active VA loan and haven’t defaulted on one in the past—there is no cap on the loan amount. You can buy a million-dollar lake house in Loudon County with zero down payment, provided your income and credit qualify for the monthly payments. The government does not set a maximum dollar figure for you.

Where limits actually come into play is for Veterans with partial entitlement. This usually applies if you are keeping a current home as a rental and buying a new primary residence, or if you’ve had a foreclosure in the past.

For 2026, the standard conforming loan limit for most East Tennessee counties—including Knox, Hamilton, and Sullivan—is $832,750.

If you have partial entitlement and want to buy a home priced higher than that, you can still do it. This is considered a “Jumbo VA loan.” The difference is that you will likely have to make a down payment, usually 25% of the amount that exceeds the $832,750 limit. It’s still a great deal compared to conventional financing, but it’s not strictly zero down in that specific scenario.

Exclusive Tennessee Benefits for Veterans

Beyond the federal loan perks, the state of Tennessee offers specific financial advantages that make the monthly budget much easier to manage.

The biggest one to watch is the Property Tax Relief program. If you are a disabled veteran with a 100% permanent and total (P&T) rating, or a surviving spouse, you don’t just get a pat on the back; you get a significant reduction in your tax bill. The state and county reimbursements cover taxes on a portion of your home’s assessed value.

For 2026, there is a major legislative update you need to know about. Currently, the relief applies to the first $175,000 of your home’s value. However, starting July 1, 2026, that threshold increases to the first $200,000 of market value. This is a direct saving that lowers your monthly payment if you escrow your taxes.

On top of that, Tennessee has no state income tax on wages or military retirement pay. If you are drawing a pension, that money goes a lot further in Johnson City or Cleveland than it would in many other states.

Buying Unique East TN Properties: Cabins, Condos, & Land

East Tennessee isn’t just subdivisions and cul-de-sacs. Many Vets come here looking for a specific lifestyle, but the VA has strict Minimum Property Requirements (MPRs) that can make certain local property types tricky.

Log Cabins and Mountain Homes

If you are looking at Sevierville or the foothills of the Smokies, you will see plenty of cabins. A VA loan can absolutely be used for a cabin, but it must be a “real” home. It needs a permanent foundation, a permanent heat source (a wood stove alone usually won’t cut it), and safe water/sewer systems.

The big catch in rural areas is often the road. If the cabin is on a private road, the lender will require a recorded maintenance agreement signed by the neighbors. If the road is too rough for a standard car to travel year-round, the appraiser might flag it.

Condos

Downtown living in Knoxville or Chattanooga is popular, but condos are stricter than single-family homes. You cannot just pick any unit; the entire condo complex must be on the VA-approved list. Getting a “spot approval” for a single unit in a non-approved complex is difficult and rarely worth the delay. Always check the approval status before falling in love with a listing.

Homes with Acreage

We often get asked about buying land with a VA loan. You can buy a house that sits on acreage, but you generally cannot buy raw land by itself. The appraiser also has to verify that the value is mostly in the home, not just the land. Also, the property cannot be an income-producing working farm. You can have a garden or a few animals for personal use, but if it looks like a commercial agricultural operation, the loan might be denied.

Steps to Buy a Home in East Tennessee with a VA Loan

The process here is similar to other states, but the local market pace dictates how you should move.

1. Get Your COE The Certificate of Eligibility is the first document needed. It proves to the lender that you have the service history to qualify.
2. Pre-Approval Choose a lender who understands Tennessee taxes and fees. A local lender will give you a more accurate estimate of your “cash to close” than a big national call center that might guess at the county tax rates.
3. The House Hunt Work with a Realtor who understands VA appraisals. In competitive pockets of the market, you might need an agent who knows about the “Tidewater Initiative,” which is a process to help justify the sales price if the appraisal comes in low.
4. The Appraisal The VA appraisal protects you from buying a lemon or overpaying. In East Tennessee, the timeline for this is currently running about 7 to 10 days. The appraiser is looking for fair market value and safety issues (like peeling paint in older homes or handrails on steep stairs).
5. Closing Once you close, remember the occupancy requirement. You generally need to move into the home within 60 days. This loan is for your primary residence, not a property you intend to leave vacant or rent out immediately.

Closing Costs & Fees in Tennessee

Even with a “no money down” loan, you will have some costs at the closing table. However, there are ways to minimize these.

The most distinct cost is the VA Funding Fee. This goes directly to the VA to keep the program running.

• 2.15% of the loan amount for first-time use (with 0% down).
• 3.3% for subsequent use.
• 0% (Waived) if you receive compensation for a service-connected disability.

If you are disabled, ensuring your lender has your paperwork to waive this fee saves you thousands of dollars instantly.

For the rest of the closing costs—title insurance, recording fees, and pre-paid taxes—you are looking at roughly 1% to 2% of the purchase price. The good news is that in the 2026 market, seller concessions are back on the table. The VA allows the seller to pay up to 4% of your loan amount toward your closing costs and debts. In a balanced market like we have now in the Tri-Cities, negotiating for the seller to cover these costs is very common.

There are also “non-allowable fees” that the VA forbids the Veteran from paying. Your lender will recognize these (often certain attorney or escrow fees) and structure the deal so the seller or lender covers them.

Frequently Asked Questions

What is the VA loan limit for Knox County in 2026?

For Veterans with full entitlement, there is no loan limit. For those with partial entitlement, the conforming limit for 2026 is $832,750. You can borrow more than this, but it would require a down payment on the portion exceeding that amount.

Can I buy a vacation rental in the Smoky Mountains with a VA loan?

No, you cannot use a VA loan to purchase a dedicated vacation rental or investment property (like an Airbnb). The VA loan is strictly for primary residences that you intend to live in full-time. However, you can buy a multi-unit property (up to 4 units) as long as you occupy one of the units as your home.

Do Tennessee Veterans pay property taxes?

Yes, generally speaking, Veterans pay property taxes. However, disabled veterans with a 100% P&T rating are eligible for significant relief. As of July 1, 2026, the state reimburses the taxes on the first $200,000 of the home’s assessed value, reducing the annual bill substantially.