TN VA loan glossary

Program figures verified July 2026. Details change; confirm your scenario with us.

Mike Certo · Cornerstone First Mortgage · NMLS #260555 · Updated May 30, 2026

VA loans + TN-specific Veteran programs have a vocabulary of their own. This glossary collects the terms Veterans actually encounter, plain-English definitions, and TN-relevant context where useful. Bookmark this page.

A

AMI (Area Median Income): Income benchmark used by TN Down Payment Assistance (DPA) programs (THDA Great Choice, THDA Great Choice Plus, Homeownership for Heroes) to determine eligibility. 2026 Davidson AMI is roughly $112,000 for a household of 4.

Assumable: A VA loan can be assumed by a qualified buyer (Veteran or non-Veteran). The original Veteran's entitlement stays tied to the loan unless the assuming party is also a Veteran substituting their own entitlement. Full guide.

ARM (Adjustable Rate Mortgage): VA permits ARMs but most VA loans are fixed-rate. Less common in TN market.

B

BAH (Basic Allowance for Housing): Monthly housing stipend paid to active-duty service members. Varies by base + rank + dependent status. Pull your exact figure with the BAH calculator.

Back-end DTI: Total debt obligations (PITI + other monthly debts) as a percentage of gross income. VA guideline: 41%. Some lenders accept higher with strong residual income.

C

Cash-out refi: VA refinance that pulls equity out of the home. VA allows up to 100% LTV cash-out (higher than conventional 80% cap). Funding fee applies (2.15% first use / 3.30% subsequent).

CFD / special assessment: Special assessment or improvement districts in some TN master-planned communities. Adds to monthly housing cost; VA underwriter includes it in DTI.

Closing costs: Fees paid at closing, typically 2-4% of loan amount. VA caps several. Seller can pay up to 4% in concessions.

Cluster home: Detached or semi-detached home in a planned community with shared common-area maintenance. Common in TN retirement communities. VA loan eligible if HOA approved.

COE (Certificate of Eligibility): VA-issued document confirming a Veteran's eligibility for the VA loan benefit. Free, obtained through VA.gov or via Mike. Required before VA loan can close.

Equitable distribution: Tennessee is an equitable-distribution state (not community property). In a divorce, marital property is divided fairly rather than automatically split 50/50. Affects how VA loans are titled and how divorce and estate planning interact with the home.

Compensation: VA disability monthly payment based on rating (10%-100%). Federally tax-free in all states.

Conforming loan limit: Maximum loan size for standard VA (or conventional) financing. 2026 TN baseline: $832,750 statewide.

D

Storm preparedness: Wind, hail, and tornado mitigation features (roof condition, anchoring, safe room). Matter for both VA MPR and Tennessee insurance pricing. Severe-weather + flood guide.

DD-214: Discharge document issued at military separation. Used to verify VA loan eligibility + claim other Veteran benefits.

Disability rating (VA): Percentage rating (0% to 100%, in 10% increments) assigned by VA based on service-connected disabilities. The funding fee is waived for Veterans receiving or entitled to receive VA disability compensation. A 100% permanent-and-total rating qualifies you for Tennessee's disabled-Veteran property tax relief (reimbursement on the first $175,000 of value).

DPA (Down Payment Assistance): TN programs that provide grants or forgivable seconds to help with down payment + closing costs. Top programs: THDA Great Choice, THDA Great Choice Plus Advantage (with Veteran bonus), THDA Homeownership for Heroes. Stacker guide.

DTI (Debt-to-Income ratio): Total monthly debt divided by gross monthly income. VA guideline: 41% back-end. Front-end (PITI only) typically should be ≤29%.

E

Earnest money deposit (EMD): Money buyer puts up at offer acceptance to show good faith. Standard TN EMD is 1% of price; 2-3% strengthens VA offers in competitive markets.

Entitlement: Veteran's $0-down VA loan capacity. Currently $144,000 basic + 25% of FHFA conforming limit = roughly $208,000 total entitlement in 2026. Limits the $0-down amount; doesn't cap the loan size for Veterans with full entitlement.

Escrow account: Account where lender holds property tax + insurance funds and pays them when due. Most TN VA loans use escrow.

F

FAIR Plan (TN FAIR Plan): Insurance of last resort for homes that can't get standard market coverage, typically older or high-wind/storm-risk TN properties. More expensive, more limited coverage.

FHFA limit: Federal Housing Finance Agency conforming loan limit. 2026 baseline: $832,750 across all 15 TN counties.

First use: A Veteran's first time using VA loan benefit. Lower funding fee (2.15% at $0 down) vs subsequent use (3.30%).

Front-end DTI: PITI as a percentage of gross income. VA prefers ≤29% but DTI alone doesn't decide approval.

Funding fee: One-time VA fee paid at closing (can be financed). 2.15% first use, 3.30% subsequent at $0 down. Waived for 10%+ disability rating. Calculator.

G

Gross income: Income before taxes. Used for DTI calc.

Gross-up: Treatment of tax-free income (VA disability, BAH, etc.) as higher equivalent taxable income for mortgage qualification. Standard 25% boost. Calculator.

H

Tennessee's disabled-Veteran property tax relief: State program that reimburses property tax on the first $175,000 of a home's market value for a Veteran rated 100% permanent-and-total service-connected (primary residence; no income limit). It is relief/reimbursement, not a full exemption. Apply through the County Trustee. Full guide.

HOA (Homeowners Association): Community association charging monthly/annual fees for shared amenities + maintenance. Common in TN master-planned communities. Affects VA DTI calculation.

THDA Great Choice Plus: Down payment assistance paired with the THDA Great Choice first mortgage: a $6,000 forgivable second or up to 5% of the sales price. Statewide, income and purchase-price limits by county. Strong stacker with conventional/FHA financing.

THDA Great Choice: Statewide TN DPA program. Up to 5% of loan amount as grant or 3-year forgivable second.

I

IRRRL (Interest Rate Reduction Refinance Loan): VA simplify refi. No income docs, no appraisal, no funding fee if disability waiver. Must pass VA's 36-month recoupment test. Calculator.

Inspection: Buyer-paid home inspection (separate from VA appraisal). Identifies condition issues + bargaining points.

J

Joint VA loan: Two Veterans buying together can use combined entitlement. Each contributes their entitlement; combined down-payment requirement scales accordingly.

Jumbo VA: VA loan above the FHFA conforming limit ($832,750 in TN). Veterans with full entitlement can finance to ~$4M with select lenders.

L

Land lease: Property where you own the home but lease the land. Rare in TN. VA typically can't finance.

LO (Loan Officer): Mortgage professional originating loans. Mike is an LO at Cornerstone First Mortgage. NMLS #260555.

LTV (Loan-to-Value ratio): Loan amount divided by appraised property value. VA allows 100% LTV (and effectively higher with funding fee financed).

Fort Campbell: Army post on the Tennessee-Kentucky line near Clarksville (Montgomery County). Home of the 101st Airborne Division (Air Assault). Large active-duty and family population. Base hub page.

M

MCC (Mortgage Credit Certificate): Federal tax credit for portion of mortgage interest paid. TN Housing Authority administers. Can stack with VA + DPA.

MHA (Military Housing Area): Geographic area used to set BAH rates. Fort Campbell falls in the Clarksville MHA; NSA Mid-South in the Memphis MHA; Arnold AFB in the Tullahoma MHA.

MPR (Minimum Property Requirements): VA's property standards. Working HVAC, sound roof, adequate water/sewer, no major safety issues.

N

NADL (Native American Direct Loan): VA loan program for Native Veterans on tribal trust land. VA is the direct lender. Full guide.

Net income: Income after taxes. Used for VA residual income calc.

NMLS: Nationwide Multistate Licensing System for mortgage professionals. Mike: NMLS #260555. Cornerstone: NMLS #173855.

O

Occupancy: VA requires primary residence occupancy within 60 days of closing. No exception for second homes or investment property.

Origination fee: Lender fee for processing the loan. VA caps at 1% of loan amount.

P

THDA Homeownership for Heroes: A Great Choice option for military and Veterans: a reduced interest rate that also waives the first-time-buyer requirement statewide.

PCS (Permanent Change of Station): Military relocation between duty stations. 60-day window from arrival for VA primary-residence occupancy. Summer PCS tactics.

PITI: Principal, Interest, Taxes, Insurance. Total monthly housing payment. Calculator.

Pre-underwriting (TBD): Full underwriting before a specific property is identified. Strongest pre-approval format; Mike issues TBD letters for TN summer-PCS situations.

Primary residence: VA loan requirement. Must occupy as primary residence within 60 days of closing.

R

Reserves (military): National Guard + Reserve service. Reservists with 6+ years qualify for VA loan benefit.

Residual income: Net income remaining after PITI + utilities + debts. VA's hidden second qualifying test (separate from DTI). Required minimums by family size + region. Calculator.

Restored entitlement: VA entitlement restored after a previous VA loan is paid off (typically via home sale). Allows reuse for next purchase.

S

Seller concessions: Money seller agrees to pay toward buyer closing costs. VA allows up to 4%.

Subsequent use: Second or later use of VA benefit. Higher funding fee (3.30% at $0 down vs 2.15% first use).

Survivor benefits: Surviving spouse of KIA or service-connected disabled Veteran may be eligible for VA loan + property tax relief + Dependency and Indemnity Compensation.

T

TBD (To Be Determined): Pre-underwriting before property is identified. Strongest pre-approval letter format.

Term: Length of the loan. Standard VA is 30 years; 15-year and 20-year also available.

Tribal trust land: Land held in trust by the federal government for a tribe or individual Native American. Standard VA can't finance; NADL applies.

U

Underwriting: Lender's full review of borrower + property. Verifies income, credit, assets, property.

V

VA appraisal: VA-ordered appraisal verifying property value + MPR compliance. Different from buyer's inspection.

VA Builder ID: Registration number assigned by VA Regional Loan Center to qualified builders. Required for VA construction loans.

VA disability compensation: Monthly tax-free payment based on service-connected disability rating.

VA loan limit: Maximum loan size at full guaranty. 2026 TN baseline: $832,750.

Vested Veteran: Veteran who has earned the VA loan benefit through qualifying military service.

W

Wind/hail deductible: A separate, often percentage-based deductible some Tennessee policies apply to wind, hail, and tornado damage. Worth checking before you close. Severe-weather + flood guide.

Flood zone (FEMA SFHA): A Special Flood Hazard Area mapped by FEMA. If your home is in one, your lender will require flood insurance to close. Common along Middle Tennessee rivers and creeks. Severe-weather + flood guide.

Z

Zero-down: Standard VA loan feature. No down payment required.

Term you encountered that's not here? Email Mike and he'll add it, this glossary grows as TN Veterans ask new questions.