Tennessee

Tennessee's fast-growing metro areas — Nashville, Memphis, Knoxville, and Chattanooga — are driving demand for accessory dwelling units. Nashville's ADU ordinance has been one of the most active in the Southeast. ADU Pass helps Tennessee homeowners handle the permit paperwork.

810 ZIP codes
97 Counties
497 Cities

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State ADU details

State insurance regimes

Tennessee's residential property insurance market is regulated by the Tennessee Department of Commerce and Insurance (TDCI), Insurance Division, under T.C.A. Title 56. Tennessee does NOT operate a stand-alone FAIR Plan, wind pool, or other state-issued insurer of last resort — the state participates in the Tennessee Aggregate Excess of Loss Reinsurance Mechanism and the Tennessee Commercial Auto Insurance Procedure as residual-market structures, but these are not single-family fire-and-extended-coverage residual insurers. The voluntary admitted market is the primary avenue for residential coverage; properties unable to obtain admitted-market coverage seek surplus-lines coverage. Severe convective storm, tornado, hail, and remnant-tropical-system flooding are the dominant catastrophic perils.

checked 2026-04-26

Known state issues (1)

  • policy-review (since 2024-09) — Nashville's late-2025 BL2025-1007 amends detached-accessory-dwelling-unit rules in the largest TN market; Chattanooga's Hamilton County Regional Planning Agency is processing a city ADU ordinance. Statewide ADU activity is presently concentrated in Nashville-Davidson, Memphis-Shelby, Knox-Knoxville, and Hamilton-Chattanooga; smaller jurisdictions vary widely. (source)
Federal (United States) — ADU-relevant rules and programs

Federal ADU law

The United States has no federal statute that directly regulates accessory dwelling unit entitlement or design. Land-use authority over ADUs resides with states and local governments under the traditional police power. Federal engagement is limited to financing (Fannie/Freddie/FHA/VA/USDA), flood insurance (FEMA/NFIP), and discretionary housing programs (HUD), which are recorded in sibling sections of this file.

checked 2026-04-20

Federal financing programs

Federal housing-finance agencies and GSEs set nationwide underwriting rules that govern whether an ADU can be financed, appraised, and counted toward mortgage qualifying income. The relevant actors are Fannie Mae, Freddie Mac, FHA (HUD), VA, and USDA Rural Development.

checked 2026-04-20

Federal tax credits

There is no ADU-specific federal tax credit. ADUs may incidentally qualify for existing federal energy-efficiency and clean-energy tax credits when the ADU construction includes qualifying measures.

checked 2026-04-20

Federal housing programs

HUD administers several discretionary programs that can fund ADU-related activity at the grantee's election, but none is an ADU-specific program.

checked 2026-04-20

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