Richard Parker, 49, faces a life sentence with no chance of parole. He pleaded guilty to the first-degree murder of Jon and Marion Setzer.
Jon Setzer, 74, was killed instantly by the explosion on Feb. 10. His 72-year-old wife died of her injuries two days later in a Nashville hospital.
Parker, with his wife and four children, lived next to the Setzers in Wilson County in central Tennessee. Investigators said he bought the materials for the bomb at a Walmart in Gallatin, about 10 miles away.
Parker was arrested the day after Marion Setzer's death.
At Tuesday's hearing, lawyers suggested Parker killed his in-laws because he owed them money he was unable to repay.
Parker and his family attended the First Church of the Nazarene in Nashville.
"If this is true, it's better than putting the family though the nightmare of a trial and reliving the nightmare of this story," the pastor, Kevin Ulmet, told the Tennessean. "And for Richard as well; to give him a chance to bring his mind back together."