DSCR loans in Tennessee
Qualify on the property's rent, not your income. Up to 85% LTV for U.S. residents, 70% for foreign nationals.
Term sheet the same business day. Flipping? Fix-and-flip loans statewide.
Tennessee rental markets at a glance
Typical home value and rent by metro, with the gross rent yield: a year of rent divided by the value.
Higher yield means less money down to reach a 0.8 DSCR, where the best pricing starts. Each link opens the DSCR calculator with that market's numbers.
| Metro | Typical home value | Typical rent | Gross yield | Down for best pricing | |
|---|---|---|---|---|---|
| Memphis | $242,000 | $1,390/mo | 6.9% | 15% | Run the DSCR |
| Knoxville | $363,000 | $1,720/mo | 5.7% | 30% | Run the DSCR |
| Chattanooga | $319,000 | $1,510/mo | 5.7% | 30% | Run the DSCR |
| Nashville | $449,000 | $1,800/mo | 4.8% | 40% | Run the DSCR |
Metro-level typical values and rents, September 2026. The down payment column and the calculator link assume a 7.5% rate, a 30-year payment and $1,800 a year insurance. Change them to match your deal.
Tennessee property taxes and your DSCR
Tennessee has one of the lower effective property tax rates: 0.52% of value a year (2024), ranked 41st among the states.
On a $449,000 rental, 0.52% is about $2,335 a year, or $195 a month added to the payment the rent has to cover.
The actual bill depends on the county and city. Use the property's real tax figure when you run the numbers.
What Tennessee investors should know
Foreclosure is non-judicial
In Tennessee, lenders can foreclose by a non-judicial trustee's sale when the deed of trust authorizes it. In 2013 the Court of Appeals rejected a claim that the process violates the state constitution.
Faster foreclosure lowers lender risk, which helps investor loan pricing.
Source: Tennessee Court of Appeals, Patelco Credit Union v. Dutton (2013)Short-term rentals: the legacy clause
Under the Short-Term Rental Unit Act (2018), a local rule that prohibits or regulates short-term rentals does not apply to a property already used as a short-term rental before the rule was adopted.
That protection ends when the property is sold or transferred, stops being used as a short-term rental for 30 continuous months, or has 3 or more violations of local law. A buyer of an existing short-term rental does not inherit it, so check current local rules.
Source: University of Tennessee MTAS, Summary of the Short-Term Rental Unit ActTransfer and mortgage taxes
Tennessee charges a realty transfer tax of $0.37 per $100 of purchase price.
Recording a mortgage adds a tax of $0.115 per $100 of debt, with the first $2,000 exempt. Budget both into closing costs.
Source: Tennessee Department of Revenue, recordation tax ratesCounties revalue every 4 to 6 years
Tennessee law requires every county to revalue all real property on a 4, 5 or 6-year reappraisal cycle, with values set as of January 1 of the revaluation year.
The tax is charged per $100 of assessed value, which is a fraction of appraised market value. Check the county's next revaluation year: it can change the tax in the DSCR payment.
Source: Tennessee Comptroller of the TreasuryTennessee DSCR loan rates
Rates from 6.172%*, the same as nationwide. Rates move with the market, so the reliable number is a priced quote on your property.
Your DSCR, credit score, LTV, prepayment penalty and loan size move the rate most. In Tennessee, the property tax bill above feeds straight into the DSCR.
This week's DSCR loan rates* This may be for the strongest files, sometimes with a buydown. Subject to underwriting. Terms as of November 2026.
Tennessee DSCR loan requirements
- A Tennessee rental, long-term or short-term, not a home you live in
- DSCR of 0.75 or higher, 0.8 or higher for the best pricing
- Up to 85% LTV on a purchase for U.S. residents, 70% for foreign nationals
- Rent from the current lease, or the appraiser's market rent
- No tax returns, W-2s or pay stubs
- Close in your name or an LLC
Loans for Tennessee investors
- DSCR rental loans: up to 85% LTV purchase, 70% cash-out, 30-year fixed or interest-only
- Fix and flip (hard-money): up to 90% of purchase and 100% of rehab, capped at 75% of ARV
- Bridge loans: up to 70% LTV, 7-14 days to close
- Foreign nationals: every program, no SSN or U.S. credit, close in a U.S. LLC
Tennessee DSCR loan questions
What are DSCR loan requirements in Tennessee?
The same as nationwide. Best pricing at a DSCR of 0.8 or higher. Minimum 0.75 with a pricing adjustment.
Up to 85% LTV on a purchase for U.S. residents. Credit and reserves are priced in. No tax returns.
What closing taxes apply to a Tennessee rental purchase?
A realty transfer tax of $0.37 per $100 of purchase price, plus a mortgage tax of $0.115 per $100 of the loan amount, with the first $2,000 of debt exempt.
If I buy an existing Tennessee short-term rental, does its legacy status carry over?
No. Under the Short-Term Rental Unit Act, the legacy protection ends when the property is sold or transferred, so the local rules in force at purchase apply.
Sources
- Tax Foundation, property taxes by state (2024 data)
- Zillow Research ZHVI and ZORI (September 2026)
- Tennessee Court of Appeals, Patelco Credit Union v. Dutton (2013)
- University of Tennessee MTAS, Summary of the Short-Term Rental Unit Act
- Tennessee Department of Revenue, recordation tax rates
- Tennessee Comptroller of the Treasury
General information, not legal or tax advice. Loan terms are subject to underwriting.