DSCR Loan Tennessee
Funded tennessee DSCR Loan Example
This fully renovated single family rental was purchased by a rental property investor in Memphis, TN with a DSCR of 1.20. The loan was funded by Ridge Street to a first time investor and closed in under 30 days.
- Rate: 6.975%
- 30 YR (FRM)
- Origination Fee: 0%
- 23 Days to Close
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What Are DSCR Loans Used For In Tennessee?
Tennessee DSCR loans are an investment property financing option that allows real estate investors to qualify based on a rental property’s cash flow rather than their personal income. DSCR loan qualification is determined by whether a property’s projected rental income covers its monthly debt service obligation, including principal, interest, taxes, insurance, and applicable HOA dues. When rental income meets this requirement, DSCR loans can be approved without relying on W-2s, tax returns, or pay stubs.
1. Nashville
2. Memphis
3. Chattanooga
4. Knoxville
In Tennessee, where demand remains strong for both long-term and short-term rentals, DSCR loans provide a highly scalable financing solution. Because qualification is based on property performance rather than traditional debt-to-income (DTI) limits, investors can purchase or refinance multiple properties and expand their portfolios beyond the constraints of conventional financing.
Common Uses For DSCR Loans in Tennessee
DSCR loans are commonly used for:
- Long-term rental properties in Nashville, Memphis, Chattanooga, Knoxville and suburban markets across Tennessee.
- Airbnb Rentals near sports venues, hospitals, travel corridors, and event-driven markets. The specialized DSCR Loan for Airbnb product is used for these short-term rental investments.
- Refinancing BRRRR projects, where investors purchase, renovate, rent, and then cash out refinance their properties when executing the BRRRR investing strategy.
- Portfolio expansion for investors scaling across multiple properties without personal DTI constraints.
Tennessee DSCR loans are used by both self-employed and W-2 investors because DSCR loans do not report to personal credit and qualification is based on a property’s cash flow rather than the borrower’s personal debt-to-income (DTI). This makes them an appealing financing option for building or expanding rental portfolios.
Tennessee DSCR Loan Products
Low Rates, from 0% Origination for long term & short term rentals in Tennessee.
Long Term Rental DSCR Loans Tennessee
Perfect for first-time or experienced investors scaling their 1 to 4 unit rental portfolio.
Up to 80% LTV for Purchases and Rate & Term Refinances
Up to 75% LTV for Cash Out Refinances
Interest Rates from 6.25% to 7.99%
Origination Fee from 0%
DSCR > 1.0
Loan Size: $55,000 to $2,000,000
Closing in as little as 21 days
Credit Score of 660+ Required
No Experience Required
See Our Complete Guide To DSCR Loans
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Short Term Rental DSCR Loans Tennessee
Designed for saavy investors pursuing higher rents with a short term rental strategy.
Up to 80% TV for Purchases and Rate & Term Refinances
Up to 75% LTV for Cash Out Refinances
Interest Rates from 6.5% to 7.99%
Origination Fee from 0%
DSCR > 1.0
Closing in as little as 21 days
Loan Size: $125,000 to $2,000,000
Credit Score of 700+ Required
Borrower Required to have 1 Personal Mortgage OR 1 Other Rental Property
See our Airbnb Loans Guide
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5-10 Unit Multifamily DSCR Loans Tennessee
For experienced investors only, looking to pursue larger multifamily rental property deals.
Up to 75% LTV for Purchases and Rate & Term Refinances
Up to 70% LTV for Cash Out Refinances
Interest Rates from 7.0% to 7.99%
Origination Fee from 1.0%
DSCR > 1.15
Closing in as little as 30 days
Loan Size: $350,000 - $2,500,000
Credit Score of 700+ Required
Borrower Required to have 1 Other 5 Unit Multifamily OR 2 Other 2-4 Unit Multifamily OR 3 other Single Family Rentals
How To Calculate DSCR For Tennessee Rental Properties
The Debt Service Coverage Ratio (DSCR) is calculated by dividing the monthly rental income of the property by the total debt service obligation.
DSCR = Rent / (PITIA)
Where PITIA includes:
- Principal
- Interest
- Taxes
- Insurance
- HOA (If applicable)
The basis of a DSCR loan in Tennessee is that the rent collected from leasing the property must be greater than the total operating costs.
A DSCR of 1.0 or higher means the rental income covers all expenses and the property is considered to be cash flowing.
Use our DSCR Loan Calculator to estimate your property’s DSCR and determine whether the property qualifies for a DSCR Loan.
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DSCR Loan Calculation Example in Tennessee
Property Value: $187,500
Loan: $150,000
Interest Rate: 6.875%
Ammortization: 30 YR (FRM)
Monthly Rent: $2,250
P&I Payment: $985.39
Monthly Taxes: $186.00
Monthly Insurance: $180
Monthly HOA: $0
DSCR 1.66
Tennessee DSCR Loan Process
Our DSCR Loan origination process includes 5 steps with reliable funding in 21-25 days.
Apply Or Get Pre-Approved Online
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Receive Your Term Sheet
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Submit Docs & Order Appraisal
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Underwriting And Final Approval
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Closing
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When To Use a DSCR Loan in Tennessee?
DSCR loans are used by investors to hold real estate long-term. There are several real estate investing scenarios that are ideal for DSCR Loans, including:
- Purchasing Turnkey Long Term Rentals
- Cash Out Refinancing in the BRRRR Investing Strategy
- Purchasing Turnkey Multifamily Properties
- Financing Short-term rentals/Airbnbs
- Cash Out refinancing to scale an investment portfolio
When Not To Use a DSCR Loan in Tennessee?
Although DSCR loans are a popular option, they are not suitable for:
- Owner-occupied properties
- Primary residences or second homes
- Properties with insufficient rental income to cover debt service
- Short-term bridge financing for quick resale (Bridge-to-Sell)
- Value-add projects that have not yet stabilized with rental income
Benefits Of DSCR LoanS Compared To Other Loan Types
The key advantages of DSCR loans compared to conventional financing options are:
- No personal income verification
- No tax returns or W-2s
- Scalable for growing portfolios
- Less documentation than conventional loans
- Works for LTRs and STRs
- DSCR Loans do not report to personal credit
Tennessee DSCR Loan Requirements
This section provides a complete checklist of the Borrower Requirements, Property Requirements, and Documents needed for a DSCR Loan in Tennessee.
Borrower Requirements
- Credit Score: 660+
- No Mortgage Lates in the last 24 Months
- Liquidity Requirements: Closing Costs + 6 Months PITIA
- First Time Investors Allowed
- Personal Borrower Or LLC
- US Citizen Or Permanent Resident
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Property Requirements
- Property Type: 1-4 Unit Residential or 5-10 Unit Residential
- DSCR > 1.0
- Property Must Be Rent Ready
- Vacant Properties Permitted For Both Purchases and Refinances
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Document Checklist
- Photo ID
- Bank Statement
- Entity Documents (Articles Of Formation, EIN, Operating Agreement) if closing in an LLC
- Appraisal (ordered by Ridge Street)
- Completed Loan Application
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Review Of The Best Rental Markets In Tennessee For DSCR Loans
Tennessee is a strong state for DSCR-financed rental properties due to its lack of state income tax, business-friendly environment, and diverse mix of urban and secondary rental markets. Investor demand is supported by population growth, expanding employment hubs, and consistent rental demand across both long-term and short-term strategies.Property values across much of Tennessee remain more accessible than coastal markets, while rental income often supports DSCR qualification without aggressive underwriting assumptions. For investors focused on cash flow, portfolio scaling, or blending long-term rentals with short-term strategies, Tennessee offers multiple markets that align well with DSCR loan structures.
DSCR Loans in Nashville, TN
Nashville is Tennessee’s most competitive rental market, driven by strong population growth, a rapidly expanding job market, and a robust short-term rental economy. The city benefits from a diversified employment base that includes healthcare, technology, finance, and entertainment.Higher home prices in Nashville are often offset by strong rental rates, particularly in well-located neighborhoods and professionally managed properties. Investors using DSCR loans in Nashville tend to focus on stabilized long-term rentals or compliant short-term rentals that generate sufficient income to meet DSCR requirements while benefiting from long-term appreciation.
DSCR Loans In Memphis, TN
Memphis is one of the most cash-flow–friendly rental markets in Tennessee and a popular choice for investors using DSCR loans to maximize yield. Lower acquisition costs combined with solid long-term rental demand help many properties achieve DSCR thresholds with conservative leverage.The city’s economy is anchored by logistics, healthcare, and education, supporting consistent tenant demand. While submarket selection is critical, Memphis remains attractive for investors prioritizing cash flow, portfolio expansion, and BRRRR-style long-term rental strategies using DSCR financing.
DSCR Loans In Chattanooga, TN
Chattanooga has emerged as a strong secondary market for rental investors, supported by job growth, infrastructure investment, and an increasing influx of remote workers. The city offers a balance between affordability and rental demand, making it well-suited for DSCR-backed long-term rental properties.Rental rates in Chattanooga often support DSCR qualification while acquisition costs remain more manageable than in larger metro areas. Investors seeking stable cash flow with moderate appreciation potential frequently view Chattanooga as a strategic addition to a Tennessee-based rental portfolio.
DSCR Loans in Knoxville, TN
Knoxville benefits from consistent rental demand driven by the University of Tennessee, regional healthcare systems, and a growing employment base. This combination supports stable occupancy and predictable rental income, particularly for long-term rental properties.Compared to Nashville, Knoxville offers a lower cost of entry while still providing rental income that can meet DSCR loan requirements. Investors using DSCR loans in Knoxville often focus on single-family and small multifamily rentals designed for steady performance rather than short-term volatility.
Tennessee DSCR Loan FAQ’s
How can I improve the DSCR of my Rental Property in TN?
- Increase Your Down Payment. By Increasing your down payment your loan amount will go down and your DSCR will icrease. If you’re struggling to improve your DSCR past 1.0, increasing your down payment is an option you may have to consider.
- Ask Your Lender About A Rate Buy Down. Some lenders, including Ridge Street, allow you to pay an additional fee at closing in exchange for a lower rate. In some cases, a rate buydown will allow you lower your DSCR without increasing your overall cash required to close.
- Push For Less Expensive Insurance. Ask your insurance broker if there is anything they can do to lower your policy fee. A lower insurance policy fee will increase your DSCR.
Could I use a DSCR loan if I have to renovate a property?
You can start by getting a short term fix and flip loan to renovate the property and then refinance the property with a DSCR loan. The strategy of buy, rehab, rent, refinance, and repeating is called The BRRRR Strategy.
Can I use a DSCR loan on an Airbnb in Tennessee?
Absolutely! Short term rentals are one of the main use cases for a DSCR loan. Also, called short term rental loans, dscr loans for short term rentals use the AirDNA projected rental income from the vacation property in the dscr calculation as opposed to the long term market rent.
What loan amounts can I get for a DSCR loan in TN?
Between $50K and $2M. As long as a the DSCR is greater than 1.0, Ridge Street will lend on it.
Are DSCR loans only for investment properties?
Yes. If you are buying a piece of real estate which you intend to live in, then you would not qualify for a DSCR loan.
For DSCR refinances and cash outs, does the property have to be rented?
Properties being financed with a DSCR loan do not need to be rented prior to financing. Investors who fix and refinance properties intend to refinance as soon as possible after renovating a property often closing on DSCR loans before leases are in place.
Ready To Get a DSCR Loan In Tennessee?
Whether you have a property under contract, you're looking to be pre-approved so you can find your next deal, or you'd like to speak with an expert, Ridge Street is a leading DSCR lender in Tennessee and can help.
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