Many Chattanooga landlords bought when prices were far lower and now hold real equity in houses that still rent well. A DSCR cash-out refinance turns some of that equity into funds for the next purchase without using personal income to qualify.
In short: LendingStreet offers DSCR cash-out refinances on Chattanooga-area rentals of 1 to 8 units up to 75% LTV, qualified on the property's rent instead of tax returns or W-2s. The new payment, including taxes and insurance, needs to clear a 1.0x standard minimum DSCR, the minimum credit score is 620 and LLC owners are standard. Seasoning before cash-out varies by program.
Values in neighborhoods such as Highland Park, St. Elmo, Red Bank and North Chattanooga have risen substantially over the past decade, helped by downtown investment, the riverfront and steady in-migration, while many of those homes were bought as inexpensive rentals. Owners use cash-out proceeds for down payments on more rentals, to fund rehabs, to pay off higher-cost short-term debt, or to build reserves.
Because the loan qualifies on rent, you do not need to show personal income. The question is whether the property's rent supports the larger payment.
The maximum is 75% of the appraised value on standard programs, sometimes less on 5-8 unit buildings or large balances, which varies by program. From that, the new loan pays off your existing mortgage and closing costs, and the rest comes to you. The appraiser's value, not the online estimate, sets the ceiling.
In Chattanooga, values can shift sharply between streets, so the appraiser will lean on nearby sales of similar homes. Updated kitchens, newer roofs and systems help support the number.
Tennessee imposes a mortgage recording tax on new recorded loans, figured on the loan amount above a small exemption, so a larger cash-out loan carries a larger tax. Title insurance, recording fees, the appraisal and lender fees round out closing costs. There is no deed transfer tax on a refinance because the property is not changing hands, unless you are also moving it between entities.
If the house is held in your personal name and you want the new loan in an LLC, ask about the transfer up front. Moving the deed can affect title, taxes and timing.
Ask your title company for an estimate of total closing costs early. On a lower-balance Chattanooga rental, fixed costs such as title and the appraisal take a bigger share of the proceeds than they do on a larger loan, so the net cash figure is the one to focus on.
This example is illustrative and not a quote. An investor owns a Hixson rental worth $360,000 with a $140,000 mortgage balance. The home leases for $2,300 a month; taxes are $290 a month and insurance $140.
At 75% LTV the new loan is $270,000. After paying off the old loan, about $7,000 in closing costs and about $308 in Tennessee mortgage tax, the investor receives roughly $122,692. Estimated principal and interest is about $1,865, the total payment about $2,295 and the DSCR about 1.00x. At 70% LTV, cash out drops to about $104,712 but the DSCR improves to about 1.06x.
| Item | 75% LTV | 70% LTV |
|---|---|---|
| New loan | $270,000 | $252,000 |
| Existing payoff | $140,000 | $140,000 |
| Estimated cash to investor | $122,692 | $104,712 |
| Estimated principal and interest | $1,865 | $1,741 |
| Total monthly payment | $2,295 | $2,171 |
| DSCR at $2,300 rent | About 1.00x | About 1.06x |
Hamilton County reappraises property on a multi-year cycle. When a reappraisal raises the appraised value of your rental, the tax bill can rise even if rates are adjusted. When you refinance, the lender uses the current tax bill, so if a reappraisal notice has arrived, use the new figure. Homes inside Chattanooga, East Ridge, Red Bank or another city also carry a city tax.
If you bought and renovated a house recently, some programs let you use the new appraised value for a cash-out after a short ownership period, while others base the loan on your cost until more time has passed. Rules vary by program, so read our seasoning guide and tell us your purchase date, price and rehab spend up front.
If you own five or more rentals, a blanket portfolio loan can refinance them under one loan with one closing and one payment, qualified on combined cash flow. That can be simpler than five separate cash-out loans, and release provisions let you sell individual houses later.
Decide first what the cash is for. If it funds a specific purchase or rehab, size the loan to that need rather than the maximum, since a smaller loan keeps the DSCR stronger and the payment lower. Run your numbers on the full new payment. Check that insurance is current and that leases are signed and in your entity's name if the loan will be in the LLC. Fix any obvious deferred maintenance, since the appraiser will note it. Then send the address, estimated value, payoff and rent through the form below or call (877) 298-1001.
Our investor loans are business-purpose loans on non-owner-occupied property. We lend across Hamilton County and the Tennessee side of the metro, and on Georgia-side properties under Georgia rules. For statewide context, see our Tennessee cash-out refinance page.
Up to 75% of the appraised value on standard programs, less your payoff and closing costs. Max LTV can be lower on 5-8 unit properties and large balances and varies by program.
No. The loan qualifies on the rent compared with the new full payment. The minimum credit score is 620.
Yes. Tennessee charges a recording tax on new recorded loans based on the loan amount. It is paid at closing.
Seasoning varies by program. Some programs allow cash-out on the appraised value after a short period; others limit it to cost until more time passes.
Often yes, but moving the deed into an LLC needs to be planned with title. Tell us at the start.
You can take less cash out to lower the payment, or look at a sub-1.0 DSCR program where available.
The appraiser completes a rent schedule using comparable rentals. Where a lease is in place, programs typically consider both the lease and market rent, so a below-market lease can limit the ratio.
Possibly, if the property is legally permitted and has an operating history or qualifying projection. See our STR refinance page.
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