Knoxville home values rose sharply over the last several years, and many investors who bought North and South Knoxville rentals before that run-up now hold more equity than their original purchase price. A DSCR cash-out refinance turns that equity into cash without income documents.
In short: LendingStreet offers DSCR cash-out refinances on 1-8 unit rentals in Knoxville and East Tennessee up to 75% LTV, qualified on the property's rent rather than tax returns. Loans start at $150,000, the standard minimum DSCR is 1.0x and the minimum credit score is 620. Cash-out seasoning varies by program.
Common uses include buying the next rental, funding a flip or construction project, buying out a partner, or paying off higher-cost short-term debt.
Rents in Knoxville have risen along with values, which helps a larger loan clear the 1.0x standard minimum.
Some investors also use the cash to improve the rental itself. A new roof, updated HVAC or crawlspace work can lower repair costs and help with insurance on older Knoxville homes.
Decide what the cash is for before you choose an amount. Money that sits idle still costs interest every month.
This example is illustrative and not a quote. An investor bought a Victorian duplex in Fourth and Gill in 2017 for $215,000. It is now worth $445,000, has a $152,000 balance and rents for $3,175 a month. City and county taxes are about $342 a month and insurance is $205.
At 75% LTV the new loan is $333,750. After paying off $152,000 and estimated closing costs of $8,200, including Tennessee's mortgage tax, the investor receives about $173,550.
Estimated principal and interest is about $2,331, and with taxes and insurance the payment is about $2,878. DSCR is about 1.10x.
If the rent were lower, the investor could take less cash to keep the ratio above 1.0x. The rent, not the value alone, sets the limit on how much the loan can be.
| Item | Amount |
|---|---|
| Appraised value | $445,000 |
| New loan at 75% LTV | $333,750 |
| Existing loan payoff | $152,000 |
| Estimated closing costs | $8,200 |
| Estimated cash to investor | $173,550 |
| Total monthly payment | $2,878 |
| DSCR at $3,175 | 1.10x |
Knox County reappraises on a multi-year cycle. After a reappraisal, assessed values rise to catch up with the market, and the tax rate is typically adjusted downward. Your bill may still change, so use the most recent bill and assessment in your estimate.
Because Tennessee assesses residential property at a 25% assessment ratio, a big jump in value usually produces a smaller jump in taxes than in high-tax states.
If a reappraisal is coming, ask the property assessor's office what the new value is likely to be, and check whether the city and county have set new rates. A conservative tax estimate protects your ratio.
Tennessee charges a tax on recorded mortgages, based on the loan amount, so a larger cash-out loan carries a larger tax. There is no deed transfer tax on a refinance because ownership does not change. Title and closing fees also apply.
Ask for a closing cost estimate early so you know your net cash.
Your title company can tell you the exact mortgage tax for your loan amount when it prepares the closing estimate.
In neighborhoods like Fourth and Gill, Old North and South Knoxville, renovated homes can sell for much more than unrenovated ones on the same street. Give the appraiser a list of improvements, dates and permits.
Historic homes with original details can appraise well, but deferred maintenance on old houses, like roofs, porches and foundations, will be noted.
Appraisers in Knoxville often work with limited comparable sales for renovated historic homes. Share the best recent sales you know of, with your agent's help.
If you bought recently, seasoning rules decide whether the loan is based on today's value or your cost. Requirements vary by program, and our seasoning guide covers the common rules.
If you just finished a rehab, ask whether the new appraised value can be used.
Investors who used a bridge or flip loan and then leased the property often look at cash-out as soon as they can. Ask about seasoning before you set your timeline.
Cash-out refinances on short-term rentals can qualify on rental income on some programs, and our STR refinance page covers that path. Inside Knoxville city limits, confirm the property has the right permit and zoning for its use.
Many STR investors in the region own in Sevier County, where cabin rentals operate under county and city rules.
If you operate a short-term rental, records of past bookings and revenue help, especially when the program considers actual income.
With five or more rentals, a blanket portfolio loan can combine them into one loan with one closing and one payment, and release provisions when you sell.
See our Tennessee cash-out page for statewide notes.
A blanket loan can also be a way to pull cash from several smaller rentals that would each be too small to refinance efficiently on their own.
Call (877) 298-1001 or use the form below with the address, current balance, rents and tax bill.
Include any recent improvement list as well.
Up to 75% of appraised value, minus your payoff and closing costs, as long as the rent supports the new payment. If the ratio is tight, a smaller cash-out amount can keep it above the 1.0x standard minimum.
It can raise your tax bill, which raises the payment. Use the most recent assessment and bill in your estimate.
No. Tennessee's transfer tax applies to deeds. The mortgage tax applies to the new loan.
No. DSCR cash-out loans qualify on rent, credit and reserves. We check credit, with a 620 minimum, and confirm you have the required reserves.
It varies by program. Recent purchases may be valued on cost until a seasoning period passes. Our seasoning guide explains the common rules and how recent purchases are treated.
Yes, on some programs. The property must have the right permits and zoning for short-term use.
Yes, though max LTV varies by program and is often lower than on 1-4 units. Expect the appraisal and review to take a bit longer on a small apartment building.
Yes. With no existing loan, the full amount after closing costs goes to you. Since there is no payoff, the DSCR is often comfortable even at full leverage.
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