Memphis is one of the country's best-known markets for single-family rental investors, with low purchase prices and strong rent relative to value. A DSCR cash-out refinance lets Shelby County landlords pull equity using that rent.
In short: LendingStreet offers DSCR cash-out refinances on Memphis rentals with one to eight units, lending up to 75% of appraised value based on rent rather than personal income. The rent has to cover the full new payment at the program minimum, 1.0x on standard programs, with a 620 minimum credit score and LLC ownership allowed. In Memphis the lines to check early are the combined city and county tax bill after Shelby County's reappraisal and Tennessee's mortgage recordation tax on new money.
A cash-out refinance replaces your existing mortgage with a larger one. The difference, less closing costs, comes to you at closing. LendingStreet sizes the new loan at up to 75% of the appraised value on a cash-out, and the loan can close in an LLC with a 30-year term available.
Underwriting does not use your W-2s or tax returns. It compares the property's rent with the full new payment, meaning principal, interest, taxes, insurance and association dues. That debt service coverage ratio has to meet the program minimum, 1.0x on standard programs, after the extra cash is added to the balance.
Large investors and local landlords alike own single-family rentals across Memphis. Cordova, Hickory Hill, Raleigh and parts of East Memphis offer 1980s to 2000s homes with family renters. Frayser, Whitehaven and Orange Mound have lower prices and higher gross yields, with older homes that need careful maintenance. Midtown and Cooper-Young have higher rents and older character homes.
Bartlett, Germantown and Collierville offer suburban rentals with strong schools and higher prices, while Southaven and Olive Branch across the Mississippi line follow Mississippi rules. Because Memphis prices are low, check that a cash-out on a single house reaches the $150,000 loan minimum.
FedEx's global hub, the medical district, St. Jude Children's Research Hospital and a large logistics sector along the river and rail lines keep Memphis renter demand broad. Most homes are brick or frame ranches and two-story houses built between the 1950s and 2000s.
Tennessee assesses residential property at 25% of appraised value, and Shelby County reappraises on a regular multi-year cycle. Property inside Memphis pays both the City of Memphis and Shelby County rates, which makes the combined bill higher than in the suburbs. Recent reappraisals have raised values substantially in many neighborhoods.
Use the current bill, and if a reappraisal notice has arrived, the lender may use the new value. Appeals are possible but take time.
Tennessee charges a mortgage recordation tax on indebtedness, and on a refinance the tax often applies mainly to new money above the existing balance. Ask your title company for the estimate. Tennessee's transfer tax applies to deeds, not to a refinance where you keep title.
Older Memphis homes can carry higher insurance quotes because of roof age, wiring and plumbing, and the area sees severe thunderstorms and occasional tornadoes. Get a current quote.
Memphis has stepped up code enforcement on rental property in recent years, and the city has looked at further measures aimed at absentee landlords. Make sure there are no open code cases or unpaid city fines, since they can surface in title work.
Short-term rentals in Memphis require a permit, and some HOA-governed suburbs prohibit them. Most Memphis cash-outs are on long-term rentals, but if you rely on STR revenue, confirm the permit first.
This example is illustrative and not a quote. An investor owns a three-bedroom home in Cordova leased to a family at market rent. The property appraises at $230,000, the existing loan balance is $100,000, and taxes and insurance run about $380 a month against total rent of $1,700.
At 75% LTV the new loan is $172,500. Paying off $100,000 leaves about $72,500 before closing costs. Estimated principal and interest on a 30-year schedule is about $1,206, so the full payment is about $1,586 and the DSCR is about 1.07x, above the 1.0x standard minimum. If the reappraisal raised the combined tax bill, adding $90 a month, the ratio would fall to about 1.01x, still above the minimum.
| Item | Amount |
|---|---|
| Appraised value | $230,000 |
| Maximum loan at 75% LTV | $172,500 |
| Existing loan payoff | $100,000 |
| Cash before closing costs | $72,500 |
| Estimated principal and interest | About $1,206 |
| Taxes and insurance | $380 |
| Total monthly payment | About $1,586 |
| DSCR at $1,700 rent | About 1.07x |
Many Memphis rentals were built before 1970, and appraisers look closely at condition. Deferred maintenance like an old roof or failing foundation can lower the value or require repairs before closing. A list of recent updates helps the appraiser support the value.
Investors who bought distressed homes, rehabbed them and rented them often refinance to pull their capital back out. If you bought recently, seasoning rules may limit the loan to cost plus documented improvements, so keep receipts.
Start with 75% of value, then check whether the rent covers that payment at the minimum ratio. If not, the loan steps down until it does. Multi-unit properties count the rent of all units, and 5-8 unit buildings may have a lower LTV cap, which varies by program.
Time since purchase matters as well. Cash-out seasoning varies by program: some lenders allow it within months, others size the loan on purchase price plus documented improvements. Programs below 1.0x and rate-and-term refinances are alternatives when the numbers are close. Our Tennessee cash-out page explains the state-level rules.
Having these ready keeps the appraisal and underwriting moving.
Yes, on non-owner-occupied rentals with one to eight units, up to 75% LTV and from $150,000. Our investor loans are business-purpose loans on non-owner-occupied property.
Tennessee's mortgage recordation tax can apply, and on a refinance it often applies mainly to new money. Your title company can confirm.
Yes. You can refinance each separately, or combine five or more under a blanket portfolio loan with one closing and one payment.
It is the same metro but in Mississippi. It follows Mississippi rules for taxes and closing.
Not personal income. The property's rent qualifies the loan, along with a 620 or higher credit score and reserves.
Seasoning varies by program. Some programs allow a cash-out within months; others cap the loan at cost plus documented rehab for a period.
Often, yes, with a smaller loan or a program that accepts a ratio below 1.0x. Terms vary by program.
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