Nashville's growth over the past decade turned many investor-owned houses into substantial equity positions, especially in East Nashville, The Nations, Germantown and the neighborhoods off Gallatin and Nolensville pikes. A DSCR cash-out lets you pull that equity using the property's rent instead of your tax returns.
In short: Yes. LendingStreet finances DSCR cash-out refinances on Nashville-area rentals up to 75% LTV, qualifying on the property's rent. The rent has to cover principal, interest, Davidson County taxes, insurance and any HOA or regime dues at the 1.0x standard minimum. Loans start at $150,000, LLC borrowers are standard and the minimum credit score is 620. Horizontal property regimes and short-term rental permits are the two Nashville-specific items to sort out early.
Metro Nashville was one of the strongest-appreciating markets in the Southeast through the late 2010s and into 2022. Growth has slowed since, and a lot of new apartments downtown, in the Gulch and along major corridors have kept rent growth moderate.
Investors who bought before 2020 often have large equity positions. Newer infill homes bought near the peak may appraise close to purchase price. Because prices are high relative to rents in many central neighborhoods, the 1.0x ratio is often what sets the loan amount rather than the 75% LTV cap.
A distinctive part of Nashville's housing stock is the horizontal property regime, or HPR, where two new homes share one original lot under a condo-style legal structure. You also see tall-and-skinny homes on subdivided lots. Many investors own one or both units of an HPR as rentals.
For a DSCR loan, an HPR unit is usually reviewed more like a condo than a detached house. Expect questions about the master deed, any regime dues, shared insurance and how the units are separately assessed. Have the regime documents ready, since they can slow a file if they are missing.
Tennessee has no broad state income tax on wages, so local property tax matters. Davidson County reappraises on a regular cycle, and recent reappraisals and rate changes have raised bills for many owners. Rentals in Williamson, Rutherford, Wilson and Sumner counties follow their own rates.
Use the current Metro Nashville tax bill when you estimate the payment, and remember that Tennessee assesses residential property at a lower percentage of value than commercial property, so a 1 to 4 unit rental is generally taxed as residential.
Tennessee charges a recordation tax on new mortgage debt. On a refinance, how it applies can depend on the new loan amount and how the transaction is structured. Ask your title company for an estimate early, since it can be a meaningful line on a larger cash-out.
Your term sheet will show lender costs separately from title, recording and taxes. If you are moving the property from your personal name into an LLC as part of the refinance, ask the title company whether the deed triggers any transfer tax and how the timing works, since that step is common with Nashville investors who bought in their own name first.
This example is illustrative and not a quote. An investor owns a three-bedroom house in East Nashville appraised at $450,000, owing $220,000. It leases for $2,950 a month. Taxes run about $260 a month and insurance about $150.
At 75% LTV the new loan is $337,500, which pays off the old loan and leaves $117,500 before closing costs. On 30-year amortization, principal and interest is about $2,302. The full payment is about $2,712, for a DSCR of about 1.09x. If the house were an HPR unit with $100 a month in regime dues, the ratio would be about 1.05x.
| Item | Amount |
|---|---|
| Appraised value | $450,000 |
| Loan at 75% LTV | $337,500 |
| Existing loan payoff | $220,000 |
| Cash before closing costs | $117,500 |
| Principal and interest (30 years) | About $2,302 |
| Taxes, insurance and any HOA (monthly) | $410 |
| Total monthly payment | About $2,712 |
| Monthly rent | $2,950 |
| DSCR | About 1.09x |
Metro Nashville requires permits for short-term rentals and restricts non-owner-occupied STR permits in many residential zones. Non-owner-occupied permits are generally limited to certain commercial, mixed-use and downtown-area zones, and permits may not transfer with a sale or a change of ownership.
If you plan to qualify on nightly income, confirm the property holds a valid permit in your name or your LLC's name. If the permit situation is uncertain, qualifying on a long-term rent estimate is the safer route.
Middle Tennessee sees severe thunderstorms and tornadoes, and premiums have risen across the state. Properties near the Cumberland River, Mill Creek or Richland Creek may sit in mapped flood zones, and the 2010 flood is a reminder that flooding can reach beyond them. Required flood coverage counts in the payment.
Nashville investors tend to recycle equity into the next deal rather than let it sit. Because central neighborhoods are expensive, many use cash from an East Nashville or Germantown rental to buy two or three lower-priced houses farther out, where the rent relative to price is stronger.
These items keep a Nashville file moving.
Yes. We finance DSCR cash-out refinances on non-owner-occupied rentals across Nashville and Middle Tennessee, up to 75% LTV, starting at $150,000.
Yes, in many cases. Expect the unit to be reviewed somewhat like a condo, with questions about the regime documents, shared insurance and any dues.
Nashville STR permits may not transfer with a change in ownership. Confirm with Metro Codes before deeding the property to an LLC.
Tennessee has a recordation tax on new mortgage debt. Your title company can estimate how it applies to your refinance.
Nashville prices are high relative to rents in many neighborhoods, so the 1.0x ratio may limit the loan before the LTV cap does.
Yes. Two to four unit properties qualify on combined rent, and 5 to 8 unit buildings can qualify on residential programs at a lower maximum LTV.
Seasoning varies by program. Some allow it soon after purchase; others want several months of ownership or limit the loan to cost plus improvements.
No. The loan qualifies on the property's rent. You need a 620 or higher credit score and reserves.
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