Nashville, Memphis, Knoxville and Chattanooga have all drawn rental investors, and appreciation across much of Tennessee has built real equity. A DSCR cash-out refinance turns it into cash using the rent, not your tax returns.
In short: Yes, LendingStreet finances DSCR cash-out refinances on 1 to 8 unit investment property in Tennessee, up to 75% LTV, qualifying on the property's rent rather than your tax returns. The rent has to cover the new payment, including taxes and insurance, at the program minimum, which is 1.0x on standard programs, and the minimum credit score is 620. Tennessee is one of the states that taxes new mortgage debt when it is recorded, so the recordation tax is a closing line to ask about early.
A cash-out refinance replaces your current loan with a larger one. The new loan pays off the old mortgage, and the difference, less closing costs, goes to you. On a DSCR cash-out the new loan can go up to 75% of the appraised value, and it covers 1 to 8 unit rentals: single-family homes, condos, townhomes, duplexes, triplexes, fourplexes and small 5-8 unit buildings.
Approval rests on the debt service coverage ratio: monthly rent divided by the new monthly payment, including principal, interest, taxes, insurance and any HOA dues. A larger loan means a larger payment, so the ratio after cash-out is the one that has to clear the minimum, which is 1.0x on standard programs.
There are no W-2s or tax returns involved, LLC borrowers are standard and 30-year terms are available. The minimum credit score is 620, and you will need reserves after closing.
Nashville and its suburbs, including Murfreesboro, Antioch, Madison and Clarksville to the north, have strong rent demand and higher prices. Memphis offers lower entry prices and a large stock of older single-family rentals. Knoxville has rentals near the University of Tennessee, and Chattanooga has a mix of older homes and newer infill.
In East Tennessee, cabins around Gatlinburg, Pigeon Forge and Sevierville near the Great Smoky Mountains form one of the country's largest vacation rental markets.
Tennessee charges a recordation tax on recorded mortgage debt, along with a transfer tax on deeds. On a refinance, the transfer tax generally does not apply because ownership does not change, but the recordation tax on the new deed of trust can. How much applies on a refinance can depend on the new money and how the transaction is structured.
Ask your title company for an estimate early, since this line can be meaningful on a larger cash-out. Title insurance, recording fees, the appraisal and lender costs are the rest of the picture.
Tennessee property taxes are moderate, and counties reappraise on a cycle of several years. Recent reappraisals in Davidson County and other fast-growing counties raised values substantially, though tax rates were often adjusted downward at the same time.
A refinance does not trigger reappraisal. Underwriting uses the current bill, so if your county just completed a reappraisal, budget on the new figure. Tennessee has no broad state income tax on wages, which shifts more of the local burden onto property and sales taxes.
Nashville regulates short-term rentals by permit, and non-owner-occupied STRs are not allowed in many residential zones. Confirm the permit type and zoning before counting on nightly income. Sevier County cabins have long operated as vacation rentals, and short-term rental programs can qualify on revenue, but steep driveways, wildfire exposure and seasonality affect insurance and underwriting.
In Memphis, insurance on older homes can be the larger cost line, and Middle Tennessee sees tornadoes and severe storms. Get a fresh quote before you apply.
This example is illustrative and not a quote. An investor owns a single-family rental in Knoxville appraised at $340,000 with an existing loan of $140,000. Rent is $2,550 a month, and taxes and insurance run $450 a month.
At 75% LTV the new loan is $255,000, leaving $115,000 after the payoff and before closing costs. On a 30-year amortization, principal and interest is about $1,740, so the total payment is about $2,190 and the DSCR is about 1.16x, above the 1.0x standard minimum.
Remember that the recordation tax on the new loan comes out of closing costs, not the ratio. It reduces the cash you receive, so ask your title company for the figure.
| Item | Amount |
|---|---|
| Appraised value | $340,000 |
| New loan at 75% LTV | $255,000 |
| Existing loan payoff | $140,000 |
| Cash before closing costs | $115,000 |
| Monthly payment (P&I, taxes, insurance) | About $2,190 |
| DSCR at $2,550 rent | About 1.16x |
Seasoning rules vary by program. Some allow a cash-out within a few months of purchase; others measure the loan against your purchase price plus documented renovation costs until you have owned the property for a set period. If you bought with cash recently, delayed financing may be the cleaner route.
The loan amount is also limited by the 75% LTV cap, by the rent covering the new payment, and on 5-8 unit buildings and larger balances, by program-specific LTV limits that can be lower.
Our investor loans are business-purpose loans on non-owner-occupied property, and investors usually use the cash to grow or protect a portfolio:
Gathering these items before you apply keeps the appraisal and underwriting on schedule.
Yes. LendingStreet finances DSCR cash-out refinances on 1 to 8 unit investment property in Tennessee, up to 75% LTV, with loans starting at $150,000 and no stated maximum.
The 75% LTV cap, the rent covering the new full payment at the program minimum, and closing costs. On 5-8 unit properties and larger balances, the maximum LTV can be lower.
Tennessee charges a recordation tax on recorded mortgage debt, and on a refinance the amount can depend on the new money and the structure. Ask your title company for an estimate.
Possibly. Underwriting uses the current bill, and a higher bill lowers the ratio. Budget on the post-reappraisal figure.
Often, yes. Short-term rental programs can qualify on revenue for cabins that operate legally. Bring a full year of booking history and a current insurance quote.
Possibly. Seasoning varies by program, and recent renovation invoices can support the new value. Some programs cap the loan at cost basis until the property is seasoned.
No. The loan qualifies on the property's rent. You still need a 620 or higher credit score, reserves and entity documents if the property is held in an LLC.
No. Our investor loans are business-purpose loans on non-owner-occupied property, so the property must be a rental, not your residence.
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