Memphis has long drawn out-of-state rental investors because the rent on a modest single-family home can cover a full payment. Many of those homes were bought with cash or hard money. A rate-and-term DSCR refinance replaces that money with a 30-year loan based on the lease.
In short: LendingStreet refinances 1-8 unit rentals in the Memphis area with DSCR rate-and-term loans that pay off hard money, a bridge loan or an existing mortgage and qualify on the property's rent, with no W-2s or tax returns. Loans start at $150,000, rate-and-term goes up to 80% LTV on some programs, and the standard minimum DSCR is 1.0x with a 620 minimum credit score. In Memphis, most refinances are single-family homes in Shelby County, and properties inside the city limits pay both Memphis and Shelby County property tax, which belongs in the ratio.
Rental demand in Memphis comes from FedEx and the logistics corridor, the medical district, St. Jude and Methodist, and a large share of households who rent. Prices on three-bedroom homes are low compared with rents, so the DSCR math often works well once the house is renovated and leased.
Out-of-state investors often buy through turnkey sellers or with short-term rehab loans, then refinance to free up the short-term lender and lock a long-term payment. Others are coming off bank loans with balloons or adjustable terms.
Memphis rentals cluster in areas with different price ranges and different property-condition issues.
| Area | Typical rental stock | Common refinance situation |
|---|---|---|
| Cordova and Hickory Hill | 1980s to 2000s single-family homes, some HOA | Replacing a bank or bridge loan |
| Raleigh, Frayser and Berclair | Older brick ranches at lower prices | Paying off rehab money after renovation |
| Midtown and Cooper-Young | Older homes and duplexes, higher rents | Rate-and-term on a renovated duplex |
| Bartlett and Southaven | Newer suburban homes | Refinancing a turnkey purchase loan |
A rate-and-term refinance pays off the existing loan and closing costs and changes the rate, term or structure, without taking meaningful cash out. Because it adds no new equity draw, leverage can reach up to 80% LTV on some programs, versus up to 75% on a cash-out. If you need cash for the next deal, see our Tennessee cash-out page instead.
Common reasons to choose rate-and-term:
This example is illustrative and not a quote. A three-bedroom brick ranch in Cordova was bought and renovated with a hard money loan and is leased for 12 months. It appraises at $215,000 and rents for $1,700 a month. The hard money loan balance is $148,000, with an interest-only payment of about $1,418 a month.
A rate-and-term DSCR refinance of $154,000 covers the payoff plus about $6,000 in estimated closing costs, roughly 72% LTV. Estimated principal and interest on a 30-year fixed loan is about $1,038. With taxes of $250 and insurance of $160, the monthly payment is about $1,448, for a DSCR of about 1.17x.
The new payment is about $381 a month lower than under the hard money loan, and it is fixed for 30 years instead of coming due. The ratio clears the 1.0x standard minimum.
| Item | Before (hard money loan) | After (DSCR refinance) |
|---|---|---|
| Loan balance | $148,000 | $154,000 |
| Monthly loan payment | $1,418 (interest-only) | $1,038 (est. principal and interest) |
| Property taxes | $250 | $250 |
| Insurance | $160 | $160 |
| Total monthly payment | $1,828 | $1,448 |
| DSCR at $1,700 rent | About 0.93x | About 1.17x |
| Loan term | Short term, comes due | 30-year fixed |
For a rate-and-term refinance, the appraisal sets both the value used for LTV and the market rent used for DSCR. Single-family homes get a rent schedule with the appraisal, and 2-4 unit properties are appraised on a small residential income form. Memphis has many investor-owned homes, so appraisers usually have plenty of lease comparables, but condition varies block by block. Photos and invoices help.
Tennessee assesses residential property at a 25% assessment ratio. Homes inside Memphis city limits pay both Shelby County and City of Memphis property tax, so the bill is meaningfully higher than in Bartlett, Germantown or unincorporated areas. Check the Shelby County Assessor and Trustee records, not a listing estimate.
Shelby County reappraises on a multi-year cycle, and values can jump in a reappraisal year. Tennessee also charges a recordation tax on new mortgages; ask the title company how it applies to your refinance.
Severe storms and tornadoes affect the Mid-South, and many Memphis rentals are older homes with roofs and systems that insurers check closely. Earthquake coverage is optional and many investors skip it, but ask about it given the New Madrid zone. Get a current quote and use it.
Memphis has stepped up code enforcement on rental housing, and the city has adopted rental registration rules for many properties. Confirm current requirements with the city and keep the property free of open violations before the refinance.
Tennessee has no rent control. Lease terms are typically 12 months, and the appraiser uses lease rent or market rent depending on the program.
Start the refinance 45 to 60 days before your short-term loan matures. Seasoning rules, meaning how long you must own the property before the new loan can use the appraised value, vary by program. In Memphis, the common case is a brick ranch in Raleigh or Frayser that was renovated and leased within a few months.
Send the address, payoff letter, lease and target loan amount through the form below or call (877) 298-1001. The financing team will run the ratio at a few loan amounts and come back with options, including sub-1.0 DSCR programs where they fit. We look at rentals across Shelby County, including Memphis, Bartlett and Cordova, plus DeSoto County, Mississippi on some programs. If you want to test the numbers first, our DSCR calculator works best with the real tax bill and a current insurance quote rather than estimates.
Homes inside the Memphis city limits pay both city and Shelby County property tax. Bartlett and other suburbs have their own city rate, usually lower.
Yes. We work with out-of-state investors. The loan qualifies on the property's rent, and the appraisal confirms value and market rent.
Some programs cover DeSoto County, Mississippi. Tell us the address and we will confirm.
They can slow it. Clear any open cases and keep proof of permitted work ready.
Some programs accept a DSCR below 1.0x. A smaller loan or a lower insurance quote can also raise the ratio.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
A rate-and-term refinance pays off existing debt and closing costs with little or no cash back, and some programs allow up to 80% LTV. A cash-out refinance lets you pull equity, up to 75% LTV.
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