Tennessee is one of the few states that taxes the mortgage itself when it is recorded. On a jumbo loan, that recordation tax, plus the transfer tax on the deed, adds up to a real closing cost before the first rent check.
In short: LendingStreet offers jumbo DSCR loans of about $1.5M to $5M+ on Tennessee rentals with 1 to 8 units, qualified on the property's rent with no W-2s or tax returns. Nashville's STR permit limits, Smoky Mountain cabin income and the state's mortgage recordation tax are the Tennessee-specific items to plan for. Max LTV on larger loans varies by program.
In Nashville, Belle Meade, Green Hills, Sylvan Park, 12 South and East Nashville have large homes and new tall-and-skinny builds, while Brentwood and Franklin in Williamson County have executive homes leased to corporate relocations. The Gulch and Midtown have high-end condos.
In East Tennessee, Gatlinburg, Pigeon Forge, Sevierville and Wears Valley form one of the country's largest cabin rental markets, with large group cabins that can reach jumbo values. Chattanooga's Lookout Mountain and North Shore, Knoxville's Sequoyah Hills and East Memphis and Germantown round out the state's higher-value areas.
Nashville's growth in health care, music, technology and corporate relocations has supported high rents in Williamson County and the city's close-in neighborhoods. Chattanooga and Knoxville have smaller high-end markets with lower prices, where 5 to 8 unit buildings and groups of rentals are more common than single jumbo homes.
| Area | Typical high-value property | What to check |
|---|---|---|
| Belle Meade, Green Hills, Franklin | Large homes | Comparable leases, Davidson or Williamson taxes |
| Gatlinburg, Pigeon Forge, Wears Valley | Large group cabins | Booking history, steep roads, wildfire insurance |
| East Nashville, 12 South | New builds and small buildings | Metro STR permit rules, HOA covenants |
Tennessee assesses residential property at a 25% assessment ratio, and counties reappraise on cycles of four to six years. Davidson County's recent reappraisals raised values sharply across Nashville, and Williamson and Sevier counties have also seen large increases. Budget on the current bill and ask when the next reappraisal is due.
Overall, Tennessee property taxes are moderate compared with many states, and there is no state tax on wages. On a large Nashville home, the tighter constraint is often the rent itself, because high values do not always bring proportionally high rents.
Cabins bring their own checks. Many Smoky Mountain rentals sit on steep lots with long driveways, decks and hot tubs, and the 2016 Gatlinburg wildfires changed how insurers look at the area. Lenders will look at booking history, management agreements and the condition of decks and roofs. A cabin with two or three years of documented income is much easier to finance than a new build with only projections.
This example is illustrative and not a quote. An investor buys a Green Hills home in Nashville for $2,300,000 and leases it for $12,500 a month. Taxes are budgeted at $1,550 a month and insurance at $450. The comparison below shows how the ratio moves between two leverage levels, using estimated principal and interest on a 30-year schedule.
At 70% LTV the loan is $1,610,000, estimated principal and interest is about $10,847, the total payment is about $12,847 and DSCR is about 0.97x. At 65% the loan is $1,495,000, the payment is about $12,072 and DSCR is about 1.04x. At 70% the ratio falls below the 1.0x standard minimum; at 65% it just clears. Sub-1.0 DSCR programs exist for files like the first column, but most investors in high-value Nashville neighborhoods bring more cash to land above 1.0x.
| Item | 70% LTV | 65% LTV |
|---|---|---|
| Purchase price | $2,300,000 | $2,300,000 |
| Loan amount | $1,610,000 | $1,495,000 |
| Down payment | $690,000 | $805,000 |
| Estimated principal and interest | $10,847 | $10,072 |
| Taxes and insurance | $2,000 | $2,000 |
| Total monthly payment | $12,847 | $12,072 |
| Monthly rent | $12,500 | $12,500 |
| DSCR | About 0.97x | About 1.04x |
Nashville limits non-owner-occupied short-term rental permits in residential-only zones, and new permits there are generally not available. Non-owner-occupied STRs are mainly allowed in mixed-use and commercial zones. Check Metro Codes for the specific parcel before you rely on nightly income.
Sevier County and the Smoky Mountain cities have long-established cabin rental markets, though cities like Gatlinburg and Pigeon Forge have their own rules. Some programs qualify on projected STR revenue, and booking history helps.
Outside Nashville's top neighborhoods, jumbo balances often mean 5 to 8 unit buildings in Nashville, Chattanooga, Knoxville or Memphis, or several rentals refinanced together.
A blanket portfolio loan can combine five or more rentals with one closing and release provisions. Buildings of 9 or more units go to our commercial programs.
A jumbo DSCR loan still qualifies on the property, not your tax returns. The lender divides rent by principal, interest, taxes, insurance and HOA dues and generally looks for 1.0x or better, with sub-1.0 programs for some files.
Bigger balances bring more scrutiny: leverage is often lower than the program maximums, more months of reserves are usually required and value may be checked with a second appraisal. Terms on large loans are reviewed one file at a time and vary by program.
Tennessee charges a transfer tax on the deed, customarily paid by the buyer, and a separate mortgage recordation tax on the loan amount. On a jumbo loan both are meaningful, so ask your title company for the exact figures early.
A complete file gets a faster answer on a large loan.
Our investor loans are business-purpose loans on non-owner-occupied property. LendingStreet finances jumbo DSCR loans across Tennessee, including Davidson, Williamson, Sevier, Hamilton, Knox and Shelby counties.
To start, send the address, price, rent and preferred leverage. We will check the ratio against the real tax and insurance figures and return two or three structures. Get a quote with the form below or call (877) 298-1001.
It is a tax charged when the mortgage is recorded, based on the loan amount. On a jumbo loan it is a real closing cost, so ask your title company for the figure.
Non-owner-occupied permits are generally not available in residential-only zones. They are mainly allowed in mixed-use and commercial zones.
Yes, if it is non-owner-occupied investment property and local rules allow nightly rentals. Booking history strengthens the file.
High values do not always bring proportionally high rents. Lower leverage or a sub-1.0 program may be needed.
No. It qualifies on the rent compared with the full payment. Credit, reserves and the property itself still matter.
Sub-1.0 DSCR programs exist for some files, usually with lower leverage or more reserves. Bringing more cash to lower the loan is the other option.
Yes. LLC borrowers are standard, and you sign for the loan personally on most programs.
2-3 competing quotes from 30+ capital sources. No credit pull. No commitment.
By clicking, you provide express written consent to be contacted by LendingStreet (NMLS #1734316) via SMS, phone, or email, possibly using automated technology, regarding your loan inquiry. Reply STOP to opt out. Consent is not required to obtain services. See our Privacy Policy and Terms.