Sevier County cabins and Nashville party houses made Tennessee a short-term rental headline state. Today the cabins are the easier loan, and Nashville is a zoning question first.
In short: LendingStreet finances Tennessee short-term rentals with DSCR loans that can qualify on projected rental revenue on some programs, starting at $150,000 with no W-2s or tax returns and LLC borrowers allowed. Gatlinburg, Pigeon Forge and the rest of Sevier County are built around cabin rentals. Nashville stopped issuing new non-owner-occupied STR permits in its residential-only zones, so investors there focus on mixed-use and commercial zones or rent long-term.
Sevier County, home to Gatlinburg, Pigeon Forge, Sevierville and Wears Valley, is one of the largest cabin rental markets in the country, driven by Great Smoky Mountains National Park, Dollywood and year-round family travel. Townsend, on the quieter side of the park in Blount County, is a smaller cabin market.
Nashville draws bachelorette groups, concerts, sports and conventions, with STR demand around downtown, the Gulch, Midtown, East Nashville and Germantown. Chattanooga has demand near downtown and the North Shore, and Memphis near downtown and Midtown. Norris Lake and Center Hill Lake serve summer boaters.
| Market | Typical property | What drives bookings | Rule to check |
|---|---|---|---|
| Gatlinburg and Pigeon Forge | Cabins, chalets, condos | National park, Dollywood, family trips | City and county rules; steep-lot cabins |
| Wears Valley and Townsend | Cabins | Quieter park access | County rules; road access |
| Nashville | Townhomes, duplexes, condos | Music, events, group trips | No new non-owner permits in residential-only zones |
| Chattanooga | Single-family homes, condos | Outdoor trips, downtown events | Non-owner STRs limited to certain zones |
Nashville stopped issuing new non-owner-occupied STR permits in residential-only zoning districts, while still allowing them in many mixed-use and commercial zones. Chattanooga also confines non-owner-occupied STRs to specific zones. Before you buy in either city, confirm the zoning and whether a permit can be issued to you.
Tennessee's 2018 Short-Term Rental Unit Act protects STRs that were lawfully operating before a local ban from being shut down, with conditions. That protection can be lost in some cases after a sale or a lapse, so ask how it applies to the property. In Sevier County, check the city or county rules and any HOA covenants on the cabin's road.
On a long-term rental, the lease or a market rent estimate sets the income. On a nightly rental, some of our programs accept a projection of gross short-term rental revenue, usually from a third-party data report that looks at similar listings, bedroom counts and occupancy in the area.
That projected income is compared with the full monthly payment to get the debt service coverage ratio. If the property already operates as an STR, 12 months of booking history can support the figure. How each program adjusts a projection varies, and a low projection can sometimes be addressed with more down payment or a sub-1.0 program.
This example is illustrative and not a quote. Consider a three-bedroom cabin with a hot tub near Pigeon Forge bought for $595,000, with a revenue projection of $55,000 a year, about $4,583 a month. The monthly budget includes $210 in property taxes, insurance at $230 and HOA dues at $60.
Financed at 75% LTV, the loan is $446,250. Estimated principal and interest comes to about $3,166, the total payment to about $3,666, and the DSCR to about 1.25x. A 15% revenue shortfall would bring it to about 1.06x.
With 65% LTV instead, the loan is $386,750 and the total payment about $3,244, lifting the DSCR to about 1.41x. The table compares both.
| Item | 75% LTV | 65% LTV |
|---|---|---|
| Loan amount | $446,250 | $386,750 |
| Estimated principal and interest | $3,166 | $2,744 |
| Property taxes | $210 | $210 |
| Insurance and HOA dues | $290 | $290 |
| Total monthly payment | $3,666 | $3,244 |
| Projected monthly revenue | $4,583 | $4,583 |
| DSCR | About 1.25x | About 1.41x |
| DSCR if revenue is 15% lower | About 1.06x | About 1.20x |
Tennessee has no tax on wage income, but short stays carry state and local sales tax plus city and county occupancy taxes, which are significant in Sevier County and Nashville. Platforms collect some of them; register where required.
Smoky Mountain cabins often sit on steep, wooded lots, and the 2016 Gatlinburg wildfires made insurers more careful about wildfire exposure, access roads and construction. Hot tubs, decks and long driveways add maintenance. Tennessee counties reappraise on a multi-year cycle, so check when the next reappraisal is due.
Sevier County stays busy most of the year: summer family trips, October leaf season, holiday light displays and spring break, with January and early February the slowest weeks. Nashville demand follows weekends, concerts, sports and conventions. Both markets have seen a lot of new supply, so the projection should use recent, closely matched comparables.
The DSCR calculation uses principal, interest, taxes, insurance and HOA dues. Your own budget needs more. A short-term rental pays for cleaning and laundry between stays, utilities, internet, streaming, supplies, platform fees and often a local manager who takes a share of revenue. Furnishing a home before the first booking is a real upfront cost as well.
None of that is in the lender's ratio on most programs, which is why a property that only just clears 1.0x on gross projected revenue can still lose money in practice. Run your own net numbers before you sign.
Our investor loans are business-purpose loans on non-owner-occupied property. The guidelines below apply to 1-8 unit STRs, though maximum leverage can be lower on larger balances and 5-8 unit properties.
We look at the property first: whether it can legally operate as a nightly rental, what it should earn, and what it costs to carry. Then we size the loan so the ratio works. Start with the form below or call (877) 298-1001.
Not for a non-owner-occupied home in a residential-only zone; Nashville stopped issuing those. Many mixed-use and commercial zones still allow them. Confirm zoning for the address.
Sevier County is a deep cabin market with year-round demand. Expect underwriting to look at recent comparables, road access and insurance on steep wooded lots.
It protects STRs that were lawfully operating before a local ban, with conditions. Protection can be lost in some cases, so ask how it applies after a sale.
Yes. Insurers look at location, roofing, access and defensible space. Get a quote early and include it in the payment.
Yes, 620. You qualify on the property's income rather than your personal income, so W-2s and tax returns are not required.
No. LLC ownership is standard. You sign for the loan personally as the member.
Yes. Rate-and-term and cash-out refinances are available, with cash-out up to 75% LTV. Your booking history can support the income, and seasoning varies by program.
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.