Tennessee DSCR Loans for STR Financing
Grow Your Portfolio with DSCR Loans
Whether you're purchasing STRs in Nashville, rental units in Memphis, or long-term investments in Chattanooga, our DSCR loans
give Tennessee real estate investors a reliable way to qualify based on property income. These loans focus on the rental cash flow your asset produces—not your W-2s, credit score, or employment history. We evaluate whether the property can fully support the loan obligations. Tennessee’s booming STR markets and consistent rental demand make it ideal for investors looking to scale. With DSCR financing, you can grow faster and more efficiently without being limited by traditional loan requirements.
How to qualify
To obtain a quote, we will need the following information:
Property Value and
Purchase Price
Down Payment
Amount
Credit Score
Asset Types
- Single Family Homes
- Townhomes
- Condos
- 2 - 4 Units (Duplex, Triplex, Quadplex)
- Multi-Family: 5 - 8 Units
- Mixed-Use: 2 - 8 Units
- Multi-Family: 9+ Unit
Loan Terms
- Loan Sizes:
$100k up to $3.5 Million (Larger loan sizes available on a case by case basis)
- Purchase LTV:
Up to 85%
- Rate & Term Refinance LTV:
Up to 80%
- Cash Out Refinance LTV:
Up to 80%
- Amortization:
30 Year % 40 Year Amortization Options Available
- Term Lengths:
5/6 ARMs, 7/6 ARMs, 10 Year Interest Only, 30 Year Fixed & 40 Year Fixed
- Floor Rate:
5.50% (subject to change daily due to market volatility)
- Full Recourse
with personal guarantee required for all borrowers with majority ownership (typically 20%+ or 25%+ if closing in an Entity)
- DSCR Requirement: 1.00x or greater depending on loan size and property type. Sub-1.00x DSCR and NO DSCR options available.
- Vesting:
Lending to Individuals, LLCs, and Corporations. Trusts Allowable on a Case by Case Basis.
- Average Time to Close:
14 to 35 days
Wondering if you qualify for investment property financing in your area?
We offer lending services in all 50 states!
Frequently Asked Questions
What is a DSCR loan and how does it work for Tennessee real estate investors?
A DSCR loan (Debt Service Coverage Ratio loan) is a type of financing that qualifies borrowers using the rental income of the property instead of their personal financials. Lenders evaluate whether the asset generates enough income to cover its mortgage, taxes, and insurance. This method works especially well for real estate investors focused on cash-flowing properties. In Tennessee, where STRs in Nashville and long-term rentals in Memphis and Chattanooga are thriving, DSCR loans offer a strategic advantage by allowing borrowers to qualify based on property performance—not personal income.
How is DSCR calculated in a typical loan scenario for Tennessee investors?
In Tennessee, DSCR is calculated by dividing the net operating income (NOI) from a rental property by its total yearly debt obligations, including mortgage, taxes, and insurance. For example, if a Tennessee rental generates $96,000 in NOI and has $80,000 in annual debt service, the DSCR would be 1.20. This means the income exceeds loan costs by 20%, a solid ratio for approval. Most Tennessee lenders require a minimum DSCR of 1.00, though stronger figures are preferred—particularly in cities like Nashville, Knoxville, and Chattanooga. Understanding DSCR in Tennessee allows investors to evaluate financing prospects with confidence.
What is considered a good DSCR ratio when applying for financing?
Tennessee lenders typically consider a DSCR of 1.20 or greater to be a healthy target. While 1.00 is the technical minimum, stronger ratios give lenders greater confidence and often reduce financing conditions. A 1.20 DSCR in Tennessee suggests your property brings in significantly more income than it costs to finance, which is a major advantage in competitive STR cities like Nashville, Knoxville, and Chattanooga. Understanding DSCR expectations in Tennessee helps you pursue better-performing properties and secure more favorable loan structures.
Can I qualify for a DSCR loan if my personal income is limited?
Yes, you can qualify for a DSCR loan even if your personal income is limited. DSCR loans, often referred to as Airbnb loans when used for short-term rental properties, are designed to approve borrowers based on the income the property generates—not personal W-2s, tax returns, or debt-to-income ratios. Lenders calculate the property's debt service coverage ratio to determine if the income is sufficient to support the loan. As long as the DSCR meets the required threshold—usually 1.00 or higher—you can often be approved regardless of personal income. This makes Airbnb loans ideal for self-employed investors, business owners, or anyone scaling a rental portfolio without relying on traditional underwriting standards.
How does a lender evaluate rental income when approving a DSCR loan?
Tennessee lenders evaluate DSCR loans based on how much income the property generates—not the borrower’s employment status or income history. In Tennessee, you’ll need to provide documentation like leases, STR performance records, or rent estimates from appraisals. That income is divided by annual loan costs to calculate the DSCR. As long as the DSCR is 1.00 or greater, Tennessee lenders may approve the loan. DSCR loans in Tennessee give investors flexibility when scaling portfolios. Understanding how rental income is evaluated in Tennessee allows borrowers to qualify based on the strength of their property—not their paycheck.
What’s the minimum debt service coverage ratio required for approval?
In Tennessee, the minimum DSCR for most loans is 1.00, confirming that property income can cover its loan obligations. Some Tennessee lenders may accept DSCRs as low as 0.75 if backed by high reserves or investor experience. A DSCR of 1.20 or higher is ideal in Tennessee for better terms and faster approvals, especially in active markets like Nashville, Knoxville, or Memphis. DSCR loans in Tennessee offer a scalable financing model for real estate investors. Understanding Tennessee’s DSCR minimum requirements helps you qualify with confidence and maximize property leverage.
Who should consider using a DSCR instead of a traditional loan?
These loans are perfect for self-employed individuals, LLCs, and investors managing multiple properties. Tennessee borrowers turn to DSCR loans to qualify through rental income, which is ideal for STR investors and portfolio builders. From Nashville to Knoxville, Tennessee real estate investors rely on these loans for faster closings and simplified underwriting. DSCR lending in Tennessee supports scalable investing without traditional income restrictions.
