Tennessee Second Home Loans and Mortgage Solutions

Financing Your Dream Second Home

Thinking about purchasing a second home in Tennessee? Whether you're looking at a Smoky Mountains cabin, a lakeside retreat, or a downtown Nashville condo, BNB Lending offers second home mortgage solutions designed for part-time personal use. We help buyers navigate Tennessee’s local STR rules, residential property tax rates, and loan eligibility guidelines. With competitive rates, quick approvals, and financing tailored for vacation and seasonal homes, BNB Lending makes owning a second home in Tennessee a seamless and compliant process.

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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!

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Frequently Asked Questions

What are the requirements for a second home loan in Tennessee?

Tennessee second home loans follow conventional federal lending rules. The property must be a single-unit residence, livable year-round, and used personally by the borrower for part of the year. It cannot be held in an LLC or used primarily as a rental. Lenders typically require a 10–20% down payment, strong credit, and verifiable income. Tennessee does not impose additional loan restrictions, but local regulations may apply depending on where the property is located. At BNB Lending, we confirm compliance with lender standards and local rules to qualify your property.

How do short-term rental rules affect loan classification?

Frequent short-term rental use can change how a lender classifies your loan—possibly shifting it from a second home to an investment property. Tennessee has no state-level STR regulation, but resort areas like Gatlinburg and cities like Nashville may require permits, enforce zoning limits, or impose occupancy taxes. The state also levies a 7.25% hotel tax on STR nights. BNB Lending evaluates your rental intent, property location, and local licensing rules to determine whether your financing qualifies as a second home loan or should follow investment guidelines.

Do second homes qualify for property tax benefits in Tennessee?

Tennessee second homes are taxed at the same rate as primary residences—25% of assessed market value under the state’s residential classification. Commercial-use properties are taxed at 40%, but a single-unit vacation home typically qualifies for the lower rate if primarily used by the owner. Tennessee has no homestead exemption for second homes, and mortgage interest is not deductible due to the absence of a state income tax. BNB Lending helps you estimate your property tax liability to ensure your financing strategy is financially sound.

Can I deduct mortgage interest on a second home?

While you can deduct mortgage interest on a second home at the federal level if you itemize and meet IRS use requirements, Tennessee does not offer a corresponding state deduction since it has no income tax. If your vacation home is rented occasionally, you may need to prorate the deduction based on personal versus rental use. BNB Lending helps structure your loan with tax efficiency in mind and recommends consulting a CPA to optimize federal deductions while staying compliant with Tennessee’s overall tax framework.

Are there second home loan programs in Tennessee?

Tennessee Housing Development Agency (THDA) programs are restricted to primary residences and do not apply to second homes, vacation properties, or part-time occupancy scenarios. These state-backed benefits are focused on first-time and low-income homebuyers. At BNB Lending, we offer flexible second home mortgage solutions across Tennessee—from the Smokies to the city. We assist with STR zoning research, property tax forecasting, and ensuring your mortgage structure aligns with lender and municipal expectations.

What types of properties qualify for second home loans?

Eligible second homes include one-unit dwellings that are livable year-round and primarily used by the borrower for personal occupancy. These include detached homes, townhouses, and condos. The property must meet appraisal and lender condition standards and cannot be a timeshare, multi-unit rental, or commercial structure. In Tennessee, zoning laws and STR regulations may affect how the property is classified. BNB Lending reviews your location and usage plans to ensure the home qualifies for second home financing.

Who benefits from choosing a second home loan over an investment loan?

These loans are perfect for self-employed individuals, LLCs, and investors managing multiple properties. If you plan to use your Tennessee home primarily for personal stays and only rent it occasionally, a second home loan may offer better rates and terms than an investment loan. These loans must be in your personal name—not held by an LLC. BNB Lending structures Tennessee second home loans to provide flexibility while keeping your financing compliant with lender and zoning guidelines.

Thinking beyond Utah? Explore Airbnb loans and second home opportunities in nearby states like Colorado or Arizona to expand your portfolio.