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DSCR Loans in Tennessee

Rental property financing built on rental income.

In Tennessee, a DSCR loan finances a rental on the strength of its rent instead of your tax returns. HUD puts the 2 bedroom Fair Market Rent for the Nashville metro at $1,798 a month (HUD User). Pillar Mortgage Group (NMLS 2700076) arranges DSCR loans in Tennessee up to $5 million.

Run my Tennessee dealCheck your DSCR

Facts checked November 1, 2026. Not a commitment to lend.

Facts checked November 1, 2026

Tennessee at a glance for DSCR investors

Every value links to its primary source. Details for each follow further down the page.

Tennessee factValueSource
Security instrumentDeed of trust is the customary instrument; statute covers sales to foreclose a deed of trust, mortgage or other lienlaw.justia.com
ForeclosureDeed of trust is the customary instrument; statute covers sales to foreclose a deed of trust, mortgage or other lienlaw.justia.com
Transfer and recording taxesRealty transfer tax $0.37 per $100 of purchase price; mortgage (indebtedness) tax $0.115 per $100 of debt, first $2,000 exempttn.gov
Security depositNo statutory cap on amountTenn. Code Ann. 66-28-301
Notice for unpaid rent14 days to remedy after receipt of written notice; repeat breach within 6 months allows termination on 7 days noticeTenn. Code Ann. 66-28-505
Rent controlState preemptionTenn. Code Ann. 66-35-102
Median listing price$429,450 in September 2026 ($429,900 in September 2025)Realtor.com via FRED
Median gross rent, statewide$1,189 (ACS 5 year 2020 to 2024)Census
HUD 2 bedroom Fair Market Rent$1,798, The Nashville metroHUD User
The definition

What is a DSCR loan, and how does it work in Tennessee?

DSCR is monthly rent divided by PITIA (principal, interest, taxes, insurance and HOA). With the HUD 2 bedroom Fair Market Rent for the Nashville metro at $1,798, PITIA can reach $1,798 at a 1.00 ratio, or $3,596 at 0.50.

Full walk through: how DSCR is calculated.

Where PMG is different

Why Tennessee investors use PMG

The guidelines that set our Tennessee DSCR loans apart.

  • First time buyers: allowed, no VOR
  • Cash out: no seasoning
  • Reserves: none under $1M, 75% LTV
  • Assets: no sourcing
  • Gift funds: 100%
  • ADUs: multiple
  • Foreign nationals: 70% / 60% LTV
  • DSCR: from 0.50
  • Interest only: 70% / 65% LTV

Loan amount

Up to $5M

Credit

660 and up

Down

20 to 25%

Vesting

LLC ok

Guidelines summarized; subject to program terms, property and borrower eligibility. Not a commitment to lend. Compare with typical DSCR programs.

Tennessee rental market

Tennessee rental market snapshot

Before you run a Tennessee deal, anchor the rent to public benchmarks instead of a listing agent's guess.

HUD Fair Market Rent, 2 bedroom

$1,798

The Nashville metro (FY2027)

HUD User

HUD Fair Market Rent, 2 bedroom

$1,301

The Memphis metro (FY2027)

HUD User

Median gross rent, statewide

$1,189

Census American Community Survey, 5 year 2020 to 2024

Census ACS

Median listing price

$429,450

September 2026, down 0.1% from $429,900 in September 2025

Realtor.com via FRED

Quick math (computed from the figures above): Using the Tennessee median listing price, $429,450, a 25% down payment is $107,362 and the loan is $322,088. A year of rent at the Fair Market Rent for the Nashville metro ($1,798) is $21,576, or 5.0% of that price. A year of rent at the Fair Market Rent for the Memphis metro ($1,301) is $15,612, or 3.6% of that price.

Fair Market Rent is a HUD benchmark, not an appraisal.

Calculator

Check your Tennessee DSCR in seconds

The rent field starts at the HUD 2 bedroom Fair Market Rent for the Nashville metro. HUD also lists the Nashville metro at $1,798 and the Memphis metro at $1,301. Swap in your lease or appraisal rent, then add your quoted rate. For a price reference, the median Tennessee listing was $429,450 in September 2026.

Tennessee DSCR Calculator

See how a rental's income stacks up against its full monthly payment. Your numbers stay in your browser.

Income
Example: HUD 2 bedroom Fair Market Rent for the Nashville metro. Replace it with your rent.
Loan
Expenses
Leave blank if there is no HOA.

Your DSCR results

Enter rent, price and your quoted rate to see your DSCR.

Formula used

Loan amount (L) = Price × (100 minus Down %) ÷ 100

P&I (30 year fixed) = L × r × (1 + r)^360 ÷ ((1 + r)^360 minus 1), where r = annual rate ÷ 100 ÷ 12

P&I (40 year interest only) = L × r

PITIA = P&I + Tax ÷ 12 + Insurance ÷ 12 + HOA

DSCR = Monthly rent ÷ PITIA

Rent needed for a target DSCR = Target × PITIA

Talk through your numbers with us

Estimates only. Not a loan offer. Rates and terms vary by lender, property and borrower. Company NMLS #2700076. Example values are illustrations, not a quote.

The math

DSCR worked examples for Tennessee

Hypothetical PITIA of $1,775 (P&I $1,400, taxes $250, insurance $125), real Tennessee rents. Not a quote or a rate.

The Nashville metro

HUD FY2027 2 bedroom Fair Market Rent (source)
$1,798
Hypothetical PITIA
$1,775

1.01DSCR

$1,798 / $1,775 = 1.01: covers the full payment.

The Memphis metro

HUD FY2027 2 bedroom Fair Market Rent (source)
$1,301
Hypothetical PITIA
$1,775

0.73DSCR

$1,301 / $1,775 = 0.73: fits programs down to 0.50.

Talk to us

Have a Tennessee rental in mind? Run it with us.

A two minute form gets the property in front of our team. You get a straight answer on the ratio and the structure.

Investors from any state can buy in Tennessee.

See If My Tennessee Deal Qualifies

No commitment  ·  Under 2 minutes

Your information is never sold or shared. By submitting you authorize Pillar Mortgage Group LLC to contact you by phone, text, or email. Equal Housing Lender.

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Top markets

Top Tennessee rental markets for DSCR

Most Tennessee DSCR deals land in these markets. Check the city rules before you buy.

Nashville

$1,798

HUD 2 bedroom Fair Market Rent, the Nashville metro (HUD)

Memphis

$1,301

HUD 2 bedroom Fair Market Rent, the Memphis metro (HUD)

Short term rental rules in Nashville and Memphis

  • Nashville: Metro permit required. Owner occupied permits are for natural persons only (LLCs and other entities ineligible). New non owner occupied permits are issued only in listed mixed use, office, commercial and downtown districts and are not permitted in AR2a, R, RS or RM residential zones. Existing permits there may renew but do not transfer on sale. One permit per lot in single family and two family districts. (nashville.gov)
  • Memphis: Registration or permit required under the city short term rental ordinance. The city began compliance letters June 1, 2026 and cites unregistered properties. Primary residence rules and caps not stated in the document checked. (memphistn.gov)

City rules change. Confirm with the city and your HOA before you buy, and ask us how your lender counts short term rental income.

Landlord and tenant law

Tennessee landlord and tenant rules that affect your DSCR

These Tennessee statutes set the ground rules for every lease you sign on a financed rental.

TopicThe ruleCitation
ScopeThe Uniform Residential Landlord and Tenant Act applies only in counties with population over 75,000 per the 2010 federal census.Tenn. Code Ann. 66-28-102
Security depositNo statutory cap on amount. Return deadline: No fixed day count. Landlord must send refund notice and may keep an unclaimed refund after 60 days with no tenant response. Damage claims must be discovered before the earlier of 30 days after move out or 7 days after a new tenant takes possession.Tenn. Code Ann. 66-28-301
Nonpayment notice14 days to remedy after receipt of written notice; repeat breach within 6 months allows termination on 7 days noticeTenn. Code Ann. 66-28-505
Month to month termination30 days written notice before the periodic rental dateTenn. Code Ann. 66-28-512(b)
Rent controlState preemption: local governments may not enact, maintain or enforce rent control on private residential or commercial property.Tenn. Code Ann. 66-35-102

Not legal advice.

Property taxes

How Tennessee taxes rental property

Every dollar of tax raises the payment the rent has to cover. Here is how Tennessee assesses and taxes property.

  • Assessment: Property is appraised by the county assessor and taxed on an assessed value equal to a set share of appraised value: residential and farm property at 25 percent, commercial and industrial at 40 percent. Tax equals assessed value times the local rate per $100 of assessed value. (comptroller.tn.gov)
  • Investor notes: Residential rental property falls in the 25 percent residential class per the Comptroller description. Tennessee has no general homestead exemption on the assessment page checked. (comptroller.tn.gov)
  • Reappraisal: Counties reappraise on a cycle and the state requires a certified tax rate after reappraisal so the reappraisal itself is revenue neutral. (comptroller.tn.gov)
Closing and foreclosure

Closing a rental in Tennessee: deeds, foreclosure and taxes

What to expect at the closing table in Tennessee, from the instrument you sign to the taxes on transfer.

  • Security instrument: Deed of trust is the customary instrument; statute covers sales to foreclose a deed of trust, mortgage or other lien. (law.justia.com)
  • Foreclosure: Nonjudicial sale under power of sale is permitted. Advertisement at least twice in a county newspaper with first publication at least 20 days before sale, plus 20 continuous days of online posting and certified mail notice to the debtor. Tenn. Code Ann. 35-5-101 (law.justia.com)
  • Transfer and mortgage taxes: Realty transfer tax $0.37 per $100 of purchase price. Mortgage (indebtedness) tax $0.115 per $100 of debt, first $2,000 exempt. (tn.gov)
Local angle

What makes Tennessee different for rental investors

  • Nashville's tourism and music economy drives strong short term rental demand, but Metro now limits new non owner occupied permits in residential zones, which steers many investors toward long term rentals. Tennessee has no broad state tax on wage income, and the state bars local rent control statewide. Clarksville sits next to Fort Campbell, and university towns like Knoxville add steady student renter demand. (nashville.gov)
Before you offer

Tennessee investor checklist

The Tennessee rules that touch your lease, your closing and your entity.

  • Security deposit: No statutory cap on amount (Tenn. Code Ann. 66-28-301)
  • Unpaid rent notice: 14 days to remedy after receipt of written notice; repeat breach within 6 months allows termination on 7 days notice (Tenn. Code Ann. 66-28-505)
  • Ending a month to month lease: 30 days written notice before the periodic rental date (Tenn. Code Ann. 66-28-512(b))
  • Rent control: State preemption: local governments may not enact, maintain or enforce rent control on private residential or commercial property (Tenn. Code Ann. 66-35-102)
  • Tax basis: Property is appraised by the county assessor and taxed on an assessed value equal to a set share of appraised value: residential and farm property at 25 percent, commercial and industrial at 40 percent (comptroller.tn.gov)
  • Security instrument: Deed of trust is the customary instrument; statute covers sales to foreclose a deed of trust, mortgage or other lien (law.justia.com)
  • Transfer and recording taxes: Realty transfer tax $0.37 per $100 of purchase price (tn.gov)
  • Short term rental, Nashville: Metro permit required (nashville.gov)
  • Short term rental, Memphis: Registration or permit required under the city short term rental ordinance (memphistn.gov)
Step by step

From offer to closing in Tennessee

  1. Send the Tennessee deal
  2. We run the DSCR
  3. We shop lenders
  4. Appraisal confirms rent
  5. Close in your name or LLC

Documents: contract, lease or rent schedule, bank statements, LLC papers, insurance quote. No tax returns. Details.

35 states and counting

DSCR loans across the country

Tennessee is highlighted. We also lend DSCR in Kentucky, Georgia, Alabama, Mississippi and Arkansas next door, and in 30 more states. Tap a gold state to open its guide.

DSCR loans in AlabamaDSCR loans in AlaskaDSCR loans in ArizonaDSCR loans in ArkansasDSCR loans in ColoradoDSCR loans in ConnecticutDSCR loans in DelawareDSCR loans in GeorgiaDSCR loans in HawaiiDSCR loans in IndianaDSCR loans in IowaDSCR loans in KansasDSCR loans in KentuckyDSCR loans in LouisianaDSCR loans in MaineDSCR loans in MarylandDSCR loans in MassachusettsDSCR loans in MichiganDSCR loans in MississippiDSCR loans in MissouriDSCR loans in MontanaDSCR loans in New HampshireDSCR loans in New MexicoDSCR loans in North CarolinaDSCR loans in OhioDSCR loans in OklahomaDSCR loans in PennsylvaniaDSCR loans in Rhode IslandDSCR loans in South CarolinaDSCR loans in Tennessee (this page)DSCR loans in TexasDSCR loans in WashingtonDSCR loans in West VirginiaDSCR loans in WisconsinDSCR loans in Wyoming
TennesseeWe lend DSCR hereAsk us

Small states, tap to open:

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Map geometry: US Census Bureau cartographic boundary files.

FAQ

Tennessee DSCR loan questions

Straight answers for investors buying or refinancing rentals in Tennessee.

PMG guidelines summarized; subject to program terms, property and borrower eligibility. Not a commitment to lend.

Book a free call

Does Pillar Mortgage Group offer DSCR loans in Tennessee?

Yes. Purchases, rate and term and cash out refinances on Tennessee rentals, up to $5 million, in your name or an LLC. That includes Nashville, Memphis, Knoxville and Chattanooga.

What rent can I use for a Tennessee DSCR loan?

The lease or the appraiser's market rent. As a benchmark, HUD puts the 2 bedroom Fair Market Rent for the Nashville metro at $1,798 a month.

Is there a security deposit limit for Tennessee landlords?

No statutory cap on amount. Return deadline: No fixed day count. Landlord must send refund notice and may keep an unclaimed refund after 60 days with no tenant response. Damage claims must be discovered before the earlier of 30 days after move out or 7 days after a new tenant takes possession. (Tenn. Code Ann. 66-28-301)

What notice is required for unpaid rent in Tennessee?

14 days to remedy after receipt of written notice; repeat breach within 6 months allows termination on 7 days notice. (Tenn. Code Ann. 66-28-505)

How much notice ends a month to month lease in Tennessee?

30 days written notice before the periodic rental date. (Tenn. Code Ann. 66-28-512(b))

What property tax rules apply to Tennessee rentals?

Property is appraised by the county assessor and taxed on an assessed value equal to a set share of appraised value: residential and farm property at 25 percent, commercial and industrial at 40 percent. Tax equals assessed value times the local rate per $100 of assessed value.

Does Tennessee have rent control?

State preemption: local governments may not enact, maintain or enforce rent control on private residential or commercial property. (Tenn. Code Ann. 66-35-102)

How does foreclosure work in Tennessee?

Tennessee closes on a deed of trust. Deed of trust is the customary instrument; statute covers sales to foreclose a deed of trust, mortgage or other lien.

What transfer taxes apply to a Tennessee purchase?

Realty transfer tax $0.37 per $100 of purchase price. Mortgage (indebtedness) tax $0.115 per $100 of debt, first $2,000 exempt.

Can I use a DSCR loan for a short term rental in Nashville?

Often, yes, with stricter income documentation. Local rule: Metro permit required. Owner occupied permits are for natural persons only (LLCs and other entities ineligible). New non owner occupied permits are issued only in listed mixed use, office, commercial and downtown districts and are not permitted in AR2a, R, RS or RM residential zones. Existing permits there may renew but do not transfer on sale. One permit per lot in single family and two family districts.
Nearby states

DSCR loans in nearby states

Investing across state lines? We lend DSCR in these neighbors of Tennessee too.

Sources and review dates

Primary sources, each with the date checked. PMG program facts come from Pillar Mortgage Group.

  1. HUD FY2027 Fair Market Rent, Nashville, Davidson, Murfreesboro, Franklin, TN HUD Metro FMR Area: https://www.huduser.gov/datasets/fmr/fmr2027/summary?counties=4703799999&reporttype=county&states=47&year=2027&sa_override=1
  2. Tenn. Code 35-5-101: https://law.justia.com/codes/tennessee/title-35/chapter-5/section-35-5-101/ (checked 2026-11-01)
  3. TN Dept of Revenue recordation tax rates: https://tn.gov/revenue/taxes/local-taxes/recordation-taxes/due-date-tax-rate.html (checked 2026-11-01)
  4. Tenn. Code 66-28-301: https://law.justia.com/codes/tennessee/title-66/chapter-28/part-3/section-66-28-301/ (checked 2026-11-01)
  5. Tenn. Code 66-28-505: https://law.justia.com/codes/tennessee/title-66/chapter-28/part-5/section-66-28-505/ (checked 2026-11-01)
  6. Tenn. Code 66-35-102: https://law.justia.com/codes/tennessee/title-66/chapter-35/section-66-35-102/ (checked 2026-11-01)
  7. FRED MEDLISPRITN: https://fred.stlouisfed.org/series/MEDLISPRITN (checked 2026-11-01)
  8. Census QuickFacts Tennessee: https://www.census.gov/quickfacts/TN (checked 2026-11-01)
  9. HUD FY2027 Fair Market Rent, Memphis, TN, MS, AR HUD Metro FMR Area: https://www.huduser.gov/datasets/fmr/fmr2027/summary?counties=4715799999&reporttype=county&states=47&year=2027&sa_override=1
  10. Nashville STR permit types: https://www.nashville.gov/departments/codes/short-term-rentals/permit-types (checked 2026-11-01)
  11. Memphis STR process update June 2026: https://memphistn.gov/wp-content/uploads/2026/06/STR-Process-Update-6-2026.pdf (checked 2026-11-01)
  12. Tenn. Code 66-28-102: https://law.justia.com/codes/tennessee/title-66/chapter-28/part-1/section-66-28-102/ (checked 2026-11-01)
  13. Tenn. Code 66-28-512: https://law.justia.com/codes/tennessee/title-66/chapter-28/part-5/section-66-28-512/ (checked 2026-11-01)
  14. TN Comptroller how to figure your tax bill: https://comptroller.tn.gov/office-functions/pa/property-taxes/how-to-figure-your-tax-bill.html (checked 2026-11-01)
  15. comptroller.tn.gov: https://comptroller.tn.gov/boards/state-board-of-equalization/sboe-resources/certified-tax-rate.html
Tennessee investors

Let the rent do the qualifying.

Send the Tennessee property and rent. We run the ratio and lay out terms before you offer.

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Run My Tennessee DSCR Numbers

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Pillar Mortgage Group, LLC is an Equal Housing Lender, doing business in accordance with the Fair Housing Act and Equal Credit Opportunity Act. Not a commitment to lend.
Company NMLS# 2700076  |  Arizona License MB-2009671  |  View NMLS Consumer Access