Our Tennessee DSCR loan page covers the statewide rules, and our best Tennessee cities for rental property post ranks Chattanooga against Memphis, Jackson, Clarksville, Johnson City and Knoxville. This post stays in the Chattanooga area and goes town by town, because that is where the real decision gets made.

Every figure was checked on November 8, 2026 against HUD User's FY2027 Fair Market Rents, Census Bureau QuickFacts, the Tennessee Comptroller of the Treasury and the City of Chattanooga.

One rent for every town

HUD treats the Chattanooga area as a single rent area, so a rental in East Ridge and one on Signal Mountain screen against the same number.

The Chattanooga rent area covers Hamilton, Marion and Sequatchie counties in Tennessee plus Catoosa, Dade and Walker counties in Georgia. For FY2027 HUD lowered the benchmark across every bedroom size.

A lower benchmark does not lower the rent on a lease you already hold. It does mean a deal you screened last year at $1,734 deserves a second look at $1,657, and it means the appraiser's rent schedule matters more than usual.

Same HUD rent from East Ridge to Signal Mountain. The median price runs from $211,100 to $544,300.

The towns side by side

East Ridge and Sequatchie County have the lowest prices, Collegedale has the most renters and Signal Mountain is an owner town with almost no rental math.

Signal Mountain's median home value is $544,300 and 87.9% of its households own, so it shows up here mainly as a warning: a beautiful town where the HUD rent cannot carry the price. Collegedale is the opposite on ownership, with only 44.0% of households owning, and its median gross rent of $1,581 is far above the HUD benchmark. Sequatchie County's median gross rent of $818 is a caution flag for the HUD figure there; confirm local rents before you lean on $1,657.

Town tax rates

Hamilton County reappraised in 2025, so the Comptroller's 2025 rates line up with current values, and the town you pick can nearly double the bill.

Tennessee assesses a house at 25% of appraised value and applies rates per $100 of that assessed value. Hamilton County's 2026 appraisal ratio is 1.0000 and its next reappraisal is 2029.

Unincorporated Hamilton is figured at the county median and Dunlap at the Sequatchie median. East Ridge combines to 2.315 per $100 of assessed value, about a third less than the city of Chattanooga's 3.4457 on the same county rate. Sequatchie County last reappraised in 2023 and sits at a 1.0000 ratio with its next reappraisal in 2029.

Run the DSCR on your deal

The DSCR math

East Ridge leads at about 1.24, Sequatchie County follows near 1.16, Soddy Daisy clears 1.00 and the city of Chattanooga lands just under it.

The setup: buy at each town's Census median value with 25% down and a 30 year fixed at Freddie Mac's 7.18% average from November 5, 2026, as a reference rate only (a conventional loan average, not a DSCR rate and not a rate we are quoting). Tax is the town's yearly bill from the table above. Insurance is $1,950 a year, an example number, not market data and not a quote. Rent is HUD's $1,657 three bedroom benchmark.

Here is the part that surprises people. Because the rent is the same everywhere, the price where a three bedroom stops clearing 1.00 barely moves: about $269,000 in East Ridge, $267,000 in Red Bank, $266,000 in Soddy Daisy and $258,000 in the city of Chattanooga, where the higher tax rate pulls it down. Unincorporated Hamilton gets the most room, about $277,000, because it carries no town rate. So the real question in Chattanooga is simple: can you buy a rentable three bedroom under about $265,000?

Bedroom count matters

A fourth bedroom adds only $104 of HUD rent here, and a two bedroom rarely clears 1.00 except in East Ridge.

At the $1,761 four bedroom benchmark, East Ridge lands near 1.32, Soddy Daisy near 1.10 and Red Bank near 1.05, while the city of Chattanooga lands near 0.98. At the $1,340 two bedroom benchmark, East Ridge lands right at 1.00 and the city of Chattanooga near 0.74. A two bedroom in this market works when the price is closer to $205,000. Our ratio floor is 0.50, so lower ratios can still be financed, but the three bedroom is the house this market prices best.

Short term rentals in Chattanooga

Inside the city of Chattanooga, a non owner occupied short term rental is limited to a short list of commercial zones, so most houses in residential neighborhoods cannot be run as absentee Airbnbs.

The City of Chattanooga requires a short term vacation rental certificate for every host. It splits rentals into two types. A homestay is your primary residence, where you live at least 183 days a year. For absentee hosts, absentee rentals are allowed only in commercial zones that permit a hotel or motel use: C-C, C-R, C-MU1 and C-MU2, plus the form based code zones CC, CX, IX, RF, RV and SH. Certificates are valid for one year and must be renewed annually, and the certificate must be posted inside the rental.

For a DSCR buyer that means two things. Check the zoning on the city's GIS map before you count on nightly income, and run the deal on long term rent first. Whether a given file can use short term rental income is confirmed per file, so send it to us before you offer. These rules are the city's; East Ridge, Red Bank and the other towns set their own.

Financing a Chattanooga rental

Interest only is the program term that matters most here, because it pulls the city of Chattanooga and unincorporated Hamilton above 1.00.

• Interest only: ten years interest only on a 40 year term, or a 30 year term with interest only, up to 70% LTV on a purchase and 65% on a cash out. Our interest only DSCR loan guide shows when it helps and when it does not.
• No reserves under $1 million and under 75% LTV, and no asset sourcing, no large deposit sourcing and no seasoning.
• 100% gift allowed for the down payment, closing costs and reserves.
• First rental is fine: no primary residence ownership and no VOR required. Our DSCR loan for new investors post covers that path.
• Cash out up to 80% LTV with no ownership seasoning, DSCR as low as 0.50, loans up to $5 million.

Our loan programs page lists the rest of what we place.

Where it goes wrong

It goes wrong when a single benchmark gets treated like a lease.

My Chattanooga checklist

1. Confirm the town on the parcel. A Chattanooga mailing address can sit in East Ridge, Red Bank or unincorporated Hamilton County.
2. Use that town's combined rate times 25% of the appraised value.
3. Pull rent comps for the street, not just the HUD figure.
4. Check zoning before counting on nightly income inside the city.
5. Get a landlord insurance quote, not a homeowners quote.
6. Send us the address. We run the DSCR the way the lender will and show you the down payment and payment.

Sources

All sources checked November 8, 2026. Data changes, so confirm before you rely on it.

1. HUD User, FY2027 Fair Market Rents, Hamilton County, TN (Chattanooga, TN GA MSA). Efficiency $1,181, 1 bed $1,231, 2 bed $1,340, 3 bed $1,657, 4 bed $1,761 (FY2026 $1,211, $1,263, $1,390, $1,734, $1,853); area includes Hamilton, Marion and Sequatchie counties, TN and Catoosa, Dade and Walker counties, GA
2. U.S. Census Bureau QuickFacts, Chattanooga city and Hamilton County, Tennessee. Median value of owner occupied housing units, owner occupied rate and median gross rent, ACS 2020 to 2024; population estimates July 1, 2025 (V2025)
3. U.S. Census Bureau QuickFacts, East Ridge, Red Bank, Soddy Daisy, Signal Mountain, Collegedale and Sequatchie County, Tennessee. Median value, owner occupied rate, median gross rent (ACS 2020 to 2024) and July 1, 2025 population
4. Tennessee Comptroller of the Treasury, 2025 Property Tax Rates. Hamilton 1.5157; Chattanooga 1.93; East Ridge 0.7993; Red Bank 0.98; Soddy Daisy 1.10; Collegedale 1.069; Signal Mountain 1.1002; Sequatchie 1.8366; Dunlap 0.648 (per $100 of assessed value)
5. Tennessee Comptroller of the Treasury, Reappraisal Schedule. Hamilton 2026 appraisal ratio 1.0000, last reappraisal 2025, next 2029; Sequatchie 1.0000, 2023 and 2029
6. Tennessee Comptroller of the Treasury, State Board of Equalization, Property Tax Reappraisal and Certified Tax Rate. Residential property assessed at 25% of fair market value
7. City of Chattanooga, Short Term Vacation Rental certificate. Certificate required for all hosts; homestay is a primary residence of at least 183 days a year; absentee allowed only in commercial zones that permit hotel or motel use (C-C, C-R, C-MU1, C-MU2 and form based CC, CX, IX, RF, RV, SH); certificates valid one year and renewed annually; certificate posted in the rental (CCC 38-87)
8. Freddie Mac Primary Mortgage Market Survey. 30 year fixed average 7.18% as of November 5, 2026 (reference only)

Frequently asked questions