DSCR Loans in Tennessee

Why Tennessee Is a Top Market for DSCR Loans

Tennessee pairs fast population growth with zero state income tax and low property taxes, which is exactly the setup that cash-flow real estate investors look for. Here’s why DSCR loans make sense in Tennessee:

• No state income tax. Tennessee is one of nine states with no income tax. This means that your rental income isn’t taxed at the state level, so more of what each property earns stays with you. Like most no-income-tax states, Tennessee makes up some revenue through higher sales tax, so it’s smart to confirm the net benefit with a CPA, but for buy-and-hold investors, untaxed rental income can be a real, recurring edge.
• Explosive population growth fuels rental demand. Tennessee gained more than 63,000 residents between July 2024 and July 2025 (a 0.88% increase), according to the latest U.S. Census Bureau Vintage 2025 estimates. The state ranks as the 15th most populous in the country with a July 1, 2025 population of 7,315,076. The Nashville-Davidson–Murfreesboro–Franklin metro area (MSA) grew by more than 136,000 residents (about 6.4%) from 2020 to 2024. On top of that, roughly one-third (33.1%) of Tennessee households rent (2020–2024 ACS data: owner-occupied housing unit rate of 66.9%). The Nashville-Davidson–Murfreesboro–Franklin metro area (MSA) grew by more than 136,000 residents (about 6.4%) from 2020 to 2024. On top of that, roughly one-third (33.1%) of Tennessee households rent (2020–2024 ACS data: owner-occupied housing unit rate of 66.9%).
• Traditional lending stays strict for investors. Traditional real estate investment loans put your tax returns, job history, and debt-to-income ratio under a microscope. This tends to penalize self-employed borrowers and investors with multiple properties. DSCR loans qualify you on the property’s income instead.
• Landlord-friendly laws and low property taxes. Tennessee has no rent control, a fast 14-day eviction timeline for nonpayment, and an effective property tax rate of 0.52%, which is well below the national average. Tennessee keeps your operating costs low, which improves your ratio, making it easier to qualify for a DSCR loan in Tennessee. 

Statistics reflect Tennessee State Data Center and Boyd Center for Business and Economic Research population estimates (2025).

Why Tennessee Real Estate Investors Use DSCR Loans

A DSCR (debt service coverage ratio) loan is a type of non-qualified mortgage loan that qualifies you based on what the property earns, not what you make. A DSCR ratio is calculated by dividing the property’s projected or actual rental income by its monthly debt obligations (calculated by PITIA). This tells lenders whether the property makes enough to cover itself.

DSCR = Gross Rental Income ÷ PITIA (principal, interest, taxes, insurance, and any association dues)

A ratio of 1.0 means the property breaks even on debt. Rental income exactly covers the property’s monthly costs. 

Lenders generally require a ratio of 1.0 or above to approve DSCR loans without personal income documentation. A ratio of 1.25 or higher typically unlocks the best rates and highest leverage.

Griffin Funding offers Tennessee DSCR loans down to a 0.75 ratio, with exceptions available below that ratio for borrowers with strong compensating factors, such as a higher credit score, larger down payment, or substantial reserves. For properties that don’t meet cash flow minimums, our no-ratio program removes the cash flow requirement from qualification entirely

View DSCR Loan Requirements

Today’s DSCR Loan Rates in Tennessee

Griffin Funding offers competitive non-QM rates as a direct-to-consumer lender. Your rate depends on factors like credit score, down payment, DSCR ratio, buydown points, and your prepayment penalty term.

Best Tennessee Markets for DSCR Loan Investments

From booming metros to fast-growing suburbs and affordable secondary cities, Tennessee gives investors a range of cash-flow profiles to choose from. According to Zillow data, as of May 2026, the average SFH rent in Tennessee is about $1,990 per month. The rent and home value figures throughout this section reflect the same dataset. Griffin Funding lends across the entire state, including Nashville, Memphis, Bartlett, Johnson City, Knoxville, Franklin, Jackson, Chattanooga, Clarksville, and Murfreesboro.

Top Markets to Watch

• Nashville: Nashville’s music industry, healthcare giant HCA Healthcare, and steady in-migration make it one of the strongest rental markets in the Southeast. Average home values near $463,355, while the average rent for single-family homes runs $2,334 per month.
• Memphis: The FedEx World Hub at Memphis International Airport employs up to 13,000 workers on-site and anchors one of the largest logistics and distribution economies in the country. That concentration of jobs keeps rental demand steady in one of the most affordable major markets in the U.S. Average single-family home (SFR) rents in Memphis run about $1,655 per month, with home values around $246,820.
• Knoxville: The University of Tennessee and consistent population growth fuel year-round rental demand in Knoxville. Average home values hover around $369,325, and average rent for single-family homes run about $2,125 per month.

High-Value Secondary Markets

• Chattanooga: Chattanooga’s citywide gigabit fiber network earned it the nickname, “Gig City,” and put it on the map for many remote workers, startups, and tech companies. Volkswagen manufacturing plant and easy access to the Smoky Mountains bring in additional renters from both industries. Average SFR rents run about $1,930 per month, with home values around $326,170.
• Clarksville: Fort Campbell drives steady military-tenant demand in one of Tennessee’s fastest-growing and most affordable cities. Average house rents run about $1,615 per month, with median sale prices around $320,980.
• Murfreesboro: As a fast-growing Nashville suburb and home to Middle Tennessee State University, Murfreesboro draws in both students and commuters. Average single-family home rents run around $2,260 per month.
• Jackson: Jackson sits between Memphis and Nashville, making it a low-cost West Tennessee hub for distribution and manufacturing. Average home rents run about $1,660 per month, with home values around $208,270.
• Johnson City: East Tennessee State University and the Tri-Cities healthcare sector drive steady rental demand in one of the most affordable markets in the state. Average rents for single-family houses run around $1,735 per month, with home values near $286,495. Nearby Kingsport, home to Eastman Chemical’s headquarters, completes the Tri-Cities and edges out Johnson City on gross yield, offering the lowest entry point among the state’s mid-size metros.

Premium Suburban Markets

• Franklin: One of the wealthiest markets in Tennessee, Franklin sits in Williamson County, just south of Nashville. Corporate headquarters and top-rated schools support long tenant tenure.
• Bartlett: An established suburb northeast of Memphis in Shelby County, Bartlett draws a stable, family-oriented tenant base. Rent on single-family homes typically start around $2,210 per month, with home values around $324,890.

Gross rental yields in Tennessee range from about 6% in the Nashville metro to nearly 10% in Sevierville, the gateway market for Gatlinburg and Pigeon Forge, giving investors one of the widest cash-flow spreads of any state Griffin Funding lends in.

Short-Term and Vacation Rental Markets

• Gatlinburg and Pigeon Forge: Two of Tennessee’s top short-term rental markets, Gatlinburg and Pigeon Forge sit at the gateway to the Great Smoky Mountains and draw up to 12 million visitors each year. Strong occupancy and no owner-occupancy restrictions make them the most investor-friendly short-term rental markets in the state. Sevierville, the metro’s 9.9% gross yield, the highest in Tennessee, backed by the table one scroll up.
• Nashville: Nashville draws heavy short-term rental demand, but the city only issues new non-owner-occupied permits in non-residential zones, which limits where investors can operate an Airbnb. If you’re financing a vacation rental in Nashville, confirm zoning laws before you buy.

Rent, home value, and yield figures in the table above reflect Zillow single-family data (ZORI and ZHVI) through May 2026. Short-term rental figures are third-party estimates from AirDNA and are directional.

Tennessee-Specific DSCR Loan Considerations

Tennessee is widely considered one of the most landlord-friendly states in the country, but the details vary by county and city. Here’s what to know before you buy:

• Rent Control and Rent Increases: Tennessee has no rent control, which means you can set and adjust rent based on market conditions, with no statutory limit on how much or how often you raise them at renewal.
• Eviction and Security Deposit Rules: Evictions in Tennessee require written notice, which is 14 days for nonpayment of rent, before filing (T.C.A. § 66-28-505). The eviction process in Tennessee moves faster than in most states, which means less time paying out of pocket on a property that isn’t producing rent. As for security deposits, Tennessee places no statutory cap on deposits, though you must return the deposit within 30 days of lease termination with an itemized statement of any deductions (T.C.A. § 66-28-301). Factor Tennessee’s eviction timeline and security deposit regulations into your cash-flow projections before you buy.
• State Income and Property Taxes: Tennessee charges no state income tax on wages or investment income, so rental income isn’t taxed at the state level. This is a direct boost to your net cash flow. Property taxes are also low, with effective rates of about 0.52%. This stays stable and predictable in most markets, but underwrite the local figure carefully. Property taxes are a major component of your PITIA and directly affect your DSCR.
• Short-Term Rental Regulations: Short-term rental rules are set locally, not statewide. For example, Nashville issues new non-owner-occupied short-term rental permits only in non-residentially-zoned areas, which is a meaningful constraint for investors planning an Airbnb in the city. Gatlinburg and Pigeon Forge are far more short-term-rental-friendly and carry strong vacation demand. Always verify the local ordinance before you close on a property you intend to run as a short-term rental.

Already own investment property in Tennessee? A DSCR cash-out refinance lets you tap existing equity without income verification, which can be useful for funding your next acquisition.

Free Tools for Tennessee Real Estate Investors

Before you buy, use these free tools to check property values, estimate cash flow, and calculate your DSCR.

• DSCR Loan Calculator: Calculate a property’s debt service coverage ratio in seconds.
• DSCR Refinance Calculator: See whether a refinance or cash-out makes sense on a property you already own.
• Rent Estimator: Get a free rent estimate to project income on a target property.
• Home Value Estimator: Estimate current market value before you make an offer.

Talk to a Tennessee DSCR Loan Specialist Today

Griffin Funding specializes in DSCR loans for real estate investors across every major Tennessee market. Whether you want to buy a rental in an LLC, qualify without tax returns, or tap equity through a DSCR home equity loan, our team works with you to structure the right loan for your goals. We lend throughout the entire state, from Nashville and Memphis to Knoxville, Chattanooga, Clarksville, and the Smokies.

Griffin Funding has closed Tennessee DSCR loans in as little as 6 calendar days, with a typical timeline of around 34 days from application to funding. Connect with a Tennessee DSCR specialist to get started today:

• Malik Abiola, Griffin Funding Tennessee Loan Officer | NMLS# 1877867
• Ryne Sweeney, Griffin Funding Tennessee Loan Officer | NMLS# 2415016
• Sarah Howell, Griffin Funding Tennessee Loan Officer | NMLS# 1333968
• Guy Troxler, Griffin Funding Tennessee Loan Officer | NMLS# 1642169

DSCR Loans by State

Don’t see your state? Griffin Funding lends nationwide. Request a quick quote and a licensed loan officer will confirm DSCR availability in your area.