DSCR Loan Tennessee

Last updated: December 9, 2024

How Do DSCR Loans Work in Tennessee?

The overall process of getting a DSCR Loan in Tennessee is approximately as follows. You submit an application for a loan (you can get started on your loan with an instant quote) answering 14 questions about your property. An instant quote will tell you if you qualify for the loan in under 1 minute of your time. It will also show you the a preliminary interest rate and loan amount. Once you select desired LTV (which can be changed later), your quote will be converted to a Loan File for processing purposes.

You will have to submit documents as part of your Loan File for underwriting. Documents we may ask for will include personal and property documents such as purchase contracts, current leases, borrowing entity documents, deeds, title work (we will engage a title company or an attorney on your behalf to draw up these documents), background and credit reports (that we will order), bank statements for liquidity verification as well as other documents that may be applicable to your specific deal. Full list of requirements can be found here in DSCR loan requirements.

We will also handle all the aspects of scheduling and appraisal for you. Please note that we have a promotion, where new clients receive a 100% refund at closing for their appraisal and existing clients forever get a 50% refund for their appraisal at closing as our way to say thank you for allowing us to partner with you! Once all the loan documents are submitted, the Loan File goes through underwriting, at which point the underwriting committee may ask for additional documents depending on their discretion. Once the committee receives all the documents and approves the file, closing can be scheduled.

The closing, will be handled by the title company or at the office of closing attorney. Once closing is complete, funds will be wired. Post closing, the loan will be entered into servicing and you will receive information regarding setting up auto-pay or other options that may be available for your loan depending on the specific servicer's capabilities.

What are the fastest growing rental markets in Tennessee?

Tennessee experienced solid population growth of around 8.9% between 2010-2020, driven largely by influxes to the Nashville and Knoxville metro areas. The state's economy is anchored by sectors like healthcare, automotive manufacturing, music/entertainment, and logistics. While housing starts picked up pace in the late 2010s, certain markets saw supply struggling to keep up with robust demand.

• 37064 - Part of the affluent Williamson County suburbs south of Nashville. Enormous job growth but very limited rental housing development.
• 37923 - Located in Knoxville's West Town area close to downtown. Student and job rent demand far outpacing new apartment deliveries.
• 38115 - Part of the fast-growing Memphis suburban area. Short-term leasing ahead of new supply likely profitable amid tight market conditions.

Nashville, TN Metro Area

The Nashville metro area led the way in Tennessee's growth, expanding by over 20% from 2010-2020. Corporate operations centers, healthcare systems like HCA and LifePoint, and the entertainment industry generated jobs. However, apartment construction couldn't match the accelerating rental demand.

• 37211 - Popular area just southeast of downtown Nashville. Rents up 30%+ over the past 5 years amid extremely limited vacancies.
• 37135 - Suburban city of Franklin experienced massive corporate expansions. But apartment development remains constrained by land scarcity.
• 37072 - Close to Nashville's airport area which added thousands of new jobs. Huge unmet demand for rental housing to be filled.

Memphis, TN Metro Area

While Memphis itself saw a population decline, the overall metro added over 50,000 residents, led by growth in suburbs like Collierville, Germantown, and Bartlett. The economy is driven by logistics/distribution, healthcare, and manufacturing. New apartment construction has been limited.

• 38117 - The Germantown/East Memphis area is high-income but supply-constrained. Solid rental growth potential exists.
• 38016 - Part of fast-growing suburb Collierville. Limited new inventory coming online to match housing demand.
• 38133 - Proximate to major logistics operations/airport. High need for quality workforce housing for Memphis' jobs boom.

Knoxville, TN Metro Area

The Knoxville metro expanded by around 8% in population during the 2010s. The University of Tennessee serves as an anchor along with manufacturing and healthcare/research industries. However multi-family construction has been limited.

• 37919 - Downtown Knoxville/University area always exhibiting tight rental housing conditions and steady rent growth.
• 37932 - West Knoxville has seen influx of new residents arriving from other states but little new supply being built.
• 37923 - As mentioned, the West Town area near downtown and the university has an extreme shortage of available rental housing.

Other Areas of Note

A few other Tennessee areas that may be worth exploring for rental investors seeking opportunities:

• 37405 - Around Chattanooga near the Georgia border. Manufacturing and logistics expansions strain housing supply.
• 38305 - Poplar corridor area of Jackson, attractive to investors able to renovate dated rental housing stock.
• 37203 - Certain Nashville neighborhoods like The Nations experiencing a renaissance but lacking new construction.

Are you able to lend on rural properties?

We can't lend on rural properties. How can I find out, if my property is rural? Here are more detail on how to verify if your property is rural in our Rural Designation Search Tools. The 2 search tools are hosted by USDA Rural Development Property Eligibility and CFPB Rural and Underserved Areas Checker. Both of the tools must flag the property as none rural for it to be eligible for our funding. Use these instruction to find out if your property is considered rural

Do I need to have my property insured to qualify for funding?

Yes, but if you don't already have insurance, we can roll it into the lending process with no extra charge or effort to you. Our insurance team works with thousands of carriers and is intimately familiar with the insurance requirements of your loan. They will be able to ether talk to the agent of your choice or find the most competitive offer without our network of carriers to complement your loan with no extra effort or expense to you. If you already have insurance, you should get an instant quote to see if we can offer you a more competitive rate and save you thousands of dollars over the lifetime of your policy. Get you instant insurance quote here.

Can you lend on properties worth less then $100k?

In short, no, appraisal as is value must come in at above 100k. We can only lend on properties that are less then $100k if they are in a portfolio with other properties and the portfolio's total as-is value on the appraisal is above $250k. In order to qualify for our loans, the property must appraise for at least $100k as-is at the time of the appraisal, however, total loan amount may be less then 100k, minimum loan amount is $55k.

Do you do cash out refi no seasoning for Tennessee loans?

We do offer refinance options with no seasoning requirements. Here is the general criteria for cash out refi no seasoning for Tennessee loans. Minimum loan amount has to be above $55,000. Minimum As-Is value on the appraisal has to be $100,000. Between 1-4 units. Must have an active lease with proof of security deposit collected. Property condition must be C4 or better. Minimum credit score of 680. Credit score between 680 to 699, gets maximum LTV of 70%, credit score of 700+ gets maximum LTV of 75%. Max LTC, 100% (less than 90 days seasoning), 140% (90 to 179 days seasoning). Minimum verified rehab, 20% of purchase price (less than 90 days seasoning), n/a (90+ days seasoning). Minimum verified rehab, is an improvement that has been done to the unit to verify increase in as-is value in such as short period of time (less then 90 days) to justify the no seasoning period. Origination fee of 1 to 2 points depending on the loan amount to keep the lights on. Lender fee, $1,995 (doesn't go to OfferMarket), includes multiple fees to several different 3rd party verification services, necessary to certify the information in the Loan File for closing. Appraisal at AMC market price, we also have a promotion that new clients get 100% of their appraisal refunded at closing and 50% refund for existing clients. Time to close, 20-25 days.

I know this is a lot of information. You don't have to lift a finger to calculate any of this to see if you qualify, all you have to do is answer 14 simple questions about your deal and we will tell you if we are a good fit for you and what kind of deal we can offer you. To get an answer on your specific situation, please answer 14 simple questions here in our online quoter for Tennessee DSCR loans.

You can read more about our cash out refi no seasoning requirements or get started on your Tennessee DSCR loan.

How to get a DSCR Loan in Tennessee?

The easiest way to start your Tennessee DSCR loan is to click the start button next to "apply for DSCR loan" banners at the top or bottom of this page. OfferMarket's team has expansive experience working with real estate investors across Tennessee.

What are the requirements for a DSCR loan in Tennessee?

If you scroll up on this page, you will see a simple checklist that details high level requirements for our DSCR loans in Tennessee. If you want a more detailed quote for your specific deal, click "start" next to "apply for a DSCR loan" and our online quoting system will produce an accurate quote based on 14 questions related to your deal. Most investors are able to get a complete quote in under a minute because those 14 questions most investors will know answers to. Our most detailed DSCR Loan Requirements can be found here. Once you complete an online quote, you can proceed to your Loan File, where you can peruse the Loan Terms which will detail all the fees and proceeds of the loan in one convenient interface. Get an instant loan quote and Loan File

Why use Tennessee DSCR Loans to buy investment properties?

DSCR (debt-service coverage ratio) loans can help real estate investors shorten their cash cycle and grow their rental portfolios more rapidly in a few key ways. First, the higher leverage and lower down payments allowed by DSCR loans mean investors can acquire more properties with the same amount of cash on hand, rather than tying it all up in larger down payments. Additionally, the option for interest-only payments creates more positive cash flow that can be reinvested into new property acquisitions. Finally, DSCR underwriting based solely on the rental income of the property itself, rather than the investor's personal income, enables investors to scale their portfolios more quickly without running into debt-to-income ratio restrictions.