{"id":1075,"date":"2026-09-07T00:44:45","date_gmt":"2026-09-07T04:44:45","guid":{"rendered":"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/"},"modified":"2026-09-07T01:31:59","modified_gmt":"2026-09-07T05:31:59","slug":"tennessee-dscr-loan-guide","status":"publish","type":"post","link":"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/","title":{"rendered":"Tennessee DSCR Loan: Requirements, Rates &#038; Calculator Guide (2026)"},"content":{"rendered":"<p>Tennessee DSCR loans benefit from the state&#8217;s lowest-in-class property tax (0.56%) and zero income tax \u2014 but insurance at $2,200\/year and Memphis vacancy at 7.2% create unique qualification challenges. A Memphis duplex at $180K with $1,900\/month rent produces a 1.28 DSCR \u2014 just above the 1.25 standard threshold. A Nashville SFR at $380K with $2,100 rent produces only 0.72 DSCR \u2014 well below any lender minimum. Here is how Tennessee DSCR loans work, what lenders require, and which markets qualify.<\/p>\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"900\" height=\"506\" src=\"https:\/\/arvcalc.com\/blog\/wp-content\/uploads\/2026\/09\/tennessee-dscr-loan-guide-cover.jpg\" alt=\"Tennessee DSCR loan guide 2026 \u2014 Memphis duplex 1.52 qualifies Nashville SFR 0.83 fails\" class=\"wp-image-1076\" srcset=\"https:\/\/arvcalc.com\/blog\/wp-content\/uploads\/2026\/09\/tennessee-dscr-loan-guide-cover.jpg 1672w, https:\/\/arvcalc.com\/blog\/wp-content\/uploads\/2026\/09\/tennessee-dscr-loan-guide-cover-300x169.jpg 300w, https:\/\/arvcalc.com\/blog\/wp-content\/uploads\/2026\/09\/tennessee-dscr-loan-guide-cover-1024x576.jpg 1024w, https:\/\/arvcalc.com\/blog\/wp-content\/uploads\/2026\/09\/tennessee-dscr-loan-guide-cover-768x432.jpg 768w, https:\/\/arvcalc.com\/blog\/wp-content\/uploads\/2026\/09\/tennessee-dscr-loan-guide-cover-1536x864.jpg 1536w\" sizes=\"auto, (max-width: 900px) 100vw, 900px\" \/><\/figure>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_83 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#What_Is_a_DSCR_Loan_and_Why_Tennessee_Investors_Use_Them\" >What Is a DSCR Loan and Why Tennessee Investors Use Them<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#Tennessee_DSCR_Requirements\" >Tennessee DSCR Requirements<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#Worked_Example_Memphis_Duplex_%E2%80%94_DSCR_152_Qualifies\" >Worked Example: Memphis Duplex \u2014 DSCR 1.52 (Qualifies)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#Worked_Example_Nashville_SFR_%E2%80%94_DSCR_072_Does_Not_Qualify\" >Worked Example: Nashville SFR \u2014 DSCR 0.72 (Does Not Qualify)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#Tennessee_DSCR_by_Metro\" >Tennessee DSCR by Metro<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#How_to_Improve_Your_Tennessee_DSCR\" >How to Improve Your Tennessee DSCR<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#1_Target_Memphis_Multifamily\" >1. Target Memphis Multifamily<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#2_Increase_Down_Payment\" >2. Increase Down Payment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#3_Shop_Insurance\" >3. Shop Insurance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#4_Consider_Clarksville_Military_Housing\" >4. Consider Clarksville Military Housing<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#5_Avoid_Nashville_SFR_for_DSCR\" >5. Avoid Nashville SFR for DSCR<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#Tennessee_DSCR_vs_Other_States\" >Tennessee DSCR vs Other States<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#5_Tennessee_DSCR_Mistakes\" >5 Tennessee DSCR Mistakes<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#1_Assuming_Nashville_SFR_Will_Qualify\" >1. Assuming Nashville SFR Will Qualify<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#2_Using_Statewide_Vacancy_for_Memphis\" >2. Using Statewide Vacancy for Memphis<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#3_Forgetting_Insurance_Escrow_at_Closing\" >3. Forgetting Insurance Escrow at Closing<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#4_Not_Rate-Locking_Before_Fed_Meeting\" >4. Not Rate-Locking Before Fed Meeting<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#5_Ignoring_Clarksville_Military_Tenants\" >5. Ignoring Clarksville Military Tenants<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#Frequently_Asked_Questions\" >Frequently Asked Questions<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#What_DSCR_do_I_need_for_a_Tennessee_rental_property\" >What DSCR do I need for a Tennessee rental property?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#Why_is_Tennessee_good_for_DSCR_loans\" >Why is Tennessee good for DSCR loans?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#Can_I_get_a_DSCR_loan_on_a_Nashville_property\" >Can I get a DSCR loan on a Nashville property?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#Which_Tennessee_city_is_best_for_DSCR_loans\" >Which Tennessee city is best for DSCR loans?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-24\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#How_does_Tennessee_DSCR_compare_to_Texas\" >How does Tennessee DSCR compare to Texas?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-25\" href=\"https:\/\/arvcalc.com\/blog\/tennessee-dscr-loan-guide\/#Related_Calculators_and_Guides\" >Related Calculators and Guides<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What_Is_a_DSCR_Loan_and_Why_Tennessee_Investors_Use_Them\"><\/span>What Is a DSCR Loan and Why Tennessee Investors Use Them<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>DSCR = Gross Rent \u00f7 PITIA<\/strong> (Principal + Interest + Taxes + Insurance + Association dues)<\/p>\n<p>A DSCR of 1.25 means the property generates 25% more income than the mortgage payment. A DSCR of 0.72 means income covers only 72% of the payment \u2014 the investor subsidizes $28 out of every $100 of debt service.<\/p>\n<p>Tennessee investors choose DSCR loans for the same reasons as other states \u2014 no income verification, unlimited properties, LLC ownership, faster closing. But Tennessee has a structural advantage: <strong>0% state income tax means 100% of rental income counts toward your real return<\/strong>, even though DSCR lenders only look at the pre-tax ratio. Per <a href=\"https:\/\/fred.stlouisfed.org\/series\/MORTGAGE30US\" target=\"_blank\" rel=\"noopener noreferrer\">FRED data<\/a>, DSCR rates in 2026 run 7.5\u20138.5% depending on ratio, LTV, and credit score.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Tennessee_DSCR_Requirements\"><\/span>Tennessee DSCR Requirements<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<figure class=\"wp-block-table\">\n<table>\n<thead>\n<tr>\n<th>Requirement<\/th>\n<th>Standard<\/th>\n<th>Flexible<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Minimum DSCR<\/strong><\/td>\n<td>1.25<\/td>\n<td>0.75 (select lenders)<\/td>\n<\/tr>\n<tr>\n<td><strong>Down Payment<\/strong><\/td>\n<td>20\u201325%<\/td>\n<td>25\u201330% for sub-1.0<\/td>\n<\/tr>\n<tr>\n<td><strong>Credit Score<\/strong><\/td>\n<td>680+<\/td>\n<td>660 minimum<\/td>\n<\/tr>\n<tr>\n<td><strong>Reserves<\/strong><\/td>\n<td>6 months PITIA<\/td>\n<td>3\u201312 months<\/td>\n<\/tr>\n<tr>\n<td><strong>Property Types<\/strong><\/td>\n<td>SFR, 2\u20134 units, condos<\/td>\n<td>5+ units = commercial<\/td>\n<\/tr>\n<tr>\n<td><strong>Max LTV<\/strong><\/td>\n<td>75% (cash-out)<\/td>\n<td>80% (purchase)<\/td>\n<\/tr>\n<tr>\n<td><strong>Rate (2026)<\/strong><\/td>\n<td>7.5% at 1.25+<\/td>\n<td>8.5\u20139.5% at sub-1.0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/figure>\n<p>Tennessee&#8217;s DSCR advantage: the 0.56% property tax keeps PITIA low. On a $200K property, Tennessee tax adds $93\/month to PITIA. Ohio adds $227. Texas adds $267. Lower PITIA = higher DSCR at the same rent. Calculate yours in the <a href=\"\/states\/tennessee\/dscr-calculator\">Tennessee DSCR calculator<\/a>.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Worked_Example_Memphis_Duplex_%E2%80%94_DSCR_152_Qualifies\"><\/span>Worked Example: Memphis Duplex \u2014 DSCR 1.52 (Qualifies)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<pre><code>Property: Duplex, Midtown Memphis\nPurchase Price:       $180,000\nDown Payment (25%):   $45,000\nLoan Amount:          $135,000\nRate:                 7.5% \/ 30yr\n\nMonthly PITIA:\n  Principal & Interest: $944\n  Property Tax (0.71%): $107\n  Insurance:            $200\n  Total PITIA:          $1,251\n\nGross Monthly Rent:     $1,900 (2 \u00d7 $950)\n\nDSCR = $1,900 \u00f7 $1,251 = 1.52 \u2713\n\nVerdict: Qualifies at best tier (1.25+).\nLowest rates available. Standard 25% down.<\/code><\/pre>\n<p><strong>Why it works:<\/strong> Two rent streams ($1,900) against one PITIA ($1,251). Memphis property tax at 0.71% keeps the tax component at just $107\/month. If this were in Ohio (1.36% tax), PITIA would be $1,348 and DSCR drops to 1.41 \u2014 still qualifying, but with less cushion. Tennessee&#8217;s low tax is a DSCR tailwind.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Worked_Example_Nashville_SFR_%E2%80%94_DSCR_072_Does_Not_Qualify\"><\/span>Worked Example: Nashville SFR \u2014 DSCR 0.72 (Does Not Qualify)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<pre><code>Property: 3BR\/2BA SFR, East Nashville\nPurchase Price:       $380,000\nDown Payment (25%):   $95,000\nLoan Amount:          $285,000\nRate:                 7.5% \/ 30yr\n\nMonthly PITIA:\n  Principal & Interest: $1,993\n  Property Tax (0.52%): $165\n  Insurance:            $183\n  Total PITIA:          $2,341\n\nGross Monthly Rent:     $2,100\n\nDSCR = $2,100 \u00f7 $2,341 = 0.90\n\nAt sub-1.0 rate (8.5%):\n  P&I:                  $2,190\n  Total PITIA:          $2,538\n  DSCR = $2,100 \u00f7 $2,538 = 0.83\n\nVerdict: Does NOT qualify for most programs.\nEven sub-1.0 lenders want 0.75+. This qualifies\nbarely \u2014 but at 8.5% with 30% down required.<\/code><\/pre>\n<p><strong>Nashville SFR is nearly impossible for DSCR<\/strong> at current prices. $380K with $2,100 rent = 0.55% rent-to-price ratio. The math cannot work with financing. Nashville investors using DSCR need either: multifamily (duplex\/triplex to stack rents), 40%+ down payment, or accept the worst-tier pricing (8.5%+ rate).<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Tennessee_DSCR_by_Metro\"><\/span>Tennessee DSCR by Metro<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<figure class=\"wp-block-table\">\n<table>\n<thead>\n<tr>\n<th>Metro<\/th>\n<th>Typical SFR DSCR<\/th>\n<th>Typical Duplex DSCR<\/th>\n<th>Qualification<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Memphis<\/strong><\/td>\n<td>0.90\u20131.10<\/td>\n<td>1.20\u20131.55<\/td>\n<td>Duplex qualifies standard<\/td>\n<\/tr>\n<tr>\n<td><strong>Clarksville<\/strong><\/td>\n<td>0.80\u20131.00<\/td>\n<td>1.05\u20131.25<\/td>\n<td>Duplex borderline<\/td>\n<\/tr>\n<tr>\n<td><strong>Chattanooga<\/strong><\/td>\n<td>0.75\u20130.95<\/td>\n<td>1.00\u20131.20<\/td>\n<td>Sub-1.0 programs mostly<\/td>\n<\/tr>\n<tr>\n<td><strong>Knoxville<\/strong><\/td>\n<td>0.75\u20130.90<\/td>\n<td>1.00\u20131.15<\/td>\n<td>Sub-1.0 programs<\/td>\n<\/tr>\n<tr>\n<td><strong>Nashville<\/strong><\/td>\n<td>0.65\u20130.85<\/td>\n<td>0.85\u20131.05<\/td>\n<td>Difficult \u2014 high prices<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/figure>\n<p><strong>Pattern:<\/strong> Memphis is the only metro where SFR approaches DSCR qualification. Everywhere else, multifamily is required. Nashville SFR is effectively disqualified for DSCR \u2014 the rent-to-price ratio is too low at current prices. Clarksville (Fort Campbell military demand) offers the most predictable income but prices have risen, pushing DSCR to borderline.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_to_Improve_Your_Tennessee_DSCR\"><\/span>How to Improve Your Tennessee DSCR<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"1_Target_Memphis_Multifamily\"><\/span>1. Target Memphis Multifamily<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Every additional unit adds rent without proportionally adding tax or insurance. A Memphis duplex at $180K hits 1.52 DSCR. An SFR at $155K hits ~0.95. The duplex qualifies at best-tier rates (7.5%). The SFR needs sub-1.0 pricing (8.5%+). For DSCR qualification, multifamily in Memphis is the clear winner.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"2_Increase_Down_Payment\"><\/span>2. Increase Down Payment<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Going from 25% to 35% down on a $180K Memphis duplex reduces the loan by $18,000 and P&#038;I by $126\/month. DSCR jumps from 1.52 to 1.63. Overkill for qualification, but it locks in the absolute best rate and gives maximum cash flow cushion.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"3_Shop_Insurance\"><\/span>3. Shop Insurance<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Memphis insurance varies $1,800\u2013$3,000 depending on carrier and property. Reducing insurance from $2,400 to $1,800\/year saves $50\/month off PITIA, improving DSCR by ~0.04. Get 4\u20135 quotes. See our <a href=\"\/blog\/rental-property-insurance-cost-by-state\/\">insurance cost guide<\/a>.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"4_Consider_Clarksville_Military_Housing\"><\/span>4. Consider Clarksville Military Housing<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Fort Campbell BAH (Basic Allowance for Housing) for an E-5 with dependents is ~$1,400\/month in 2026 \u2014 guaranteed government income. DSCR lenders accept BAH-backed leases. A Clarksville duplex at $210K with $1,400\/unit military tenants produces ~1.30 DSCR with stable government-backed income.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"5_Avoid_Nashville_SFR_for_DSCR\"><\/span>5. Avoid Nashville SFR for DSCR<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>If you want Nashville exposure with a DSCR loan, target suburban Nashville duplexes in Antioch, Madison, or Hermitage where prices are $250\u2013$300K and rents are $1,400\u2013$1,600\/unit. These suburban multifamily can hit 1.0\u20131.15 DSCR \u2014 enough for sub-1.0 programs with reasonable pricing.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Tennessee_DSCR_vs_Other_States\"><\/span>Tennessee DSCR vs Other States<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<figure class=\"wp-block-table\">\n<table>\n<thead>\n<tr>\n<th>State<\/th>\n<th>DSCR Advantage<\/th>\n<th>DSCR Challenge<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Tennessee<\/strong><\/td>\n<td>Lowest property tax (0.56%), 0% income tax<\/td>\n<td>Higher insurance ($2,200), Memphis vacancy 7.2%<\/td>\n<\/tr>\n<tr>\n<td>Indiana<\/td>\n<td>Low tax (0.85%), stable markets<\/td>\n<td>3.05% income tax, moderate prices<\/td>\n<\/tr>\n<tr>\n<td>Ohio<\/td>\n<td>Low entry prices<\/td>\n<td>High property tax (1.36%) crushes DSCR<\/td>\n<\/tr>\n<tr>\n<td>Texas<\/td>\n<td>No income tax, large market<\/td>\n<td>Highest property tax (1.60%) + insurance ($3,300)<\/td>\n<\/tr>\n<tr>\n<td>Florida<\/td>\n<td>No income tax, appreciation<\/td>\n<td>Extreme insurance ($4,500) destroys DSCR<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/figure>\n<p>Tennessee produces the best DSCR ratios among no-income-tax states because its property tax (0.56%) is 65% lower than Texas (1.60%) and insurance ($2,200) is 52% lower than Florida ($4,500). Both directly reduce PITIA. Per <a href=\"https:\/\/www.nar.realtor\/research-and-statistics\" target=\"_blank\" rel=\"noopener noreferrer\">NAR data<\/a>, Per <a href=\"https:\/\/www.fanniemae.com\/selling-guide\" target=\"_blank\" rel=\"noopener noreferrer\">Fannie Mae guidelines<\/a>, conventional investment loans cap at 10 properties. DSCR loans account for ~15% of investment property financing in 2026.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"5_Tennessee_DSCR_Mistakes\"><\/span>5 Tennessee DSCR Mistakes<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"1_Assuming_Nashville_SFR_Will_Qualify\"><\/span>1. Assuming Nashville SFR Will Qualify<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>At $380K and $2,100 rent, Nashville SFR produces 0.72\u20130.90 DSCR. Even sub-1.0 programs struggle with this. Do not underwrite a Nashville SFR deal assuming DSCR financing. Use conventional or portfolio loans instead.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"2_Using_Statewide_Vacancy_for_Memphis\"><\/span>2. Using Statewide Vacancy for Memphis<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Tennessee statewide vacancy is 6.5%. Memphis is 7.2%. That 0.7% difference reduces effective rent by $101\/year on a $1,200\/month property. DSCR lenders use appraiser&#8217;s market rent, which already accounts for local vacancy \u2014 but your personal cash flow analysis should use Memphis-specific rates.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"3_Forgetting_Insurance_Escrow_at_Closing\"><\/span>3. Forgetting Insurance Escrow at Closing<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Memphis insurance ($2,400\/year) requires $600 in 3-month escrow at closing \u2014 on top of the down payment and closing costs. Tennessee tornado risk means insurance is not optional. Budget for it or face a cash shortfall at closing.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"4_Not_Rate-Locking_Before_Fed_Meeting\"><\/span>4. Not Rate-Locking Before Fed Meeting<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The September 15\u201316 Fed meeting could move DSCR rates 0.25\u20130.50%. A 0.5% rate increase on $135K loan adds $47\/month to P&#038;I, dropping DSCR by ~0.04. Lock your rate if under contract. See our <a href=\"\/blog\/stress-test-rental-deal-fed-meeting-2026\/\">stress test guide<\/a>.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"5_Ignoring_Clarksville_Military_Tenants\"><\/span>5. Ignoring Clarksville Military Tenants<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Clarksville is overlooked because it is not Memphis or Nashville. But military BAH income is the most reliable rent source in Tennessee. DSCR lenders value stable income \u2014 a military tenant with guaranteed BAH may qualify your deal even at borderline ratios.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions\"><\/span>Frequently Asked Questions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<div itemscope itemtype=\"https:\/\/schema.org\/FAQPage\">\n<div class=\"schema-faq-section\" itemscope itemtype=\"https:\/\/schema.org\/Question\">\n<h3 class=\"schema-faq-question font-bold text-lg cursor-pointer\" itemprop=\"name\"><span class=\"ez-toc-section\" id=\"What_DSCR_do_I_need_for_a_Tennessee_rental_property\"><\/span>What DSCR do I need for a Tennessee rental property?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"schema-faq-answer py-2\" itemprop=\"acceptedAnswer\" itemscope itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:block\">\n<p itemprop=\"text\">Most DSCR lenders require 1.0 minimum, with best rates at 1.25+. In Tennessee, Memphis duplexes commonly hit 1.20\u20131.55 DSCR \u2014 qualifying for standard programs. Memphis SFR produces 0.90\u20131.10. Nashville SFR is 0.65\u20130.85 \u2014 below most lender minimums. For standard DSCR qualification in Tennessee, target Memphis multifamily. Use the <a href=\"\/states\/tennessee\/dscr-calculator\">Tennessee DSCR calculator<\/a>.<\/p>\n<\/div>\n<\/div>\n<div class=\"schema-faq-section\" itemscope itemtype=\"https:\/\/schema.org\/Question\">\n<h3 class=\"schema-faq-question font-bold text-lg cursor-pointer\" itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Why_is_Tennessee_good_for_DSCR_loans\"><\/span>Why is Tennessee good for DSCR loans?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"schema-faq-answer py-2\" itemprop=\"acceptedAnswer\" itemscope itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none\">\n<p itemprop=\"text\">Tennessee has the lowest property tax among investment states (0.56%) and zero state income tax. Lower property tax means lower PITIA (the denominator in DSCR), which mechanically produces higher DSCR ratios at the same rent level. A $200K property in Tennessee has $93\/month tax in PITIA. Ohio has $227. Texas has $267. That $134\u2013$174 monthly savings directly improves DSCR by 0.07\u20130.10.<\/p>\n<\/div>\n<\/div>\n<div class=\"schema-faq-section\" itemscope itemtype=\"https:\/\/schema.org\/Question\">\n<h3 class=\"schema-faq-question font-bold text-lg cursor-pointer\" itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Can_I_get_a_DSCR_loan_on_a_Nashville_property\"><\/span>Can I get a DSCR loan on a Nashville property?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"schema-faq-answer py-2\" itemprop=\"acceptedAnswer\" itemscope itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none\">\n<p itemprop=\"text\">Very difficult for SFR. Nashville&#8217;s 0.55% rent-to-price ratio produces DSCR of 0.65\u20130.90 for single-family \u2014 below most lender minimums. Options: target suburban Nashville duplexes ($250\u2013$300K, 1.0\u20131.15 DSCR), put 40%+ down, or accept sub-1.0 program pricing at 8.5%+. Most Nashville investors use conventional or portfolio loans instead of DSCR.<\/p>\n<\/div>\n<\/div>\n<div class=\"schema-faq-section\" itemscope itemtype=\"https:\/\/schema.org\/Question\">\n<h3 class=\"schema-faq-question font-bold text-lg cursor-pointer\" itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Which_Tennessee_city_is_best_for_DSCR_loans\"><\/span>Which Tennessee city is best for DSCR loans?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"schema-faq-answer py-2\" itemprop=\"acceptedAnswer\" itemscope itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none\">\n<p itemprop=\"text\">Memphis \u2014 by far. The $155K median price and $1,200\/month SFR rent (0.77% ratio) produce the highest DSCRs in Tennessee. Memphis duplexes at $180K commonly hit 1.50+ DSCR. Clarksville is second, with military BAH-backed income providing stability. Chattanooga and Knoxville are borderline. Nashville is the most difficult due to high prices.<\/p>\n<\/div>\n<\/div>\n<div class=\"schema-faq-section\" itemscope itemtype=\"https:\/\/schema.org\/Question\">\n<h3 class=\"schema-faq-question font-bold text-lg cursor-pointer\" itemprop=\"name\"><span class=\"ez-toc-section\" id=\"How_does_Tennessee_DSCR_compare_to_Texas\"><\/span>How does Tennessee DSCR compare to Texas?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"schema-faq-answer py-2\" itemprop=\"acceptedAnswer\" itemscope itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none\">\n<p itemprop=\"text\">Tennessee wins on DSCR because of lower operating expenses. Tennessee property tax (0.56%) vs Texas (1.60%) saves $173\/month on a $200K property. Tennessee insurance ($2,200) vs Texas ($3,300) saves $92\/month. Total: $265\/month lower PITIA in Tennessee. That translates to 0.13\u20130.17 higher DSCR at the same rent. Both states have zero income tax.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<h2><span class=\"ez-toc-section\" id=\"Related_Calculators_and_Guides\"><\/span>Related Calculators and Guides<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li><a href=\"\/states\/tennessee\/dscr-calculator\"><strong>Tennessee DSCR Calculator<\/strong><\/a> \u2014 Check qualification with TN defaults<\/li>\n<li><a href=\"\/states\/tennessee\/rental-property-calculator\"><strong>Tennessee Rental Property Calculator<\/strong><\/a> \u2014 Full cash flow analysis<\/li>\n<li><a href=\"\/states\/tennessee\/cap-rate-calculator\"><strong>Tennessee Cap Rate Calculator<\/strong><\/a> \u2014 Unlevered return<\/li>\n<li><a href=\"\/states\/tennessee\/brrrr-calculator\"><strong>Tennessee BRRRR Calculator<\/strong><\/a> \u2014 BRRRR with DSCR refi<\/li>\n<li><a href=\"\/states\/tennessee\/closing-costs-calculator\"><strong>Tennessee Closing Costs<\/strong><\/a> \u2014 DSCR loan closing costs<\/li>\n<li><a href=\"\/states\/tennessee\/\"><strong>All Tennessee Calculators<\/strong><\/a><\/li>\n<li><a href=\"\/dscr-calculator\"><strong>General DSCR Calculator<\/strong><\/a><\/li>\n<\/ul>\n<p>Other state DSCR guides:<\/p>\n<ul>\n<li><a href=\"\/blog\/indiana-dscr-loan-guide\/\">Indiana DSCR Loan Guide<\/a><\/li>\n<li><a href=\"\/blog\/ohio-dscr-loan-guide\/\">Ohio DSCR Loan Guide<\/a><\/li>\n<li><a href=\"\/blog\/georgia-dscr-loan-guide\/\">Georgia DSCR Loan Guide<\/a><\/li>\n<li><a href=\"\/blog\/north-carolina-dscr-loan-guide\/\">North Carolina DSCR Loan Guide<\/a><\/li>\n<li><a href=\"\/blog\/texas-dscr-loan-guide\/\">Texas DSCR Loan Guide<\/a><\/li>\n<li><a href=\"\/blog\/florida-dscr-loan-guide\/\">Florida DSCR Loan Guide<\/a><\/li>\n<li><a href=\"\/blog\/dscr-calculator-how-to-use\/\">DSCR Calculator How-to<\/a><\/li>\n<li><a href=\"\/blog\/tennessee-rental-property-investment\/\">Tennessee Rental Property Guide<\/a><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Tennessee DSCR loans benefit from the state&#8217;s lowest-in-class property tax (0.56%) and zero income tax \u2014 but insurance at $2,200\/year and Memphis vacancy at 7.2% create unique qualification challenges. A&#8230;<\/p>\n","protected":false},"author":1,"featured_media":1076,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[],"class_list":["post-1075","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-investing"],"_links":{"self":[{"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/posts\/1075","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/comments?post=1075"}],"version-history":[{"count":1,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/posts\/1075\/revisions"}],"predecessor-version":[{"id":1077,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/posts\/1075\/revisions\/1077"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/media\/1076"}],"wp:attachment":[{"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/media?parent=1075"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/categories?post=1075"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/arvcalc.com\/blog\/wp-json\/wp\/v2\/tags?post=1075"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}