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DSCR loans for Gatlinburg cabins and Tennessee rental property
Long-term financing approved on what the property earns. Cabins, chalets, condos and houses, rented by the night or by the year, with no tax returns or employment check.
DSCR loan terms
| To buy | up to 85% LTV |
| Cash-out refinance | up to 80% LTV |
| Credit scores from | 600 |
| Fixed terms | 5 to 30 years |
| Prepayment choices | 3-year, 5-year or none |
| Typical closing | about 30 days |
At a 600 score the limit is 70% loan-to-value. Stronger credit qualifies for up to 85% on a purchase.
DSCR in plain terms
DSCR is short for debt service coverage ratio. It answers one question: does the rent pay the mortgage? If it does, the loan can be approved without looking at your personal income.
DSCR = monthly rent ÷ monthly payment. The payment counts principal, interest, property taxes, insurance and any owners’ association dues.
| Rent | Payment | DSCR | Reading |
|---|---|---|---|
| $6,500 | $5,000 | 1.30 | Income is 30% above the payment |
| $4,200 | $4,200 | 1.00 | Income equals the payment |
| $3,780 | $4,200 | 0.90 | Income is short; expect less leverage or a higher rate |
We prefer a ratio of 1.0 or higher. A strong borrower can qualify under 1.0 with lower leverage, and there is a no-DSCR option up to 75% loan-to-value at a higher rate.
Cabin and vacation rental loans
In Gatlinburg, Pigeon Forge and Sevierville, most rental income is earned by the night. We underwrite those properties on projected short-term income, not on what the cabin would bring on an annual lease, and that usually supports a larger loan.
- Income is taken from 12 months of rental history, or from AirDNA projections counted at about 70 to 80%.
- The property must be allowed to operate as a short-term rental, with no zoning or covenant restriction against it.
- Cabins, chalets, condos and condotels qualify. Non-warrantable condos and condotels are financed at slightly lower leverage.
Rules depend on where the cabin sits. The City of Gatlinburg issues a Tourist Residency Permit, Sevierville and Pigeon Forge have their own permits, and cabins outside the city limits need a Sevier County short-term rental unit permit with a yearly fire inspection. Confirm what is allowed at a specific address before you buy.
What makes the payment higher in Sevier County
- Property tax. Tennessee assesses residential property at 25% of appraised value and commercial property at 40%. Sevier County classes a short-term rental that is not the owner’s primary residence as commercial, so the tax bill on a rental cabin is well above a neighbor’s who lives in theirs.
- Insurance. A cabin rented by the night needs a short-term rental policy, not a homeowner’s policy. Log construction, wildfire exposure and distance from a fire station can all raise the premium.
- Association and road fees. Resort communities charge dues, and cabins on private roads often share a road maintenance fee. Both count in the payment.
Get real figures for all three before you make an offer. They decide whether a deal clears 1.0.
Loan options
- Fixed terms from 5 to 30 years. The 10/1 interest-only and the 30-year fully amortized loan are chosen most often.
- Qualifying on the interest-only payment is available.
- A 3-year or 5-year prepayment penalty. The 5-year option usually prices about 0.25 to 0.5% lower. No penalty is available at a higher rate.
- One property or a whole portfolio.
Refinancing after a build or a renovation
If you build or renovate a cabin and decide to keep it, a DSCR loan replaces the short-term construction or fix and flip loan with long-term debt. A cash-out refinance at up to 80% loan-to-value can hand back much of the cash you put in.
Documents we ask for
- Loan application
- Signed purchase contract, or your original settlement statement for a refinance
- The lease for a long-term rental, or an income statement or booking history for a short-term rental
- Two months of bank statements
- Insurance and title company contacts, and someone to let the appraiser in
- For an LLC: articles of organization, EIN letter and operating agreement
The full list is in our hard money loan document checklist.
DSCR loans: common questions
We prefer 1.0 or higher, which means the rent covers the full payment. Strong borrowers can qualify below 1.0 with lower leverage, and a no-DSCR program is available up to 75% loan-to-value at a higher rate.
Yes. Short-term rentals are qualified on 12 months of rental history or on AirDNA projections counted at about 70 to 80%. The property must be allowed to operate as a short-term rental.
Yes. We finance log cabins, chalets, condos and condotels as rental property. Non-warrantable condos and condotels are financed at slightly lower leverage.
The minimum is 600, at up to 70% loan-to-value. Higher scores qualify for up to 85% of the purchase price.
No. A DSCR loan is approved on the property’s rental income. There is no employment, tax return or debt-to-income review.
Yes. A new or newly converted rental is underwritten on AirDNA projections, counted at about 70 to 80%, instead of past bookings.
No. These are business-purpose loans and are not reported on your personal credit like a conventional mortgage. There is no cap on how many properties we will finance for you.
Buying or refinancing a rental cabin?
Send the address, the price and what you plan to do with the property. We will reply with the leverage and pricing that fit your deal.