Nashville
Where zoning determines your loan strategy.
Music City is one of the top-grossing STR markets in the country, but Metro Nashville's Short-Term Rental Property (STRP) permit framework decides which loan program actually fits. Type 2 (non-owner-occupied) permits are restricted to specific zoning districts, so financing strategy starts with the parcel, not the pricing.
Why this market works
- Year-round tourism engine, bachelorette, CMA Fest, Titans, Predators, SEC football, and a booming convention calendar.
- Diverse demand mix, corporate relocation, healthcare travelers (HCA, Vanderbilt), and leisure keeps ADR resilient off-peak.
- Investor-friendly Tennessee tax structure, no state income tax and franchise/excise treatment favorable for LLC-held rentals.
Loan programs that fit
- DSCR loan on Type 2-permitted or MTR (30+ day) properties with AirDNA-projected income.
- Second-home / Type 1 owner-occupied program for buyers using the property as a primary residence with occasional rental.
- Jumbo DSCR for luxury East Nashville, Germantown, and 12 South builds above the $806,500 conforming limit.
- MTR-underwritten DSCR (medium-term rental, 30+ days) for parcels in residential zones where Type 2 STRP is not permitted.
Regulatory landscape
- Metro Nashville Short-Term Rental Property (STRP) permit required, Type 1 for owner-occupied, Type 2 for non-owner-occupied.
- New Type 2 permits are restricted to specific commercial/mixed-use zoning districts (MUL, MUG, MUI, CS, ORI, etc.), most residential zones do not qualify.
- Confirm zoning and existing permit status with Metro Codes before writing the offer, an unpermitted Type 2 purchase is not financeable as an STR.
- Davidson County occupancy tax (6%) plus Tennessee state and local sales tax collection required.
Underwriting notes
- Lenders now request a copy of the active STRP permit or a zoning verification letter at underwriting, do not skip this in the offer contingency period.
- MTR strategy (30+ day furnished rentals to traveling nurses and corporate relocators) is fully DSCR-financeable and sidesteps STRP restrictions in most residential zones.
- Nashville flood plains along the Cumberland and its tributaries drive material insurance premium swings, pull the elevation certificate before commitment.
- HOA and condo association STR bans are common in downtown high-rises, review the master deed and rules before offering.
FAQ
Nashville financing questions
Can I still get a non-owner-occupied Airbnb permit in Nashville?
Only in specific zoning districts. Metro Nashville restricts new Type 2 (non-owner-occupied) STRP permits to certain commercial and mixed-use zones. Most residential parcels are ineligible for a new Type 2 permit, though existing permits can transfer with the property in some cases. Verify zoning and permit status with Metro Codes before writing an offer.
What loan program works when the property isn't Type 2 eligible?
A DSCR loan underwritten to medium-term rental (MTR) income, 30+ day furnished stays targeting traveling nurses, corporate relocators, and insurance-displaced tenants. MTR is not regulated by the STRP framework and pencils strongly near Vanderbilt, HCA, and Nashville General.
Can I use projected Airbnb income to qualify for a Nashville DSCR loan?
Yes, on a Type 2-permitted property. Lenders qualify off AirDNA Rentalizer projections cross-checked with the appraiser's 1007 rent schedule. On non-permitted parcels, we underwrite to long-term or MTR rent instead.
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