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Tennessee · Fix and flip loans

Tennessee Fix and Flip Loans: Leverage, Closing Taxes and a Nashville Flip That Pencils

A Tennessee fix and flip loan typically funds 85–100% of the purchase and every dollar of the renovation, to a ceiling of 70–80% of the after-repair value. Tennessee's recording taxes fall on the buying side of a flip: the buyer of a deed pays $0.37 per $100 in transfer tax, and the borrower pays $0.115 per $100 on the loan. On the Nashville flip below that's $1,256 when you buy, while your own buyer owes the transfer tax when you sell.

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Transfer tax (paid by the buyer)
$0.37 per $100
Mortgage tax on your loan
$0.115 per $100 over $2,000
Max loan, share of ARV
70–80%
Tax-sale redemption period
Up to 1 year

Tennessee figures from the sources below, updated October 30, 2026. Not an offer.

Tennessee costs

Tennessee taxes you on the way in, and the assessor can catch up with a finished rehab.

Holding a flip in Tennessee is moderately priced, but two state taxes come due when you record, and a completed renovation can be assessed partway through the year. Lender figures are ranges published in October 2026.

WORKED EXAMPLE · NASHVILLE FLIP, 6-MONTH HOLD
After-repair value (ARV)
$450,000
Purchase price
$250,000
Rehab budget
$65,000
Loan: 90% of price + all of the rehab
$225,000 + $65,000 = $290,000
Cap check: 75% of ARV
$337,500 — the loan stays under it
Transfer tax on your deed ($0.37 per $100)
$925
Mortgage tax ($0.115 per $100 over $2,000)
$331
Interest at 10.25%, 6 months
$13,197
Points (1.5%) and doc fee
$4,350 + $1,995
Property tax, 6 months (25% × $2.814 per $100)
$879
Insurance (assumed)
$1,200
Other buying closing costs (assumed)
$3,000
Selling costs (assumed 6% of ARV)
$27,000
Total costs beyond purchase and rehab
$52,877
Your cash in: down payment $25,000 + costs paid before sale
$50,877
Profit before income tax$82,123

$450,000 − $250,000 − $65,000 − $52,877 = $82,123. The ARV is close to Zillow's September 2026 typical value for metro Nashville, and the price meets the 70% rule exactly: 70% × $450,000 − $65,000 = $250,000. The 10.25% rate is an assumption below 2025's 10.45% non-bank median; it runs on $225,000 for the full six months and on the rehab money for an average of three. Property tax uses the 2025 Urban Services District rate on an appraisal equal to the price, and a rehab finished before September 1 can add a prorated assessment on top. Your buyer, not you, pays the $1,665 transfer tax on the sale. Illustrative only — not a rate quote.

Interest
Investor loans with short terms carried a 10% median rate in 2025 HMDA data overall, and 10.45% from non-bank lenders. Entry-level rates advertised in October 2026 sat between 7.75% and 9.24%. With draws, interest typically runs only on the balance actually disbursed.
Points and fees
Points usually run 0–2, and document fees are extra; Easy Street's is $1,995. Lima One lets you pay its points at payoff instead of at closing. On the Nashville loan below, one point is $2,900.
Transfer tax on your purchase
The grantee owes 37 cents per $100 on the greater of the price or the property's value: $925 on a $250,000 house. When you resell, your buyer is the grantee, so the $1,665 of tax on a $450,000 sale is theirs.
Mortgage tax on your loan
$0.115 per $100 of indebtedness over the first $2,000, paid by the borrower when the deed of trust is recorded. A recorded instrument must state its maximum principal indebtedness, so a draw loan is taxed on the full amount: $331.20 on $290,000.
Property tax while you hold
Residential property is assessed at 25% of its appraisal. In Nashville's Urban Services District, the 2025 rate of $2.814 per $100 of assessed value comes to about 0.70% of appraised value a year, or $147 a month on a $250,000 house. Bills are payable from the first Monday in October and go delinquent on March 1.
A mid-year assessment on your rehab
If an improvement is completed after January 1 and before September 1, or the property is sold or leased in that window, the assessor must correct the assessment to the improvement's completed value, prorated for the rest of the year. Work unfinished on January 1 is assessed on the cost of materials, which the owner must report in writing by February 1.
Insurance during the rehab
Tennessee's average HO-3 premium was $1,649 in 2023, but a vacant house mid-renovation needs its own coverage. Find out what your lender requires and price a builder's-risk policy before you close.
Markets

Knoxville and Johnson City values rose; Nashville and Chattanooga edged down.

Comparable sales set the ARV; the metro trend shows whether those comps are rising under you or slipping. The typical value approximates a finished house, and the lower-third value is closer to where most fixer-upper prices sit. Cheap houses bring a different problem: in Jackson the lower-third value is about $94,000, and lenders' published loan minimums run from $50,000 to $100,000, so a deeply discounted purchase there may be too small to finance.

MetroTypical home value12-mo changeLower-third value12-mo change
Nashville$449,000−0.5%$309,000−0.3%
Memphis$242,000+0.1%$119,000−0.9%
Knoxville$363,000+1.9%$231,000+2.6%
Chattanooga$319,000−0.3%$201,000+0.6%
Clarksville$289,000+0.2%$180,000−0.6%
Kingsport$243,000+1.1%$145,000+1.1%
Johnson City$280,000+1.4%$179,000+2.2%
Jackson$202,000+0.7%$94,000+0.9%
United States$366,000+1.2%$198,000+2.2%

Swipe the table to see every column →

Zillow Research, retrieved October 30, 2026: ZHVI for all homes, both houses and condos, smoothed and seasonally adjusted. Typical value is the middle tier, lower-third value the bottom tier; metros and the US, September 2026 with the change from September 2025.

Tennessee rules

Tennessee rules to build into your schedule.

Foreclosure sales: shorter newspaper notice since 2025
Most Tennessee foreclosures are trustee's sales under a deed of trust's power of sale, with no court case. A 2025 amendment, in force from July 1 of that year, cut the newspaper notices from three to two and added an online notice that has to stay up for 20 days running on a site run by a registered posting company. A sale postponed more than 30 days needs a mailed notice at least 10 days before the new date. Watch the online postings as well as the paper, and check whether the deed of trust waives the statutory two-year right of redemption; many do.
Foreclosure volume is modest
Tennessee logged 3,001 properties with foreclosure filings from January through June 2026, a rate of one per 1,048 housing units and 35th among the states, though filings were up 24% on a year earlier. Plan on sourcing most purchases from listings and off-market sellers, with auctions as a supplement.
Tax-sale purchases can be redeemed
After a court confirms a tax sale, owners and other interested parties can redeem for one year when taxes were five years or less delinquent, 180 days when more than five but under eight, 90 days at eight or more, and 30 days if the property is shown to be vacant or abandoned. Redemption repays you with 12% a year interest on your purchase price, so don't start a rehab until the period runs out.
If you keep it as a rental
Rent the finished house to one household and it should normally stay in the 25% residential class, though some counties have treated certain single-family rentals as commercial and a July 2026 ruling reversed one such reclassification. A duplex or larger with two or more rental units is commercial at 40%. Run the hold-or-sell math on the right class.
Nashville short-term rentals aren't an easy exit
In Nashville's R, RS, RM and AR2a residential zones, an investor can't get a new permit for a short-term rental the owner doesn't live in, and a seller's existing permit doesn't come with the house. Don't count on nightly rentals as a fallback for a flip in a residential zone.
Licensing and the business-purpose line
The state Attorney General has described Tennessee's residential lending license as covering loans made mainly for personal or household purposes on a dwelling. Flip lenders make the business purpose part of the file and have you confirm in writing that you won't live in the house.
Business purpose only
These loans finance houses you'll resell or rent to others. If you or your family intend to move in, at any stage of the project, use a residential mortgage instead.

Tennessee fix and flip loan questions

Who pays transfer tax on a Tennessee flip?

The grantee does. The tax runs 37 cents for every $100 of the sale price or value, whichever is higher, and it's owed by whoever receives the deed. On a flip that means you pay it when you buy, $925 on a $250,000 house, and your buyer pays it when you sell, $1,665 on a $450,000 resale.

How much is Tennessee's mortgage tax on a flip loan?

$0.115 per $100 of the loan above the first $2,000, paid by the borrower when the deed of trust is recorded. Because the recorded instrument states the maximum principal, a draw loan is taxed on the full commitment, rehab money included. On a $290,000 flip loan that's $331.20. A later refinance records a new deed of trust and owes the tax again.

How much can I borrow for a Tennessee flip?

Lenders' October 2026 programs advanced 85–100% of the price, more as your track record grows, and the whole rehab budget, so long as the loan stays within 70–80% of the after-repair value; some lenders hold first-time investors to 60–70% of ARV. In the Nashville example, 90% of a $250,000 price plus a $65,000 rehab gives a $290,000 loan, under the $337,500 cap.

How do Tennessee foreclosure sales work now?

Most are trustee's sales held without a court case under the deed of trust's power of sale. Under rules in effect since mid-2025, the trustee runs two newspaper notices and keeps a notice online for 20 straight days through a registered posting service. Many deeds of trust waive the borrower's two-year redemption right; check the deed before you bid, and have funding lined up.

Can I buy a Tennessee tax-sale property to flip?

You can, but the owner and other interested parties can redeem it after the court confirms the sale: for one year in most cases, or 180, 90 or 30 days depending on how long taxes were delinquent and whether the property is vacant. If they redeem, you get your price back plus 12% a year interest, not the house. Wait out the period before spending on a rehab.

What if my Tennessee flip doesn't sell?

Lease it out and refinance with a debt service coverage ratio (DSCR) loan, where the rent rather than your income carries the approval. A 75%-of-value cap on cash-out is the most common limit, and lenders often want around 90 days of ownership first. A $337,500 refinance on a $450,000 house would owe $385.83 of mortgage tax, and a single-family rental is normally assessed at 25%, a duplex at 40%.

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Related loan programs

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Sources and methodologyUpdated October 30, 2026

Figures are market ranges from published lender terms and public data on the dates shown. They describe the market and are not an offer. Your terms depend on the property, your credit and your experience.