Music Income Has Two Different Years, and Lenders Confuse Them
Nashville’s independent music economy songwriters, producers, session players, engineers, and publishers has an income pattern that almost no underwriter outside Tennessee has seen before, and misreading it costs borrowers real money.
The pattern is this: a song-cut year looks nothing like a catalog baseline year. A writer with a major cut takes a large advance and a surge of income in one period. In the years between cuts, the same writer earns a steadier, much lower stream from catalog streaming and back-end royalties. Both are real. Neither alone represents the borrower.
Two practical consequences:
Choose the lookback deliberately. If your most recent twelve months included a cut and an advance, a 12-month program overstates you and invites conditions about whether the income recurs. If it did not, a 12-month program understates you badly. The 24-month average usually represents a music-industry borrower better, and it gives the underwriter both halves of the cycle to look at.
Separate advance from catalog. An advance is recoupable and underwriters treat it differently than earned streaming income. Break the two out yourself, in writing, before the file goes in rather than letting an underwriter guess and condition on it.
Bring the same discipline to any documentation of forward-looking work: signed agreements, publisher statements, and a short written explanation of your cycle.
The Lenders
Select Home Loans
Select Home Loans is a Non-QM mortgage broker (NMLS #2384002) writing 1099 investor loans across Tennessee. Underwriter familiarity with music-industry and cabin-rental income varies enormously between wholesale investors putting your file in front of a shelf that has seen it before is most of what a broker is worth here.
We quote DSCR and bank statement alternatives alongside the 1099 program so you can compare paths on the same property.
Get a quote · (888) 550-3296
Other lenders worth calling — listed in no particular order:
Accurate Mortgage Group (NMLS #407536) A Tennessee-based lender with a dedicated Non-QM practice covering bank statement, 1099, DSCR, asset depletion, and foreign national programs, with a stated sub-30-day average Non-QM closing.
Capital Home Mortgage Nashville Nashville operations across 1099, bank statement, asset, and DSCR programs, with a local Nashville line.
Brokers First Funding A wholesale Non-QM lender holding a Tennessee Department of Financial Institutions mortgage license, publishing Tennessee-specific guidance including Music Row income structuring and Smoky Mountains cabin DSCR. Broker channel.
Truss Financial Group A Non-QM-focused brokerage serving Tennessee statewide with bank statement, 1099, DSCR, and asset depletion programs.
Mbanc A direct lender publishing Tennessee-specific Non-QM analysis across bank statement, 1099, asset utilization, and DSCR, with particular focus on the Nashville and Smoky Mountains markets.
Angel Oak Mortgage Solutions One of the largest dedicated Non-QM investors nationally, with a purpose-built 1099 income program. Reached through a broker.
Verify current licensure and program availability before relying on any listing. See the disclaimer at the end of this page.
The Smokies Are the Country’s Deepest Cabin Rental Market
Gatlinburg, Pigeon Forge, and Sevier County support a cabin short-term rental concentration that has no real equivalent anywhere else, driven by the most-visited national park in the United States and nightly rates well above what Tennessee acquisition costs would suggest.
For financing, that has an unusual effect: the Smokies are one of the few short-term rental markets where DSCR genuinely works. Trailing twelve-month platform income is well documented, market rent data is deep, and lenders that would discount a seasonal property elsewhere will underwrite a Smokies cabin on documented performance.
Two cautions. First, that only holds where you can produce actual trailing income a new-build or a property coming off a long owner-use period has no history, and then a 1099 loan is the cleaner path. Second, the market is competitive enough that operating costs management, cleaning, platform fees meaningfully affect real returns in a way the gross nightly rate does not convey.
Nashville short-term rentals are a different proposition entirely. The city permits and regulates them actively, with distinctions between owner-occupied and non-owner-occupied properties. Verify the specific address’s permit status and eligibility before you close; do not rely on a listing’s representation.
How Qualifying Works
A 1099 loan qualifies you on income documented on your 1099 forms rather than the net profit shown after deductions.
Programs split into two camps. Some apply 90 percent or more of gross 1099 income with no expense deduction. Others apply an expense factor of 10 to 25 percent first.
On $180,000 of annual 1099 income:
| Method | Qualifying income |
|---|---|
| 90% of gross | $162,000/yr — $13,500/mo |
| Gross less 20% expense factor | $144,000/yr — $12,000/mo |
| Net profit from your tax return | frequently under $80,000 |
Model your payment with our mortgage calculators.
The two-year self-employment history requirement is separate from the two-year income lookback. Ask about both.
Tennessee’s 1099 Population
Music industry independents songwriters, producers, engineers, session musicians, and publishers concentrated in Nashville, with the income pattern discussed above.
Healthcare consultants around Nashville’s substantial healthcare corporate cluster, an unusually deep independent consulting layer.
Construction and specialty trades across a state absorbing sustained in-migration.
Logistics and owner-operator trucking around the Memphis freight hub, where documented business expense makes gross-receipts qualifying decisive.
Remote professionals and freelancers relocating from higher-tax states, drawn by Tennessee’s lack of a state income tax often with strong income and a short Tennessee history.
Tennessee Investment Markets
Nashville and Williamson County carry the highest values, with Williamson among the wealthiest counties in the South. Ratios tighten considerably here; frequently a 1099 case.
Memphis offers the strongest raw yields in the state with deep single-family and small multifamily inventory, and is a long-standing out-of-state investor market.
Knoxville and Chattanooga sit between the two on price and yield with steady university and healthcare demand.
Sevier County and the Smokies are the cabin market discussed above.
Clarksville and the Fort Campbell corridor support durable rental demand from military housing-allowance tenants, which underwrites cleanly.
Rural counties are where loan minimums bind a share of inventory prices below common Non-QM floors of roughly $75,000 to $150,000.
Other Tennessee Specifics
Non-judicial foreclosure by power of sale with a comparatively fast process. Investors price this favorably and Tennessee generally supports better LTVs than judicial states.
Business-purpose lending is straightforward. Investment property loans made for business purposes are treated as exempt from consumer lending regulation, which keeps investor Non-QM clean procedurally.
Property taxes are moderate, which helps both DTI capacity and DSCR ratios a genuine advantage over Texas or Illinois.
In-migration has kept appraisal support strong in Nashville, Knoxville, and Chattanooga. Memphis and rural counties are more variable.
Investment Property Terms
- Down payment: 20–25 percent typical, better pricing at 25 percent and above
- Credit: 620 floor at most investors; real improvements at 680, 700, 740
- Reserves: 6–12 months PITIA, often with additional reserves per financed property already owned
- Prepayment penalties: common on investment property, typically 1–3 years, often buyable at a quarter to a half point
Compare with our purchase loan options and refinance loan options.
1099 or DSCR?
Use DSCR in Memphis, Chattanooga, and the value corridors where rents cover the payment, and on established Smokies cabins with documented trailing platform income.
Use a 1099 loan in Nashville and Williamson County where prices have outrun rents, on a new or unproven cabin with no rental history, on anything below a DSCR investor’s loan minimum, on properties needing work first, or where you are also buying a primary residence.
If you already hold Tennessee rentals, a DSCR refinance works well here.
Questions to Ask
- My income is music-industry will you run 24 months, and how do you treat advances versus catalog income? (Ask this first in Nashville.)
- Do you qualify on gross 1099 income, or apply an expense factor?
- For a Smokies cabin do you underwrite trailing platform income, and how many months do you need?
- Is this Nashville property permitted for short-term rental, and does that permit convey?
- What is your minimum loan amount? (Ask this in rural counties.)
- Can you quote DSCR on the same property?
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Disclaimer
The lenders described on this page are listed in no particular order. Select Home Loans appears first because we publish this page and originate these loans; we have a commercial interest in this category. No lender listed has paid for placement.
This page reflects our opinion based on publicly available information at the time of writing. It is general information, not a recommendation, an endorsement, or an offer of credit. Lender programs, guidelines, licensure, pricing, and availability change frequently and without notice, and nothing here guarantees that any lender is currently licensed in Tennessee, currently offers the program described, or will approve your file.
Short-term rental permitting varies by jurisdiction, changes, and is specific to individual properties; verify with the relevant authority. Consult a licensed mortgage professional and where appropriate a tax advisor, attorney, or financial advisor before making any borrowing decision. Verify any lender’s licensure through NMLS Consumer Access at nmlsconsumeraccess.org.
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