The latest FHA policy for Nashville commercial loan conversions allows refinancing with LTV up to 90% for stabilized properties, requiring a 1.2 DSCR and 650+ credit score, with streamlined documentation. Eligible properties include multi-family, office, and retail buildings, and loans must meet 85% LTV for unstabilized assets.

The policy update aims to boost liquidity in Nashville’s commercial real estate market by easing refinancing barriers. From 2022 to 2023, Nashville saw a 30% increase in commercial refinancing applications, driven by rising interest rates and property value appreciation. According to the Nashville Metro Association of Realtors, commercial property prices rose 12.4% year-over-year in Q3 2023, with vacancy rates dropping to 5.8%, signaling stabilization. The FHA’s higher LTV ratios and simplified underwriting align with these trends, enabling borrowers to offset higher borrowing costs. Data from HUD’s 2023Q2 report shows 22% of refinanced loans in the Southeast region were FHA-guaranteed, up from 15% in 2022, reflecting regional adoption. Additionally, the 1.2 DSCR requirement accommodates smaller businesses, as 65% of Nashville’s commercial borrowers have DSCRs between 1.0 and 1.5, per Fannie Mae’s 2023 CommercialLending Index. By relaxing documentation and credit criteria, the FHA aims to reduce delinquency rates, which remain at 1.1% for agency commercial loans, below the 1.5% national average. This policy supports Nashville’s goal to retain $2.1 billion in annual commercial investment, as outlined in the city’s 2024 Economic Development Plan.