Kentucky has two industries that produce independent contractors in numbers you would not expect from a state its size, and both of them break conventional mortgage underwriting in the same way.
The first is logistics. Louisville is the hub of one of the largest air cargo operations in the world, and the ecosystem around it freight brokers, owner-operators, contract handlers, customs and expediting specialists runs heavily on 1099 arrangements with real business expense behind it.
The second is the equine industry. Central Kentucky’s horse economy employs trainers, farriers, exercise riders, bloodstock agents, and consultants who are almost universally paid as independent contractors, often by multiple clients, with income that varies with the racing and sales calendar.
Add construction trades, healthcare contracting, and the bourbon tourism economy, and Kentucky has a deep bench of borrowers whose tax returns understate them badly and comparatively affordable investment property for them to buy.
The Lenders
Select Home Loans
Select Home Loans is a Non-QM mortgage broker (NMLS #2384002) writing 1099 investor loans in Kentucky. We work across multiple wholesale investors, which matters here because some lenders serve Kentucky for investment property only and not for owner-occupied purchases a licensing quirk that catches borrowers out when they try to use the same lender for their home and their rentals.
We quote DSCR and bank statement alternatives alongside the 1099 program so you can compare paths on the same property.
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Other lenders worth calling — listed in no particular order:
Mbanc A direct lender publishing Kentucky investment property programs across bank statement, 1099, asset utilization, and DSCR, including no-ratio DSCR structures. Note that they serve Kentucky for investment property financing only; owner-occupied purchases require a different lender.
Newfi Lending (NMLS #1231327) Publishes Kentucky-specific DSCR and Non-QM content covering self-employed and investor programs, second mortgages, and 40-year structures.
Ameritrust Mortgage A direct Non-QM lender with a Kentucky-specific presence, offering 1099, bank statement, and asset-qualifier programs for self-employed borrowers and investors.
Capital Home Mortgage Kentucky Kentucky operations across 1099, bank statement, asset, and DSCR programs.
Angel Oak Mortgage Solutions One of the largest dedicated Non-QM investors nationally, with a purpose-built 1099 income program. Reached through a broker.
Griffin Funding Publishes qualifying on 90 to 100 percent of gross 1099 income, 620 minimum credit, and loan amounts to $4 million.
Verify current licensure and program availability before relying on any listing. See the disclaimer at the end of this page.
How Qualifying Works
A 1099 loan qualifies you on income documented on your 1099 forms rather than the net profit shown after deductions. Appraisal, assets, credit, reserves, and ability-to-repay analysis all work normally only the income document changes.
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 |
Owner-operators in the Louisville logistics corridor are the clearest Kentucky case for gross-receipts qualifying. Fuel, maintenance, insurance, and equipment payments produce enormous legitimate deductions a tax return understates the borrower badly, and a bank statement program applying a 50 percent expense factor understates them a second time for the same costs.
Ask directly: do you qualify on gross 1099 income, and if you apply an expense factor, what is it?
Run the numbers yourself first with our mortgage calculators so you know roughly what payment your qualifying income should support before you talk to anyone.
One year or two
One-year suits growing income or a recent shift to independent work with prior experience in the same field.
Two-year suits equine industry income, which tracks the racing and sales calendar rather than the fiscal year, and construction working a cold-weather season.
The two-year self-employment history requirement is separate from the two-year income lookback. These get conflated constantly ask about both.
Kentucky’s 1099 Population
Logistics and freight contractors around the Louisville air cargo hub brokers, owner-operators, contract handlers, and customs specialists.
Equine industry professionals across the Bluegrass region trainers, farriers, exercise riders, bloodstock agents, and consultants, typically paid by multiple clients across a seasonal calendar.
Construction and specialty trades, statewide.
Healthcare contracting around the Louisville and Lexington hospital systems.
Bourbon and hospitality tourism operators, including a genuine short-term rental economy along the distillery corridor.
Kentucky Investment Markets
Louisville and Lexington carry the bulk of investor inventory, with steady rental demand from healthcare, university, and logistics employment. Both support solid rent-to-price ratios by national standards.
Northern Kentucky functions as part of the Cincinnati metro, which means investors here should confirm their lender writes in Ohio as well if their portfolio crosses the river.
Bourbon trail and lake markets support seasonal short-term rentals, where annualized rent gets discounted by lenders and the 1099 path is often cleaner than DSCR.
Rural counties are where loan minimums bind a good deal of inventory prices below common Non-QM floors of roughly $75,000 to $150,000.
Other Kentucky Specifics
Judicial foreclosure. Kentucky forecloses through the courts, which lengthens timelines and makes Non-QM investors modestly more conservative on leverage than in a power-of-sale state.
Insurance is comparatively affordable, which is a real advantage. Where Florida and Louisiana investors watch premiums destroy their DTI capacity and their DSCR ratios, Kentucky files generally do not have that problem.
Cold-weather property condition. Heating systems, roof age, and foundation issues surface in appraisals more often than in warm-weather states.
Older housing stock in the urban cores. Louisville and Lexington both have significant pre-1978 inventory, bringing lead paint disclosure obligations and more frequent deferred-maintenance flags.
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
See our full purchase loan options and refinance loan options for how these programs compare to conventional financing.
1099 or DSCR?
Kentucky rent-to-price ratios support DSCR well in Louisville, Lexington, and Northern Kentucky, which makes it a sensible default for a conventional long-term rental with documented lease history.
Use a 1099 loan where the property falls below a DSCR investor’s loan minimum, where it is a seasonal short-term rental whose annualized rent gets discounted, where the property needs work before it rents, or where you are also buying a primary residence DSCR is investment-only.
If you already hold Kentucky rentals and want to pull equity, a DSCR refinance is usually the cleaner route than a cash-out on personal income.
Questions to Ask
- Do you qualify on gross 1099 income, or apply an expense factor?
- Do you write owner-occupied in Kentucky, or investment property only?
- What is your minimum loan amount? (Ask this outside Louisville and Lexington.)
- Will you run both the 1-year and 2-year scenarios given my seasonal calendar?
- Are you licensed in Ohio too? (Ask this in Northern Kentucky.)
- What is the prepayment penalty, and what does removing it cost?
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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 Kentucky, currently offers the program described, or will approve your file.
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 independently through NMLS Consumer Access at nmlsconsumeraccess.org.
Select Home Loans, NMLS #2384002. Equal Housing Opportunity.
