Flood Insurance Is Doing More Damage Than Your Tax Return
Louisiana investors tend to arrive at alternative documentation because their tax returns understate them. Fair enough that is what these programs solve.
But the number that more often decides a Louisiana investment file is the flood premium.
A flood insurance premium of $2,000 to $4,000 a year on a Louisiana rental can reduce that property’s debt service coverage ratio by roughly 5 to 10 percentage points. A property that pencils at 1.10 without flood lands around 1.00 to 1.05 with it right at the edge of most lenders’ floor. FEMA map revisions can move it again after you close.
The practical consequences are two. First, get a flood quote on the specific property before you finalize your offer price, not after inspection. Second, when flood costs push a property below DSCR floor, a 1099 loan qualifying on your personal income is frequently the path that still works which is precisely why understanding both products matters more in Louisiana than in most states.
The Lenders
Select Home Loans
Select Home Loans is a Non-QM mortgage broker (NMLS #2384002) writing 1099 investor loans across Louisiana. Working across multiple wholesale investors matters here because appetite for flood-zone property and for New Orleans short-term rentals varies considerably between them — a file that stalls at one shelf frequently moves at another.
We quote DSCR and bank statement alternatives alongside the 1099 program so you can see which product the property’s carrying costs actually permit.
Get a quote · (888) 550-3296
Other lenders worth calling — listed in no particular order:
Brokers First Funding A wholesale Non-QM lender holding a Louisiana Residential Mortgage Lending License issued by the Louisiana Office of Financial Institutions under the Residential Mortgage Lending Act. Publishes Louisiana-specific program mapping including offshore worker bank statement approaches built around hitch schedules, New Orleans short-term rental DSCR with compliance guidance, and Gulf Coast camp STR. Broker channel.
Capital Home Mortgage Louisiana Louisiana operations across 1099, bank statement, asset, and DSCR programs, with a Baton Rouge-area line.
1st Nationwide Mortgage Publishes Louisiana-specific DSCR and Non-QM content including flood impact analysis and guidance on Louisiana property types such as doubles and shotgun houses.
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.
NASB (North American Savings Bank) Among the longest-running alternative documentation programs in the country, with a 1099-NEC based option.
Verify current licensure and program availability before relying on any listing. See the disclaimer at the end of this page.
New Orleans Short-Term Rentals: Verify the Address
New Orleans has some of the strictest short-term rental regulation of any major American city, with distinct commercial and residential categories, zoning restrictions, and permit requirements that have changed repeatedly.
Verify the specific property’s STR status with city records before you make an offer. Buying on the assumption that a property can operate as a short-term rental, then discovering the zoning does not permit it, is one of the more expensive mistakes available in this market and a listing description is not verification.
This matters less for a 1099 loan than a DSCR loan, because you are qualifying on your own income rather than projected nightly rates. But it entirely determines whether the investment works, and a lender is not the right advisor on the regulatory question. Engage a local attorney or agent who handles this regularly.
Offshore and Energy Income
Louisiana’s offshore energy workforce has an income pattern almost nobody else has: hitch schedules. Two or three weeks on, an equivalent stretch off, with pay arriving in concentrated blocks tied to rotation rather than in even monthly amounts.
Underwriters unfamiliar with the pattern read the gaps as instability. Underwriters who have seen it read it correctly. This is a genuine reason to work with a lender who has done Louisiana energy files before rather than one seeing the pattern for the first time.
The 24-month lookback is generally the right choice here, because it captures enough rotations to establish a run rate. Bring a short written explanation of your hitch schedule with the file rather than answering a condition about it later.
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 own numbers with our mortgage calculators before you talk to a lender, and remember to include a realistic flood premium in the payment.
Louisiana’s 1099 Population
Offshore and oilfield contractors supply boat crews, ROV operators, divers, and equipment specialists, concentrated in the Houma-Thibodaux and Lafayette corridors.
Petrochemical contractors along the Baton Rouge and River Parishes industrial corridor.
Commercial fishing and seafood operators along the coast, seasonal and heavily independent.
Construction and restoration trades, with demand tied to storm cycles the same way it is in Florida.
Hospitality, music, and event contractors in New Orleans, where a substantial share of the workforce is independent.
Other Louisiana Specifics
Business-purpose lending is straightforward. Loans on investment property for business purposes are treated as exempt from consumer lending regulation in Louisiana, which keeps investor Non-QM relatively clean procedurally.
Property types are distinctive. Doubles, shotguns, and camelbacks are standard Louisiana inventory and are generally eligible, but confirm with a lender who has actually financed them rather than assuming.
Wind and named-storm deductibles are separate from your base hazard policy along the coast, and separate again from flood. Three coverages, three costs, all inside your carrying-cost model.
Louisiana uses a civil law system unlike every other state, with different terminology and procedures around property and security interests. This rarely affects a straightforward purchase, but it is a reason to use a closing attorney who works in Louisiana routinely.
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 and Louisiana’s insurance stack makes those months larger than a national estimate suggests
- Prepayment penalties: common on investment property, typically 1–3 years, often buyable at a quarter to a half point
Compare against our full purchase loan options and refinance loan options.
1099 or DSCR?
Louisiana acquisition prices are low enough that rent-to-price ratios look strong on paper and then insurance eats the difference. A property that would clear 1.20 DSCR in Kentucky can land near 1.00 in a Louisiana flood zone on identical rent.
Use DSCR where the property clears the ratio after a real flood and wind quote, not an estimate.
Use a 1099 loan where it does not, where STR permit status makes projected rent unreliable, where the property needs work before it rents, or where you are buying a primary residence as well.
Questions to Ask
- What does the flood premium do to this property’s DSCR and if it drops below floor, what is the 1099 path?
- Do you qualify on gross 1099 income, or apply an expense factor?
- Have you underwritten offshore hitch-schedule income before?
- Do you finance doubles and shotguns?
- What is your appetite for New Orleans short-term rental property?
- What is the prepayment penalty, and what does removing it cost?
More from Select Home Loans: DSCR loans · DSCR refinance · Learning Center · About Select
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 Louisiana, currently offers the program described, or will approve your file.
Nothing here is legal advice. New Orleans short-term rental regulation is complex and changes; verify permit status with the city and engage a Louisiana attorney. Flood zone designations and premiums change with FEMA map revisions. 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.
Select Home Loans, NMLS #2384002. Equal Housing Opportunity.
