Kentucky's rental markets are affordable and varied, from Louisville shotgun houses to Lexington student rentals and northern Kentucky homes across the river from Cincinnati. A DSCR cash-out refinance lets you pull equity using the rent.
In short: Yes. LendingStreet finances DSCR cash-out refinances on 1-8 unit investment property in Kentucky, up to 75% LTV, qualified on the property's rent instead of your tax returns, with a 620 minimum credit score and LLC borrowers standard. In Kentucky, the deed transfer tax applies to sales rather than refinances, and flood insurance near the Ohio River and in eastern Kentucky is the item most likely to change the payment.
You take out a new loan larger than your current balance, pay off the old mortgage and keep the difference. On a DSCR cash-out the new loan is sized on the appraised value, up to 75% LTV, compared with up to 80% LTV on a purchase.
The loan qualifies on the debt service coverage ratio: monthly rent divided by the full new payment, meaning principal, interest, taxes, insurance and any HOA dues. A bigger balance means a bigger payment, so it is the ratio after the cash-out that has to clear the 1.0x standard minimum. You do not need W-2s, pay stubs or tax returns, and the loan can close in your LLC.
Louisville has the deepest rental market, with shotgun houses and camelbacks in Germantown, Schnitzelburg and Shelby Park, Victorian homes in Old Louisville and newer suburbs to the east and south. Lexington adds student demand from the University of Kentucky and a stable professional workforce.
Northern Kentucky cities such as Covington, Newport and Florence sit in the Cincinnati metro and offer older row and town homes. Bowling Green has Western Kentucky University and growing manufacturing, and Fort Campbell and Fort Knox support rentals in Hopkinsville, Radcliff and Elizabethtown.
Kentucky charges a real estate transfer tax on deeds when property is sold, which does not usually apply to a refinance. There is no state mortgage tax. Your costs are mainly title, settlement, appraisal, county clerk recording and escrow deposits.
Your term sheet and closing disclosure list lender costs separately from title, recording and government charges, so you can see exactly what the cash-out costs and how much of the equity reaches you.
| Closing item | How it usually works in Kentucky |
|---|---|
| Transfer tax | Paid on deeds when property sells; not usually on a refinance |
| Mortgage tax | None at the state level |
| County clerk recording | Fees to record the new mortgage |
| Title and settlement | Lender title policy and closing fees |
| Escrow setup | Deposits for property taxes and insurance |
Kentucky property taxes are moderate. State, county, city and school district rates combine, and in Louisville Metro some properties also fall within smaller cities with their own levies.
The homestead exemption is limited to owners who are older or disabled and live in the home, so it does not apply to rentals. Use the current bill from the county PVA and sheriff for the property as a rental.
Parts of Louisville near the Ohio River, and many communities in eastern Kentucky, have serious flood history, including the 2022 eastern Kentucky floods. If the property sits in a mapped flood zone, flood insurance is generally required and can be a significant cost.
Older homes, especially shotguns and Victorians, get close attention on roofs, wiring and plumbing. Updated systems can help both the insurance quote and the appraisal.
This example is illustrative and not a quote. An investor owns a renovated camelback shotgun in Germantown appraised at $300,000 with $120,000 owed on the current loan. Rent is $2,150 a month and property taxes and insurance come to $330 a month.
At 75% LTV the new loan is $225,000. Paying off the $120,000 balance leaves $105,000 before closing costs. On a 30-year term, principal and interest is about $1,535, so the full payment is about $1,865 and the DSCR is about 1.15x, above the 1.0x standard minimum.
Put another way, rent would have to fall below about $1,865 a month before this loan dropped under 1.0x, a cushion of roughly $285 a month. Running the same check on your own numbers shows how much cash the rent can actually support.
| Item | Amount |
|---|---|
| Appraised value | $300,000 |
| Loan at 75% LTV | $225,000 |
| Existing loan payoff | $120,000 |
| Cash before closing costs | $105,000 |
| Principal and interest | About $1,535 |
| Taxes and insurance | $330 |
| Total monthly payment | About $1,865 |
| DSCR at $2,150 rent | About 1.15x |
Louisville Metro requires landlords to register rental properties, and both Louisville and Lexington regulate short-term rentals through permits and zoning, with stricter limits in some residential areas for owners who do not live on site.
Lexington's neighborhoods near the University of Kentucky have occupancy limits in many zones, which affect how many tenants a house can legally hold. Keep registrations and permits current and match leases to the permitted use.
Seasoning varies by program. Some allow a cash-out soon after purchase; others want several months of ownership or limit the loan to the purchase price plus documented improvements until the property has been held longer. See our cash-out seasoning guide for how this usually works.
Two limits set your proceeds: 75% of appraised value, and the rent covering the new payment. Whichever is lower wins. On 5-8 unit properties and larger balances the maximum LTV can be lower and varies by program.
If you are unsure which limit applies to you, send the purchase date, rehab costs and rent through the form below and we will run both.
A complete file moves faster through appraisal and underwriting, and lets us quote accurately the first time.
Yes. We finance DSCR cash-out refinances on non-owner-occupied 1-8 unit rentals throughout Kentucky, up to 75% LTV, starting at $150,000.
Generally no. Kentucky transfer tax applies to deeds that convey property. A refinance records a new mortgage, which carries recording and title costs.
Yes. Covington, Newport and other northern Kentucky properties qualify on Kentucky rules for closing, with rent and value from the local market.
Only if the property holds the required permit and the use is allowed in its zone. Many Louisville refinances are underwritten on long-term rent.
It depends on the program. Some allow cash-out shortly after purchase; others require several months of ownership or limit the loan to cost plus documented improvements. Our seasoning guide covers the details.
Yes. LLC borrowers are standard on DSCR loans, and the members typically sign for the loan personally. Have the operating agreement, articles and EIN letter ready.
You can take a smaller loan to bring the ratio up, or look at sub-1.0 DSCR programs, which exist for some properties and borrowers with stronger profiles.
No. The loan qualifies on the property's rent. You will still need a 620 or higher credit score, reserves and entity documents if the property is held in an LLC.
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