Louisville's short-term rental calendar has one week everyone knows about, Kentucky Derby week, and a lot of other weeks that matter more over a full year: bourbon tourism on Whiskey Row and along the Bourbon Trail, trade shows and livestock events at the Kentucky Exposition Center, University of Louisville athletics and steady medical travel downtown.
In short: LendingStreet offers short-term rental DSCR loans for Louisville investors buying or refinancing Airbnb and VRBO properties in Louisville Metro and nearby markets. On some programs you can qualify on projected short-term revenue instead of a long-term lease, with loans from $150,000, purchases up to 80% LTV and LLC borrowers allowed. Louisville Metro requires short-term rentals to be registered, and whole-home rentals where the owner does not live on site generally need a conditional use permit in residential zones, so confirm the path for your address before you buy.
Louisville Metro requires short-term rentals to be registered and to collect and remit transient room taxes. The rules treat host-occupied rentals, where the owner lives on site, differently from non-host-occupied whole-home rentals. In most residential zoning districts, a non-host-occupied short-term rental generally requires a conditional use permit from the Board of Zoning Adjustment, which involves an application, notice to neighbors and a public hearing.
That process takes time and is not automatic. Some properties in commercial or mixed-use zones, or in downtown areas, face a simpler path. Before you go under contract, ask Louisville Metro Planning and Design Services what the specific address needs, and ask whether any existing approval stays with the property after a sale. Rules change, so get a current answer.
Derby week brings the highest nightly rates of the year, but one week does not carry a loan. Bourbon tourism has grown into a year-round draw, with distillery experiences downtown and day trips to Bardstown and other Bourbon Trail stops. The Kentucky Exposition Center hosts large events through the year, from farm machinery and livestock shows to the state fair in August. UofL football and basketball, concerts at the KFC Yum! Center and medical travel to downtown hospitals fill other weekends.
Lenders and revenue projections look at the full year, so a Derby-week rate should not drive your numbers.
Most Louisville STR demand clusters near downtown and in walkable older neighborhoods: the Highlands along Bardstown Road and Baxter Avenue, Germantown and Schnitzelburg, NuLu and Butchertown just east of downtown, Old Louisville near the University of Louisville campus, and Crescent Hill and Clifton along Frankfort Avenue.
Properties near the Kentucky Exposition Center and the airport, in areas like Audubon Park and along Preston Highway, draw event and trade-show guests. Each area has different zoning, so the same type of house can have very different permit paths a few blocks apart.
| Area | Guest draw | Typical property | Permit note |
|---|---|---|---|
| Highlands, Germantown, Schnitzelburg | Restaurants, bars, Bardstown Road | Shotgun houses, camelbacks, bungalows | Mostly residential zones; non-host-occupied usually needs a CUP |
| NuLu, Butchertown, downtown | Whiskey Row, Yum! Center, waterfront | Condos, mixed-use buildings, rehabbed houses | Zoning varies; condo bylaws may restrict |
| Old Louisville | UofL, Victorian architecture | Large homes, units in converted mansions | Preservation district rules on exterior work |
| Near the Expo Center and airport | Trade shows, state fair | Postwar houses | Event-driven demand |
This example is illustrative and not a quote. An investor buys a renovated shotgun house in Germantown for $285,000, assuming the property can obtain the approvals it needs for short-term use. The loan is 75% of the price, $213,750. A third-party projection estimates $37,000 a year in short-term revenue. Assume the program counts 80%, or $2,467 a month.
Estimated principal and interest on a 30-year term is about $1,495. Property taxes in Jefferson County are budgeted at about $238 a month and insurance written for short-term rental use at $165. The total is about $1,897, for a DSCR of about 1.30x.
| Item | Amount |
|---|---|
| Purchase price | $285,000 |
| Loan at 75% LTV | $213,750 |
| Projected annual revenue | $37,000 |
| Monthly income counted (80%) | $2,467 |
| Estimated principal and interest | $1,495 |
| Property taxes (monthly) | $238 |
| Insurance (monthly) | $165 |
| Total monthly payment | $1,897 |
| DSCR | 1.30x |
If the permit path in Louisville does not work for a property, some investors look at nearby markets with their own rules. Across the Ohio River, Jeffersonville, New Albany and Clarksville in Southern Indiana are minutes from downtown Louisville and each sets its own short-term rental policy. Bardstown, about an hour south, draws Bourbon Trail visitors and has its own city and county rules. Shelbyville and other towns along the I-64 corridor are other options.
Each city and county regulates differently, and Indiana has its own lodging taxes. Confirm the rules for each address before you buy.
A DSCR loan compares income with the full monthly payment, including taxes, insurance and any HOA dues. On some STR programs, income is a third-party projection of short-term revenue for the address, often reduced for vacancy and costs. The standard minimum is 1.0x, and sub-1.0 programs exist.
If the projection comes in low, you can put more down, qualify on long-term rent instead, or review options at /str-loan-low-airdna-projection.html. For a property already operating with its permits, a refinance can use actual booking history; see /str-dscr-refinance.html.
Kentucky assesses property at fair cash value through the Jefferson County Property Valuation Administrator, and the tax is the combined state, Metro, school and other rates applied to that value. Homestead exemptions do not apply to rentals. A deed transfer tax applies when you buy.
Short stays are subject to Kentucky sales tax and transient room taxes. Some platforms collect these; confirm which ones you must file. For insurance, get a policy that covers short-term rental use and guest liability. Properties near the Ohio River or in low areas of the West End and southwest Louisville may need flood insurance.
Have the address, zoning district, permit status, projected or actual revenue and a tax and insurance estimate ready. If you are planning a conditional use permit application, tell us; it affects timing.
Call (877) 298-1001 or use the form below to get a quote. If you also hold long-term rentals, see /blanket-portfolio-loans-louisville-ky.html.
Yes in some cases, but whole-home rentals where the owner does not live on site generally need a conditional use permit in residential zones, plus registration. Check the specific address with Louisville Metro.
Projections and lenders use a full year of expected revenue. Derby week helps the annual number, but it is one week out of 52.
On some programs, yes. The lender uses a third-party projection for the address, often reduced for vacancy and costs.
Do not assume it does. Ask Louisville Metro whether the existing approval stays with the property or whether you must apply again.
Yes. Jeffersonville, New Albany and Clarksville each set their own rules, and they are minutes from downtown Louisville.
The minimum is 620.
Yes. LLC borrowers are standard, and you will typically sign for the loan personally as well.
Furnished rentals of 30 days or more to traveling nurses, contractors and relocating families are common in Louisville and can support a DSCR loan based on longer leases.
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