Tuesday, 27 November 2018 00:00

How Many Mortgages Can I Have?

How Many Mortgages Can I Have

At some point, every real estate investor ends up asking the same question.

It usually comes after they’ve purchased three or four properties and are really beginning to see the potential for a much larger portfolio, provided they can find the financing for it.

At this point, they begin to wonder, “just how many mortgages can I have?”

Sound familiar?

If your real estate portfolio is coming along and you don’t want to stifle its growth, then finding out how many mortgages you can have is the natural next step.

 

How Many Mortgages Can I Have? The Simple Answer

Fortunately, there’s a very simple answer to this common question about multiple mortgages: how many mortgages you can have is up to the lender. This even includes the The Federal National Mortgage Association (FNMA).

Back in 2009, FNMA did away with a rule that had previously limited lenders to financing just four properties at once. In their announcement, they explained that, “Experienced investors play a key role in the housing recovery.”

As such, you can actually take up to as many as 10 loans at once with FNMA’s 5-10 Properties Program.

Here’s the criteria you must meet to qualify:

 

  • You must already own 5 – 10 properties with financing
  • For a mortgage to purchase, you need 25% down payment for 1-unit; 30% for 2-4 units
  • For a mortgage to refinance, you need 30% equity, regardless of property type
  • A credit score of at least 720
  • No late payments on any of your mortgages for the past year

 

Obviously, that’s a pretty long list of very rigid rules. So, it probably shouldn’t come as too much of a surprise that not many lenders have taken up FNMA on their offer over the years.

In fact, you’d actually have a very hard time finding a lender who would be willing to offer you this program, even though it’s been approved by FNMA.

Most traditional lenders regard the mortgage application process for this program as more trouble than it’s worth. After all, keep in mind that most of their customers just want a single mortgage for the home in which they plan to live.

How to Secure as Many Mortgages as You Want

Therefore, while some real estate investors have taken up FNMA on their offer, they’re far from ideal. The same generally goes for the types of mortgages most traditional lenders are willing to offer investors, even those with a long history of successfully paying back their loans.

Instead, most investors have made blanket loans a central focus of their portfolio-expanding plans.

As the name suggests, a blanket mortgage is a loan intended to cover more than one home. It could also cover several tracks of land. So, instead of going through the cumbersome process of applying for, say, five loans to purchase five properties, a real estate investor only needs one.

Obviously, this is a much more convenient, time-effective arrangement. It’s also much cheaper, as the borrower doesn’t have to pay five separate sets of costs for each of their loans. This makes a big difference later on, too. Paying just one mortgage every month as opposed to five is enough reason for many investors to prefer blanket mortgages over any other option.

How Many Blanket Mortgages Can I Have?

Naturally, the next question most investors have is about how many blanket loans they can take out at once.

The answer is similar.

Technically, the limit on blanket loans is still completely up to lenders. Likewise, the number of properties those blanket loans will cover is also at the lender’s discretion.

That said, blanket loans have been used for as many as 500 properties before. Their application process also doesn’t require a specific debt-ratio standard or level of personal income. Instead, the most important factor for most lenders will simply be what the borrower has in cash reserves.

Need More Mortgages to Improve Your Portfolio

“How many mortgages can I have?”

Real estate investors will probably continue to ask this question for years to come.

However, a better question may be, “What kind of mortgage does my investment require?”

If your investment is in multiple properties – or tracks of land – the answer is almost always going to be, “a blanket loan.”

At Rental Home Financing, we specialize in helping experienced investors like you find the blanket loans they need to build their portfolios.

You can start our straightforward, user-friendly loan application process today. Apply now and you’ll be that much closer to the capital required to finance your next investment.

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