Can you have multiple mortgages? And, if so, exactly how many mortgages can you have?
In this article we answer all these questions and more. So whether you’re looking to buy a 2nd home or buy investment properties, here’s what you need to know about multiple home loans.
How Many Mortgages Can You Have?
The short answer is yes, you can have multiple mortgages.
But there is a limit on the number of conventional loans you are able to get. Currently, that number stands at 10 home loans in your name.
Fannie Mae is a corporation that sets a lot of rules for mortgage lenders in the United States. And their guidelines on multiple mortgages have changed over the years. .
It used to be that you could only have 4 conventional loans in your name. However, to try and bounce back after the real estate industry crash in 2008, Fannie Mae decided to increase the amount of mortgages an investor can have up to ten home loans.
What Are the Downsides To Having Multiple Mortgages?
While it’s possible to have up to 10 mortgages, it can be a hassle. And a big reason why is due to how mortgage lenders will treat you if you want to get 2 or more loans.
They will be more cautious on approving multiple home loans because they will see you as a greater lending risk. So, to start, lenders may get a little hesitant to give you more than one home loan.
To compensate for that risk, you’ll have to meet some extra requirements and face other issues when getting multiple mortgages.
For example, you may have to come up with a larger down payment for the homes you wish to get a mortgage for. Also, you’ll likely need to have a higher credit score than normal in order to qualify for the loan.
You may even end up paying higher interest rates on the additional mortgages you get.
Qualifying Requirements For Multiple Mortgages
The qualifying requirements will differ depending on how many mortgages you have. The more conventional loans you have, the stricter the requirements will get.
Things get separated out on your first 4 mortgages vs mortgages 5 – 10. Here’s an overview of the requirements.
For one to four mortgages, you’ll typically need:
- An really good credit score (generally at least 670)
- A loan-to-value ratio of less than 80 percent
- Any existing rental properties you have should show a good history of performance and cash flow
- A less than 20 percent down payment means that you will have to face mortgage insurance
- Proof of income (ie. W-2s or tax returns)
- Proof of your existing conventional home loans
For five to ten mortgages, the requirements are even stricter. Here are the requirements you’ll likely face:
- You must use the FNMA 5-10 Properties Program
- You must have at least four financed properties
- At least a 25 percent down payment for a single-family home or 30 percent for a multi-unit property
- A credit score of at least 720
- For refinancing, a 30 percent equity is required
- All mortgage payments are paid on-time within the last year
- You do not have a reported bankruptcy or foreclosure in the last seven years
- You must provide two years of tax returns that shows all rental income from all rental properties
- A sufficient reserve to cover at least six months of PITI
- You must fill out and sign a 4506-T form