Do you ever wonder how many mortgages you can have at once? In 2009, Fannie Mae updated its same borrower policy, amending the maximum number of conventional mortgages any one person can have from four to 10. However, qualifying and finding a lending institution that’ll give you more than four can be difficult.
In this post, we’ll discuss what’s required to have multiple mortgages (including an example), the pros and cons of having multiple mortgages, and how to manage them.
Real Estate Investing With Multiple Mortgages
While you can take out up to ten mortgages, the qualifications become more strict after your fourth. Here’s a side-by-side comparison:
|Mortgages 1 – 4
|Mortgages 5 – 10
|A minimum credit score of 670 (620+ for your first mortgage).
|A minimum credit score of 720+.
|Loan-to-Value (LTV) Ratio
|80% or lower.
|Usually 80% or lower.
|25% for investment properties, 30% for multi-family homes.
|Required Tax Returns
|W-2s or proof of tax returns showing all rental income from all properties for one year.
|Proof of tax returns showing all rental income from all properties for two years.
|Late Payment Restrictions
|Late mortgage payments are discouraged.
|No late mortgage payments are allowed on any property within the last year.
|Additional Documents Required
|Statement of assets and liabilities and financial statements on any existing investment properties.
|Statement of assets and liabilities and financial statements on all existing investment properties.
|Additional Financial Requirements
|Proof of six months of cash reserves for principal, interest, taxes, and insurance (PITI) coverage for every property.
When shopping around, ask mortgage lenders about their additional loan requirements, if any.
Advantages of Having Multiple Mortgages
Having multiple mortgages comes with several benefits, including:
- More Rental Income: The more properties you rent out, the higher your rental income will be. One…