Homeowners looking to establish rental properties or purchase vacation homes may find themselves wondering, “How many mortgages can you have?” The team at Champions Mortgage is here to break down the answer and provide tips for financing multiple homes. Contact us if you need an experienced mortgage broker in Dallas, TX, to guide you through various mortgage guidelines and assist with the home-buying process.
Primary Residences Have No Mortgage Limit
Say you want to take out a conventional mortgage on your home that you live in full time. Common mortgage guidelines state there is no limit to the number of loans you can have on that home, though most people elect for one mortgage when they purchase and then take out a secondary home equity loan down the road. Although the rules allow for multiple mortgages on primary residents, it’s uncommon to see people take out more than two home loans.
Secure As Many As Ten Mortgages for Investment Properties
How many mortgages can you have on vacation homes or rental properties? The answer ultimately depends on your finances, though the Federal National Mortgage Association states that a homeowner may have up to ten mortgages on their portfolio. Securing multiple home loans could be a challenge depending on your finances since you’ll have to meet various lender requirements, including:
- Minimum credit score: You’ll need a credit score of at least 620 to purchase your first six investment properties, while a score of 720 will help you secure additional home loans.
- Cash reserves: Lenders want you to have enough cash on hand to cover 2% of your loan’s unpaid principal balance for the first four loans, 4% for your fifth and sixth mortgage, and 6% saved up to your tenth mortgage.
- Minimum down payments: Having more than seven rental properties forces you to produce a higher down payment to secure the mortgage. Lenders require as much as 20% down and up to 25% if you’re purchasing a multi-family home.
Exactly how many mortgages can you have based on this information? Work with a seasoned lending specialist who can review your finances and determine the best option.
Additional Home Loans Available for Investment Properties and Secondary Homes
Understanding limits and lender requirements for conventional loans can help make a more informed decision about investing in real estate. Consider the following alternatives if you don’t want to take out a conventional mortgage.
- Portfolio loan: You won’t have to wait as long to secure a portfolio loan but should set aside enough for a sizable down payment. With this home loan, lenders assume all the risk and will only provide funds to those they feel fully confident in as borrowers.
- Hard money loan: Instead of using a traditional lender, you can secure a hard money loan from private investors who will accept the property as collateral should you default on the loan. These loans don’t come with the strict requirements of a traditional mortgage but tend to have higher interest rates.
- Blanket mortgage: You can purchase multiple properties under the same blanket mortgage and release certain ones from the loan if you sell. This option is popular among real estate investors and worth considering.
Contact a Lending Professional Today
How many mortgages can you have at a time? What are the consequences of falling into mortgage delinquency? Champions Mortgage has the answers to these questions and more.
Contact our team today to discuss your goals for homeownership, and our specialists will determine which type of home loan you can secure. Reach out to Champions Mortgage online or by calling (281) 727-2500 to connect with an expert and begin your home-buying process.
