How Many Mortgages Can You Have?

How Many Mortgages Can You Have?

For primary residences, there is typically no limit to how many conventional mortgage loans you can take out, per Fannie Mae guidelines—though by definition, you'll usually only have one residence where you live "primarily." If you're using HomeReady Loans, which are designed for low-income borrowers, the limit is two mortgages, and for second homes or investment properties, the limit is 10 conventional loans at once.

Government-backed loans have different limits. FHA loans, which are backed by the Federal Housing Administration, limit you to just one loan at a time—unless you meet certain exceptions, as do U.S. Department of Agriculture (USDA) mortgages. VA loans—mortgages for veterans and military service members guaranteed by the U.S. Department of Veterans Affairs—allow up to two at a time. All government-backed loans must be used for primary residences except in rare circumstances.

Learn more: What Is a Government-Backed Mortgage?

How to Get Approved for Multiple Mortgages

While you may technically be allowed to have multiple mortgages, it can be challenging to get approved for them. Your income and debt levels will need to be able to support the additional loan payments, and lenders may have stricter qualifying requirements the more loans you have.

To increase your chances of getting approved for multiple mortgages, you can:

• Improve your credit score. A higher credit score can show lenders that you're a low-risk borrower who's likely to make your payments. At the bare minimum, you will need at least a 620 credit score to qualify for your first six conventional loans and a 720 credit score for any loans beyond that.
• Build your cash reserves. Having more cash saved up makes you a lower risk, too, as you have more funds to pull from if you have trouble making payments. Moreover, the cash reserve requirement on conventional loans goes up as you add more mortgages to your portfolio. You will need 2% of the aggregate unpaid principal balance for loans one through four, 4% for loans five and six and 6% for loans seven through 10. You will also need two months of PITIA (principal, interest, taxes, insurance and association fees) for the first four loans and six months of PITIA for any subsequent loans.
• Lower your debt-to-income ratio (DTI). Your DTI reflects how much of your income goes toward debts, and the higher it is, the harder it will likely be to make subsequent mortgage payments. Taking steps to lower your DTI before applying for an additional mortgage can make you a lower risk for lenders and help you more easily qualify. It could reduce the interest rate you receive too.

Tip: Lenders typically require you to submit more documents with a second mortgage, so make sure you have them handy. Gather mortgage statements, property tax bills, homeowners insurance information and other important documents for your other mortgages.

Learn more: What Factors Do Mortgage Lenders Consider?

Tips for Managing Multiple Mortgages

Since mortgage loans use your properties as collateral, it's important to have a plan for how you'll manage your monthly payments—particularly if you have several of them.

These tips can help you stay on track when managing your multiple mortgage loans:

• Organize your mortgage details. Take note of your loans' different due dates, payment amounts and other details, and create a plan for how you'll make those payments each month. Automatic payments or automated clearing house (ACH) transfers from your bank account can ensure you always make payments on time, but you'll need to make sure your balance is always high enough to cover it.
• Consider renting out properties. Renting out one or more of your properties could generate additional income to help you cover your payments. You could even think about renting out only a portion of the property (one room, for instance) or as a temporary rental—on Airbnb or VRBO—on days you're not using it.
• Speak to a financial advisor. A financial advisor can help you put together a plan for managing your loans and staying on track with payments. They can also assist with budgeting guidance or advise you on future investment decisions if you're considering building out your real estate portfolio further.

Learn more: How to Pay a Mortgage

Alternative Ways to Finance Multiple Properties

Having several conventional loans isn't your only option if you need to finance the purchase of multiple pieces of real estate.

You can also use these loan types to buy multiple properties:

• Blanket mortgages: A blanket mortgage can be used to finance several properties at the same time using a single loan. They're a common choice for real estate investors, builders and developers.
• Portfolio loans: These are loans that lenders keep and service in-house—rather than selling to an investor after closing. They can be helpful for borrowers with unique financial situations or more risk factors, as the lender doesn't have to adhere to any third-party requirements—like those for conforming or government-backed mortgages.
• Home equity loans: This is a type of second mortgage that lets you borrow from the equity you've built up in another property you own. You can use the funds however you like, including toward another property purchase.
• Hard money loans: These are short-term loans typically used to buy investment properties. Instead of looking at the borrower's credit, the lender analyzes the property's value as collateral. They offer fast funding, repayment terms of a few years or less and have higher interest rates than traditional mortgages.

Learn more: What Type of Mortgage Loan Is Best?

The Bottom Line

If you're hoping to buy and finance multiple properties, it's certainly possible, but your options are limited. Government-backed mortgages will not be an option for most borrowers, and while you can hold up to 10 conventional loans, you will need a higher credit score and additional cash reserves the more loans you take on.

Before you apply for multiple mortgage loans, check your FICO^® Score^Θ for free with Experian and take steps to improve your credit score.