Can You Buy Two Houses With One Loan? What You Need To Know

When looking to purchase a new home, some buyers may consider getting two properties at once. This could be to have a primary residence and a rental property purchase a home for parents, or various other reasons. A common question that comes up is can you buy two houses with one loan?

The short answer is yes, it is possible to buy two homes using a single mortgage loan in certain situations However, there are important factors to consider and requirements that lenders will look for when underwriting a loan to finance two properties

In this comprehensive guide, we’ll overview everything you need to know about getting one loan to buy two houses including:

• Types of loans available
• Lender requirements
• The process of qualifying
• Pros and cons of this approach
• Alternatives to consider
• Tips for success

Let’s dive in to help you understand if combining two home purchases into one loan could work for your real estate goals.

Loans That Allow Buying Two Properties

Most conventional mortgages only allow you to purchase one property. However, certain specialized loan programs may provide financing for two homes on a single loan. Here are some options to consider:

Portfolio Loans – Local banks or credit unions may offer “portfolio loans” they keep in-house instead of selling to larger investors. These can be customized to allow financing two properties.

Doctor Loan – Specialized mortgages for physicians often provide flexibility to purchase two homes with one loan.

Jumbo Loan – Jumbo loans exceed conforming loan limits, allowing higher balances to potentially finance two properties. However, large down payments are usually required.

HELOC – A home equity line of credit (HELOC) uses your current home as collateral to tap equity, which can be used as a down payment on a second property.

Bridge Loan – Designed for short-term financing, bridge loans can simultaneously finance two houses when transitioning between selling one and buying another.

Construction Loan – Builders will sometimes finance construction of two new homes on a single construction loan that converts to a permanent mortgage.

As you can see, there are various routes to explore if you want to buy two homes on one loan. But first, you’ll need to meet eligibility requirements.

Lender Requirements to Qualify for Two Homes with One Loan

While possible, getting approved for two mortgages with one loan is far from easy. Lenders have strict requirements when underwriting these specialized loans:

Large Down Payment – Expect to put down 20-30% or more on each property. This provides the lender security on both homes. Lower down payments get rejected.

Excellent Credit – Most lenders want minimum credit scores over 740 to consider one loan for two homes. Some may require scores over 800.

Low DTI – Your total debt-to-income ratio must be low, often below 36%. High DTIs signal too much risk.

Other Real Estate – If you have other existing property, some lenders won’t finance two more homes on one loan. Others limit it to 4 total properties.

No FHA Loans – Government-backed FHA loans can only be used to finance one primary residence, not multiple homes.

Contingency Plan – If one property doesn’t appraise or has other issues, you’ll need backup funds to cover that down payment separately.

High Income & Assets – Significant current income plus large assets and reserves are required to qualify for jumbo, portfolio, or specialty loans on two homes.

As you can see, lenders want maximum assurance you can repay the larger loan amount and handle both mortgage payments. That means strict requirements.

The Process of Qualifying for One Loan on Two Homes

If you meet the baseline requirements above, here is an overview of the process to qualify for and get approved for one loan to purchase two houses:

1. Check if allowed – Confirm with your lender that they provide single loans for two homes and understand their specific policies.

2. Assess finances – Review your full financial picture including income, expenses, assets, reserves, and existing properties. Determine if you can afford two mortgages.

3. Improve credit score – Maximize your credit score as much as possible by paying down debt and disputing errors. Every point helps.

4. Find properties – Once pre-approved, shop for both properties simultaneously so you can coordinate closing timelines. Consider contingencies in case issues arise with one home.

5. Submit full application – Provide all required income and asset documentation to prove you are financially capable of managing both mortgages.

6. Get appraisals – The lender will order appraisals on both homes to ensure they support the requested loan amounts.

7. Final approval – Underwriters will scrutinize every detail of the full application and property appraisals before final sign off.

8. Close on properties – Coordinate carefully with real estate agents to close on both homes concurrently or within a short window.

Expect the approval process to take longer than a standard one property mortgage. Also plan for higher closing costs and fees due to the increased complexity.

Pros and Cons of One Loan on Two Houses

Here are some key advantages and disadvantages to weigh when considering using one mortgage loan to finance two home purchases:

Pros

• Simplicity of one loan application and set of closing documents

• May receive better rates or terms on a large, single loan versus two separate mortgages

• Can close on both properties concurrently instead of sequentially

• Leverage strengths of your financial profile (high income, excellent credit, large assets) to qualify for a larger loan

Cons

• Difficult to meet stringent lender requirements on credit score, income, down payment, and low DTI

• Higher risk for lender and investor translates to higher costs for borrower in fees and interest

• Complicated process requires coordinated timing and contingencies across both transactions

• If default, both homes are at risk instead of just one

• Large loan amounts may exceed conforming limits requiring a jumbo loan

Carefully weigh these tradeoffs versus alternatives like two separate mortgages or buying one home at a time.

Alternatives to Buying Two Homes With One Loan

Given the challenges, here are a few options that may be easier than financing two properties with one mortgage:

Buy separately over time – Buy one property first. After establishing payments and equity, purchase the second home later with its own distinct loan. This spreads risk over time.

Obtain two separate mortgages – Get approved for and manage two entirely distinct loans tailored to each home. Requires two full applications but limits risk.

Partner with co-borrowers – Applying with another borrower like a spouse can help meet strenuous income and credit requirements to qualify for a larger one-loan amount.

Use all cash – Avoid mortgages altogether by buying both properties outright in cash, if funds allow. No loan qualification is necessary.

Alternative financing – Explore more flexible seller financing deals or private lenders that may finance two homes when bank mortgages have strict limits.

Buy one, rent the other – If buying a primary home and rental property, consider just getting a mortgage for the home you’ll live in and renting the other.

Looking at alternative options can provide more feasible routes to owning two homes versus trying to finance both in a single loan transaction.

Tips for Successfully Buying Two Homes With One Mortgage

If after reviewing the pros, cons, and alternatives you still want to move forward with one loan on two houses, here are some tips:

• Shop specialized lenders like portfolio banks/credit unions, jumbo loan providers, or programs for doctors/high-net-worth borrowers.

• Get pre-approved to confirm you meet the higher guidelines before making offers.

• Know contingencies like requiring the seller to temporarily finance one property if the loan amount falls through.

• Have a large down payment assembled – at least 20% down on each home.

• Reduce other monthly debts as much as possible to lower your DTI.

• Get any co-borrowers like a spouse involved early to include their income and assets.

• Be ready to document every financial detail about income, expenses, assets, liabilities, and reserves.

• Prepare to pay higher rates and fees due to the increased risk and complexity.

• Have 6-12 months of mortgage payments for both homes saved up in reserves.

• Hire a real estate agent experienced with coordinating complex multi-property transactions.

• Be thorough and patient – it may take substantially longer than financing a single home.

With the right lender, proper preparation, and contingencies in place, it is possible to buy two homes on one mortgage loan. But you must clear high hurdles to qualify and expect to pay more for the flexibility. Know the challenges and alternatives before pursuing this path to finance two properties with one loan.

The Bottom Line

Financing two homes with a single mortgage is achievable in specific cases if you meet strict credit,