How Many Mortgage Loans Can You Have? A Detailed Look at Your Options

When it comes to real estate investing a common question that comes up is “how many mortgage loans can you have at once?” The answer isn’t straightforward as there are several factors at play. In this comprehensive guide, we’ll break down everything you need to know about getting multiple mortgages, from conventional loan limits to alternative financing options.

Conventional Loan Limits

If you want to stick with traditional lenders and conventional mortgages, the number of loans you can have at once is restricted, but higher than it used to be. Here are the key facts:

• The Federal National Mortgage Association (FNMA or Fannie Mae) now allows borrowers to have up to 10 conventional mortgages at the same time This limit was increased from 4 to 10 mortgages in recent years

• However, just because Fannie Mae sets this limit, individual lenders may not be willing to take on that level of risk. Many lenders cap out at 1-2 mortgages per borrower.

• To qualify for multiple conventional mortgages, you’ll likely face stricter requirements like higher credit scores, down payments, and cash reserves. Interest rates may also be higher.

So in reality, while 10 conventional mortgages is technically allowed, it can be very difficult to find a lender who will approve that many. Qualifying for even 2-3 mortgages requires meeting rigorous standards.

Qualifying for Your First 6 Mortgages

When applying for your first 6 conventional mortgages, here are some common qualification benchmarks lenders may look for:

• Credit score between 620-680

• Loan-to-value ratio up to 85%

• Proof of rental income and cash flow from current properties

• Verified income through W-2s and tax returns

• Detailed statement of assets and liabilities

• Financial records for any existing investment properties

• Documentation of current conventional mortgages

Lenders will also consider your debt-to-income ratio, reserves, and overall financial profile. The stronger your finances, the better chance you have of approval.

Stricter Requirements Beyond 6 Mortgages

Once you move past 6 mortgages, lenders apply much stricter standards. Here are some typical requirements for loans 7-10:

• Minimum 15-20% down payment on each investment property

• 25% down payment on multi-unit properties

• Credit score of at least 620, often higher

• No late mortgage payments in the past 12 months

• 2 years of tax returns verifying all rental income

• 6+ months of PITI reserves for all properties

As you can see, lenders want to see solid assets, credit, and real estate experience before approving excessive numbers of mortgages.

Fannie Mae’s Requirements for 5-10 Mortgages

During the 2008 housing crisis, Fannie Mae established stringent requirements for investors seeking 5-10 financed properties. These include:

• Minimum 720 credit score

• 25-30% down payments

• Funds to cover PITI payments on all properties

• 2 years of rental income documentation

• No foreclosures or bankruptcies in past 7 years

• No late mortgage payments in past 12 months

• Completed 4506-T tax form

Because of the risk, lenders may not even offer loans 7-10 under the Fannie Mae program. But for elite investors, it can provide access to more capital.

Alternative Financing Options

If you have trouble qualifying for multiple conventional mortgages, alternative financing may help you access more capital:

Hard Money Loans

• From private lenders, not banks
• Secured by the property as collateral
• Typically 8-15% interest rates
• Require 20-30% down or more
• Close in days, less stringent approval

Blanket Loans

• One loan to finance multiple properties
• Entire loan amount secured by all properties
• Lower closing costs but higher rates
• Only allowed within the same state

Portfolio Loans

• Originated and held by lenders, not sold
• Less stringent approvals but higher costs
• Requires 20%+ down payment

Cash-Out Refinance

• Tap equity in existing properties
• Take cash from refinance to fund new purchase
• Allows you to access capital in current homes

These options provide more flexibility but also come with higher rates and costs. They can enable more real estate purchases when done strategically.

Managing Multiple Mortgages

If you do end up with several mortgages, it’s critical to stay organized. Some tips:

• Track all principal balances, timelines, and payments closely. Don’t rely solely on lenders.

• You may have different lenders and non-uniform payment dates. Stagger or align payment dates (your choice).

• Automate payments and reminders so you never miss anything.

• Similarly, automate rent collection from tenants to ensure steady cash flow.

• Maintain detailed records of income and expenses for each property.

• Strategically time maintenance, repairs, and upgrades to manage cash flow.

With multiple mortgages, proactive tracking and planning are essential to keep finances steady and avoid surprises.

The Bottom Line

While Fannie Mae sets a limit of 10 conventional mortgages, actually getting approved for that many loans is extremely difficult. Most investors max out at 2-4 conventional mortgages before needing to pursue alternative options like hard money and blanket loans.

No matter what financing route you choose, it’s wise to start small and slowly scale up investment properties as your experience and finances allow. Rushing into an excessive number of mortgages without proper planning can be risky and set you up for failure.

With strategic money management, however, multiple real estate loans can be an avenue to build significant wealth over time. If done carefully and conservatively, using leverage to grow your portfolio can pay off in the long run.