How Many Properties Can I Have Financed at Once?

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How Many Properties Can I Have Financed at Once?

Are you a real estate investor or thinking of becoming one? If so, you may have wondered, “How many properties can I have financed at once? If you have 5-10 homes in your portfolio, it is possible to get a mortgage, but it can be challenging. In 2009, Fannie Mae increased the maximum financed-property limit from four to ten. However, many banks won’t offer a 5-to-10 properties mortgage because the process of underwriting the investor’s mortgage application can be very tedious.

Why Won’t Some Banks Participate in the 5-10 Properties Financed Program?

If you’re curious why some banks won’t participate in the 5-10 Properties Financed Program, they feel their efforts (or return on investments) are best spent elsewhere. Compared to “traditional” homeowners who submit for loan approval with just a W-2, pay stub, and a few months of bank statements, seasoned real estate investors are required to provide complex tax returns, complete REO schedules, and extra details for every home underwritten and approved. Reviewing all that paperwork takes substantial time. Furthermore, investors with five or more properties financed are more likely to hold title to their homes in a non-standard fashion. That can slow down the approval process for the subject home even further.

Requirements to Finance a Home Via Fannie Mae’s 5-1o Properties Program

Many criteria must be met to finance a home using Fannie Mae’s 5-10 Properties Program, such as:

  • Own between five and ten residential properties, each with financing attached
  • Borrowers must have a minimum credit score of 720
  • A substantial down payment and equity. A 25% down payment is required for a home purchase for one unit, and 30 percent is needed for two to four units. For a refinance, 30% equity is required for all property types and units
  • No bankruptcies or foreclosures in the past seven years
  • There must not be any late mortgage payments within the prior 12 months on any mortgage
  • The borrower must submit two years of tax returns showing rental income from all rental properties
  • There must be six months of PITI reserves on each of the financed properties

Why Would Someone Want to Have Several Homes Financed at Once?

You might be wondering why anyone would want to have multiple mortgages at one time. The answer is simple; to build wealth. Real estate investors buy foreclosed homes, multi-unit properties, and more to build long-term wealth. With rents outpacing the rise in home prices in many U.S. cities such as San Francisco, Fort Worth, and Seattle, investors are clamoring for good homes, especially with interest rates at a historical low.

It might sound like a lot of work to finance multiple properties, and it is. But for most investors, the potential gain is worth the effort. Primary Residential Mortgage is here to help you every step of the way. Don’t hesitate to contact us with any specific real estate financing questions.