How Many Mortgages Can I Have in Florida?
If you're wondering, there is no limit to the number of mortgages any one person can hold. Technically, there's even no limit to the number of properties you can own or mortgages you can have. However, a conventional mortgage limit is 10.
If your credit score and income fall within the proper parameters and you can pass a background check, it would be legal for someone else to give you a loan on nine different properties up to your conventional loan limit.
Theoretically, it would be possible for someone with good credit and an income high enough to afford multiple mortgages—such as a doctor or lawyer who inherits property from their parents—to own ten different homes with mortgages.
That's pretty extreme, though. Most people are more likely to own two or three primary residences and do not want more than one mortgage on each home.
Can I get approved for more than two mortgages?
Let's get one thing out of the way right off the bat. Yes, it's possible to be approved for more than two mortgages. But how many you can get approved depends on several factors (which we'll discuss shortly).
First, let's define what getting "approved" means in this context - Your lender is giving you the go-ahead to carry multiple mortgages. In practice, this usually means that your bank will agree to offer you financing for multiple homes or give their blessing on refinancing or taking out home equity lines of credit on existing properties.
How many mortgages you can have depends on your lender and your situation and finances. Do you have excellent credit? A good debt-to-income ratio? Is your income steadily rising? Do you already own one or more homes?
Answering these questions will help determine whether getting more than two mortgages is even an option--and if so, how many additional mortgages might be reasonable given your unique circumstances.
The primary home loan
Primary home loans (aka "conventional mortgages") are the most common type of mortgage loan. Your primary home is where you spend most of your time, so that home secures a conventional mortgage as collateral. If you default on your conventional mortgage, your lender can foreclose on your primary residence to recoup their losses.
The secondary home loan
A secondary home loan (aka "conforming loan" or "vacation property mortgage") is a type of mortgage for a property that isn't your primary residence. Loans for second homes must comply with conforming standards set forth by Fannie Mae and Freddie Mac—regardless of whether you're applying directly to those firms or through another lender. If you default on a conforming loan, your lender will foreclose against any second properties you have to recoup their losses.
Investment home loans
Investment loans are mortgages taken out on a property to rent out to tenants. Lenders may look at these types of loans differently than other types—mainly because investment properties tend to be riskier than other properties because there is no guarantee that the tenant will pay rent consistently.
So How Many Mortgages Can I Have - Fannie Mae rules say ten mortgages per person
First, let's talk about the maximum number of conventional mortgages for a single person. According to Fannie Mae, you can only have ten mortgages on one individual's name at any given time. But what defines a mortgage? It's less exact than it seems.
Fannie Mae rules regard the primary home loan, the secondary home loan, and investment home loans as different types of mortgages. The first type is your standard single-family home purchase or refinance. The second one is typically a vacation or second property that you don't live in full-time. As for the third type, this loan is used to buy and maintain an investment property—in other words, one where you do not live but rent out to tenants instead.
Fannie Mae's 5-10 homes program is one of the more common ways to have multiple mortgages. This program allows you to own up to 10 investment properties (with only five mortgages) if you meet specific requirements.
The requirements for the 5-10 home program include:
You must complete the company's online course on rental income. If this is your first Fannie Mae property, you must also complete their Seller Servicer Guide and Rental Income training modules.
It would help if you had a minimum credit score of 620 for a 1-unit investment property and 640 for 2-to-4-unit investment properties. The higher your credit score, the lower your mortgage rate will be. If you do not have an established credit history, you may need a co-signer or co-borrower with qualifying credit history and sufficient income.
- It would help if you made at least two years' worth of mortgage payments (including taxes and insurance) in liquid assets between all borrowers on the loan before closing on the loan process begins.
Fannie Mae 5-10 homes program requirements
Fannie Mae's 5-10 properties program may be just what you need if you're interested in buying multiple homes. Here are the requirements:
- 25% down payment
- A minimum credit score of 680
- A maximum DTI (debt-to-income ratio) of 45%
- A minimum liquid reserve of 12 months for each property
Loan Options - How Many Mortgages Can I Have
So how many home loans are we allowed? As long as you stay true to Fannie Mae regulations, technically, up to 10 should be acceptable, depending on which lender you use. This also depends on their willingness (or even ability) to lend that much money without charging higher interest rates. There are many ways to get multiple mortgages, including:
Blanket loans are a type of commercial loan made to borrowers who own numerous properties. As their name implies, they cover multiple properties under a single mortgage. In theory, this saves you time and money because you don't have to track each property's debt-to-income ratio and other financials.
These mortgages tend to carry higher interest rates than conventional home loans because lenders see borrowers as riskier since they borrow more money than an average homeowner would need. If the market turns sour, getting rid of all these homes at once will be harder for borrowers, both financially and mentally!
Portfolio home loans
While Fannie Mae and Freddie Mac don't directly make home loans, they set guidelines for the mortgage industry. Every mortgage lender has to follow those guidelines, which means that most loans are sold to one of these two loan buyers. Both Fannie and Freddie have requirements for the maximum number of financed properties you can have before being approved for another one.
Mortgages that aren't sold to either Fannie or Freddie are known as portfolio loans and typically come from smaller lenders like community banks or credit unions. When you get a portfolio loan, it usually stays on the lender's books instead of being "sold" on the secondary mortgage market.
You might be able to get around Fannie and Freddie's restrictions by taking out a portfolio loan through a small lender. Some portfolio borrowers pay less because they don't meet Fannie or Freddie's requirements—for example, if their credit scores are lower than those companies require (usually 620). Depending on what type of financing you need—primary residence, second home, investment property—you may want to consider this option even if you qualify for a traditional conforming mortgage without an issue.
Hard money lender loans
Hard money loans are also an option, but they're not for everyone. The property itself secures these short-term loans from private lenders as collateral instead of your creditworthiness, so there's no limit to how many of these you can take out or your credit score.
Of course, this comes with a price. Hard money lender loans usually have higher interest rates, higher down payments, higher closing costs, and lower loan amounts than traditional mortgages. For example, Rocket Mortgage® offers conventional mortgages with down payments as low as 3%, while demanding money lender loans often need 20% or more upfront.
Qualifying for Multiple Mortgages
You can qualify for multiple mortgages if you meet the following criteria:
Good credit history - If you have several late payments or bankruptcy on your credit history, it won't be easy to get a mortgage. Lenders are particularly concerned about recent derogatory information and want to see that you've been doing well financially for at least two years.
Income verification - You'll need to prove that your income is sufficient to cover your mortgage payments and other ongoing expenses, such as bills and insurance. Lenders also want to know that you have enough money left over after paying these expenses to save each month in case of emergencies.
- Down payment - A down payment of 25 percent or more on each additional home helps ensure that the lender won't lose money if they have to foreclose on the property.
Limits on Debt-to-Income Ratio
When applying for a home loan, your debt-to-income ratio (DTI) is significant. It compares your monthly income to your monthly debts and helps lenders determine how well you can handle mortgage payments.
Lenders use this ratio to shed light on the amount of financial risk they take on by loaning you money; the lower your DTI, the better.
Lenders typically want this ratio below 36% before approving a second home loan, but some government-backed loans may allow DTIs as high as 50%. To calculate your DTI, add up your monthly debt payments and divide them by your gross monthly income.
Your gross monthly income is generally the amount of money you have earned before taxes or other deductions in a month. For example, if you pay $1500 a month for car loans, credit cards, student loans, and other debts, and you bring in $5000 a month before taxes, your DTI is 30%. $1500 ÷ 5000 = .30 or 30%
LTV, when it comes to multiple mortgages
Typically, lenders use the loan-to-value (LTV) ratio to determine your eligibility for a mortgage. The LTV ratio is the amount of money borrowed compared to the value of your home.
The lower this percentage, the greater your equity in the home is and vice versa. For example, if you own a $200,000 home and have a $150,000 mortgage loan, you have a 75% LTV ratio.
While having multiple mortgages won't necessarily affect your LTV ratio at first, if you take out another one that results in an aggregate LTV ratio greater than 80%, most lenders will require you to purchase private mortgage insurance (PMI).
However, private mortgage insurance will always be required if this happens with an FHA loan, regardless of the aggregate LTV.
Who Can Qualify for Multiple Mortgages?
Almost anyone can qualify for a mortgage with a good credit rating and a steady income. But what about two mortgages? Or multiple mortgages?
So how many mortgages can I have at once? Well, it depends on the person. The first thing to consider is whether or not you can qualify for a second mortgage in terms of credit. You should also think about your debt-to-income ratio and if adding another mortgage payment would affect your ability to pay other bills.
In most cases, having a second mortgage is generally okay as long as you make all your payments on time, but there are some instances in which having more than one mortgage could be problematic.
The risks and benefits
There are several risks involved in having multiple mortgages. Your primary residence and investment property can end up in foreclosure, resulting in bankruptcy. As a result, you may have to file bankruptcy if you cannot pay off your debt obligations.
This action will significantly impact your credit score. It will take time to recover from foreclosures' negative impact on your credit score.
Another risk is being forced to pay a high monthly payment amount. If you currently own a home with an underwater mortgage loan, you may feel compelled to purchase an investment property to keep up with paying off your mortgage loans.
However, this decision could lead to serious financial problems because the monthly payment for both properties will be higher than what you were paying previously for your primary residence only. Since there is no guarantee that the value of either property will increase over time, there is always the chance that you could lose money on either of them.
If you're looking to buy a house and have your first mortgage covered by a home equity loan, it's important not to go overboard. It's possible that doing so could trigger the IRS to impose additional taxes on the interest income, which is the money you would have earned on your principal balance if you put it in a bank account and let it grow.
These potential tax issues are why we recommend that young people stay away from large amounts of home equity loans, even if they might be interested in taking out two or three mortgages at once.
While there has been some recent progress in implementing new rules intended to change this situation, young people should still be careful because they might need to keep up with all the changes.
Applying for and obtaining multiple mortgages can be risky, but it may be worth the risk to get the home of your dreams in some situations.
Generally speaking, you can get a second mortgage to cover the difference if you have an offer on a home but don't have enough for a down payment. Of course, before you do that, you need to consider whether or not this is the right thing to do.
Should I Get another Mortgage?
The first step is to compare the monthly payment on the second mortgage to the additional monthly income you will be receiving from buying the second house. If it's going to be more than your current place, how much more? Is there any way your current place could be renovated to increase its value?
Another factor is risk - if the market goes down while you're holding two mortgages, are you at risk of losing both homes? What might other investments help balance this out?
On the flip side of things, if—as we all hope—the market continues upward and your investment properties go up in value, then having multiple mortgages could be one of the best financial decisions you ever made!
If approached with caution and proper planning beforehand, getting multiple mortgages could provide incredible benefits.
With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.
About Author - Phil Ganz
Phil Ganz has over 20+ years of experience in the residential financing space. With over a billion dollars of funded loans, Phil helps homebuyers configure the perfect mortgage plan. Whether it's your first home, a complex multiple-property purchase, or anything in between, Phil has the experience to help you achieve your goals.