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How Many Investment Properties Can You Finance?

How many investment properties you can finance with a mortgage?

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

According to conventional mortgage guidelines, the maximum number of investment properties that you can finance with a mortgage is ten. This assumes that the mortgages are approved through the standard underwriting process and do not require manual underwriting for an exception to a qualification requirement.

There are several points to highlight regarding the maximum number of investment properties you can finance. First, the guideline only applies to properties with a mortgage that you are responsible for, not all properties that you own. For example, if you own two investment properties free and clear, they are excluded from the ten property limit.

We should also point out that the limit applies to the number of properties and not the total number of units or loans on a property. For example, a three unit property only counts as one property. Additionally, a property with both a mortgage and a home equity loan also only counts as one property.

Another important point to keep in mind is that your primary residence and second or vacation homes are included in the property limit. So if you own your primary home -- instead of renting -- and a vacation home and both properties have mortgages that you are obligated for, then the maximum number of investment properties you can finance with a mortgage is only eight. This is because your two other properties count against the ten property limit.

While primary and vacation homes are included in the maximum property count, other types of properties are excluded, including the following:

Investment properties with more than four units

Properties held by an LLC even if you own the majority of the LLC

Commercial properties

Vacant land

Timeshares

Manufactured homes

It is important to highlight that investment properties with five or more units are not included in the property limit, even if they have a mortgage. This is because only one-to-four unit properties are eligible for conventional mortgages and properties with more units require commercial financing.

Another interesting point is that investment properties held by an LLC or similar entity are excluded from the property county as long as you are not personally responsible for any mortgages on the properties. This exclusion is permitted even if you hold a majority interest in the LLC or legal entity that legally owns the properties.

The table below shows investment property mortgage terms. We recommend that you contact multiple lenders to confirm their qualification guidelines for financing multiple properties.

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Current Non-Owner Occupied Mortgage Rates as of July 4, 2020
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Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. Click for more information on rates and product details.

If you are not eligible for a conventional mortgage because you already own too many properties, there are other financing options available to you. Your first option is a commercial loan, which uses different, and potentially more flexible, qualification guidelines than a conventional mortgage.

For example, many commercial lenders finance larger investment properties and may also work with borrowers who own multiple properties. Examples of commercial lenders that are active in this area include regional and national banks as well as some credit unions.

Your other option is to work with a lender that offers portfolio loans. Lenders keep these loans on their books instead of selling them which means they are not subject to the conventional mortgage guidelines outlined above.

You can use the FREEandCLEAR Lender Directory to search over 3,900 lenders by type and loan program. For example, you can find banks in your area that offer portfolio loans.

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Sources

"B2-2-03, Multiple Financed Properties for the Same Borrower."  Selling Guide: Fannie Mae Single Family.  Fannie Mae, August 7 2019.  Web.

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About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR.  Harry is a licensed mortgage professional (NMLS #236752). More about Harry

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