Yes! Lots of mortgage companies still have a requirement that basically states, financing is unavailable for individuals who own more than four financed properties. This is a somewhat limiting condition, indignant of a smaller boutique type mortgage company, that is relatively small in the bigger picture of mortgage lending. Mortgage financing does exist for individuals who own more than four finance properties. In fact, Fannie Mae allows up to 10 finance properties. While this is the case, be aware of the following qualifying parameters before applying for that loan.
Lenders look for the following things on multiple finance properties:
- Lenders will want to see gross rents on each property owned reported on the Schedule E. of the federal income tax return
- Lenders will also take into consideration, depreciation, less expenses for using income to offset any applicable liability payments
- 75% of gross rents on other properties will be used, if possible, best to have rent be 25% or more of the total house payment so as not to get a paper loss when trying to qualify for a new loan
- File will take longer due to the additional schedule of real estate that will need to be accounted for. Each property will need to account for property taxes, fire insurance, mortgage insurance if applicable and of course mortgage payments. This is for each and every property.
Yes the financial markets do not have a big appetite to make mortgage loans for individuals who own multiple finance properties, despite what you might hear.
While the reward is mostly worth it due to the fact interest rates are favorable, it will involve more work, more explanations, as well as more supporting documentation than a traditional loan one borrower, one property type application.
Researching multiple finance property transactions? Talk to a qualified mortgage professional today, Scott.Sheldon@nafinc.com. Scott can walk you through the various obstacles associated with multiple financed property transactions.