Posted July 11, 2014

Finance More Than 4 Properties With The 5-10 Properties Program

Fannie Mae changed its guidelines to re-allow up 10 homes financed per personIn February 2009, Fannie Mae rolled back a rule preventing real estate investors from financing more than 4 properties at a time.  The limit raised the maximum number of allowable, financed properties to 10.

The program provides bona fide investors with an avenue to add to their respective real estate portfolios.

Yes, You CAN Finance With 5-10 Homes

In its official announcement, Fannie Mae said upping the financed-property limit would help stabilize housing nationwide.

"Experienced investors play a key role in the housing recovery", it said.

2 years later, however, finding a bank that offers the 5-to-10 Properties Financed program is a challenge. Most lenders won't give a mortgage on the 5-10 Properties program as a matter of policy.

It's cause for consternation among the real estate investment crowd.  Fannie Mae says it will buy the loans; banks should be willing to do them. Few are.

Click here for a real-time mortgage rate quote.

Why Some Banks Won't Offer The 5-10 Properties Program

So, why don't all bank participate in the 5-to-10 Properties Financed program?

The probable answer is that underwriting a 5-property-owning investor's mortgage application is hard work.  "Traditional" homeowners submit for loan approvals with just a basic W-2 and paystub for an approval.  Bona fide real estate investors, on the other hand, submit for approval with complex tax returns, REO schedules, and a ton more details to reconcile and verify.

It's far quicker to underwrite and approve a standard loan as compared to a 5-10 Properties program loan. However, both loans are valued the same when bundled for Wall Street securitization.

In other words, the 5-10 Properties program is more work for same profit.  It's no wonder most banks don't do it.

Some will, however.  You just have to know where to find them.

And you have to meet their guidelines.

The 5-10 Financed Properties Program Criteria

To purchase and finance a home through Fannie Mae with more than 4 existing financed properties, investors must meet all of the following criteria:

  • Own between 5-10 residential properties with financing attached
  • Make a 25 percent downpayment on the property; 30 percent for 2-4 unit
  • Minimum credit score of 720
  • No mortgage lates within the last 12 months on any mortgage
  • No bankruptcies or foreclosures in the last 7 years
  • 2 years of tax returns showing rental income from all rental properties
  • 6 months of PITI reserves on each of the financed properties

For refinances, loan-to-value is capped at 70% for all property types.

And then, as a last step to reduce fraud, Fannie Mae's multiple property program requires applicants to sign a 4506-T -- a form giving lenders permission to verify your submitted-with-the-loan tax returns against the official, IRS-filed version of the same.

Click here for a real-time mortgage rate quote.

Where To Get A 5-10 Properties Program Mortgage

If you own more than 4 financed properties and want to purchase a fifth one (or sixth or more); or, want to refinance a home you already own, let your first call be to your personal loan officer or bank.  Ask for help -- you can't know if your banks offers the 5-10 Properties program until you ask.

If that call gets you nowhere, you can click here for a rate quote. I offer mortgages for investors with 5 or more properties financed and am happy to get you started.

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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2014 Conforming & FHA Loan Limits

Mortgage loan limits for every U.S. county,
as published by Fannie Mae & Freddie Mac, and the FHA.