How many loans can we have?

[Maura Paler]

We have 3 mortgages, one is a second home, the other 2 are investment loans for vacation rental properties. All 3 are in both husband and wife's name. We are going for our 4th, and have our eyes on a 5th property. 

My understanding was we could only hold 4 conventional mortgages by law. 

Our local bank (with which we hold 1 mortgage) has said because we have only 1 with them we are eligible for 3 more with them. Is this correct? 

Or we also heard that maybe we are allowed 4 in joint names, 4 in my name, 4 in husbands name? 

Any help would be appreciated!  

[Bryan Hancock]

The correct answer is that you can get as many loans as you want.  You're constrained on the number of conforming loans that the major GSEs will buy on the secondary market, but you're not constrained on your loan count.  You can negotiate with regional lenders that portfolio their loans and try to get terms more favorable than the 5-year bullets cited earlier in this thread.  Lenders generally don't like writing loans with durations longer than this because they stomach all of the interest rate risk and without a secondary market to sell to the risk would be even higher.  Banks generally don't like concentration risk either so shopping around for each new loan may be necessary.  

Most cities have brokers who specialize in sourcing private loans and/or loans through local lenders.  You can probably find out who these people are at your local investor networking group.  The leaders of the group will likely be able to point you in the right direction.

If all else fails you can obtain more loans by purchasing projects subject-to.  This is risky if you don't have a way to pay off the loan on demand because the loans will be instantly callable because you will have to exercise the due on sale clause with this financing.  However, if you're very liquid the risk is pretty low for two loans to be called at the same time.  If you line up private financing in the unlikely event one gets called this also reduces your risk.  

To me the better question is how many loans you SHOULD have.  Leverage cuts both ways and you need to make sure you have adequate liquidity to service debt across many projects along with capex set-asides.  Liquidity equals staying power so be careful about how many projects you take on and how quickly you take them on.