Please Clarify Rule on Max Number of Mortgages

[Devin Wanzor]

I currently have 9 properties that are owned in a partnership with one other individual. We own the partnership 50/50. Of of the 9 properties, 6 are financed on a commercial loan together, and the remaining 3 are financed on a commercial loan together. The loans are in the name of our LLC and we personally guaranty the loans. These loans do not show up on our personal credit reports.

I am wanting to buy a SFR as a rental in my own name and finance via a conventional mortgage.

I am having a hard time determining if I am going to run into the "4 financed properties rule". Can anyone clarify this for me?

I have ownership in 10 total financed properties (my primary residence is financed on a conventional loan, and I own 50% of the 9 properties financed via 2 seperate commercial loans).

Thoughts?

[David Beard]

Devin -- it is understood that these are commercial/portfolio loans held by your bank. Fannie Mae doesn't make "blanket loans", and doesn't lend to LLCs.

I would highly advise that you go through a "pre-approval" process with a conventional secondary market lender, where an actual underwriter opines on your situation. Don't believe what some loan officer tells you. The rules are cryptic and most LO's just don't understand the multiple-mortgage stuff. Most LO's focus on owner/occ borrowers and have little knowledge of many of the investment property rules. Problems surface at the 11th hour when the underwriter is reviewing everything.

If possible, you should find a lender that permits up to 10 financed properties. These lenders are more sophisticated in dealing with investors, as they've consciously decided to follow Fannie's 10-property limit, unlike most secondary market lenders that apply a 4-property limits.