How Many Times Can You House Hack?
How many times you can house hack is heavily dependent on the financing that you use. According to the Federal National Mortgage Association (Fannie Mae), the maximum number of allowed conventionally financed properties is 10.
House Hacking Mortgage Restrictions
Mortgage restrictions will have a large impact on the number of properties that you can finance and house hack.
Taking out more than one mortgage at a time can make you seem like a greater lending risk. As a result, you’ll probably need a higher credit score and you might face higher down payment requirements and interest rates if you’re not careful.
Luckily, expected rental payments from the properties you already hold can usually get factored into your debt to income ratio that lenders use to determine your eligibility.
Maximum Number of Conventional Loans
While you can technically qualify for up to 10 conventional mortgages under Fannie Mae’s 5-10 Properties Program, underwriting guidelines become very strict after the first four loans.
You can also expect to end up with higher mortgage rates as you attempt to take out more loans.
It is important to note that not many banks will finance several mortgage loans or partake in Fannie Mae’s 5-10 Properties Program, so you will likely need to shop around if you’re looking for multiple mortgages.
Qualifying for Multiple Mortgages
As long as you have a good credit score (over 700), you should be able to finance your first four house hacks through traditional means with some of the best terms possible.
If you want to qualify for more than four mortgages, you will need to prove that you have no late mortgage payments on any of your properties, and you’ll need to present proof of rental income from your other properties.
To qualify for Fannie Mae’s 5-10 Properties Program, you will need a credit score of 720 and you will have to front a 25% down payment for a single-family home, or a 30% down payment for a multi-family home.
Owner Occupancy Restrictions
While you can house hack more than once, owner occupancy restrictions will likely prevent you from doing so multiple times in the same year.
If you finance your house hack with an owner-occupied mortgage, you will usually need to live in the property for at least one year before you can rent out the entire property.
House hacking implies that you are renting out extra space in your primary residence and are therefore taking advantage of owner-occupied financing.
Keep owner occupancy requirements in mind before assuming you can build an empire entirely with owner-occupied financing.
If you’re planning to finance your first house hack with an FHA loan, keep in mind that the Federal Housing Administration will not hand out multiple loans to finance investment properties.
While you technically can have two FHA loans at the same time, you’ll need to prove either that you must relocate for a job, or that you need a larger place to support a substantial increase in your family size.
Other Ways to Finance Multiple Investment Properties
If you’re interested in purchasing multiple investment properties, there are several ways to finance your mortgages besides using conventional loans:
- Cash-Out Refinance – Allows you to take a portion of the equity that you’ve built on an existing property that you own so you can invest the money into a new deal.
- Freddie Mac’s Investment Property Mortgage Program – Offers financing for up to 10 investment properties.
- Blanket Mortgage – Used to finance multiple properties where financing terms for all properties under the mortgage will be the same. Blanket mortgages are not meant for primary residences.
- Portfolio Loan – This is a large-scale blanket loan. They are often reserved for long-term customers of a particular lender and can come with strict requirements, high interest rates, and fees, though not always. This is because the bank holds the loan in its portfolio rather than selling it to something like the Fed, which changes the risk profile for the lender.
How Many House Hacks Can You Do?
If you finance your homes through conventional mortgages, and you meet all credit, financial, and occupancy requirements, you will likely be able to house hack several times before running into significant issues.
As long as you have a good credit score and solid proof of income, you should be able to borrow up to four mortgages by traditional means at the absolute best terms.
Underwriting guidelines tend to become more strict after the first four loans, and not all banks will be willing to lend past that point. However, there are programs like Fannie Mae’s 5-10 Properties Program that will allow you to take out up to 10 mortgages.
With each new mortgage that you apply for, you will also need to prove to your lender that you are experiencing success with your existing rental properties, and you are making your mortgage payments on time.
Owner-occupancy restrictions may also require that you live in each property for at least the first year. Constantly moving is no easy task, and being a landlord comes with a host of serious responsibilities.
So, while you may be able to finance up to 4, or even 10 or more, house hacks, the number of times you can house hack will undoubtedly be limited by your bandwidth for moving and your ability to manage multiple rental properties.
How many house hacks can I do?
You can usually finance up to 4 homes with the best terms on conventional mortgages. Programs like Fannie Mae’s 5-10 Properties Program will allow you to take out up to 10 mortgages, though the terms will be worse after the first 4 loans.
What is an owner-occupied financing?
Owner occupied financing is when you take out a mortgage to buy a property that you will live in as your primary residence. FHA loans are an example of owner-occupied financing.
What is a portfolio loan?
A portfolio loan is a type of large-scale blanket loan that is often reserved for long-term customers of a particular lender. They can come with strict requirements, high interest rates, and fees, but can be a great tool for leveraging a larger portfolio.
How Many House Hacks Can You Do?
If you finance your homes through conventional mortgages, and you meet all credit, financial, and occupancy requirements, you will likely be able to house hack several times before running into issues. Underwriting guidelines tend to become very strict after the first four loans, and not all banks will be willing to hand out several mortgages. Definitely speak with a lender to better understand your position as not all will be as willing to lend on a 5th property versus your 1st, especially if your debt to income ratio gets too high.
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