What is a blanket loan?

4 Replies

Hello BP, my father owns a few houses and is looking to purchase another. Recently, I was listening to BP podcast and one of the guest mentioned a blanket loan. Is this a tool that we may be able to use to be able to finance the next purchase?

Basically it is a single loan that is secured against multiple properties. So instead of having 5 homes with 5 separate loans you instead have 5 homes all on one loan. Generally you would have each property tied to an associated release amount so that if you chose to sell an individual property you could do so.Whether or not this would be something you would want to use for your next acquisition, will depend on what terms you'd be looking at and what your goal with getting the blanket would be.

@Frederick Garbutt ,

I agree with @Matt Devincenzo . Depends on circumstances. If you're in the Bay Area like me, it's easier to just have one loan on each house. Then you can do 30yr fixed loans that are conventional and able to be securitized. Better rates, and longer fixed terms. No release issues. It is more common in low-price areas where the prices are too low to support an individual loan, so you have to get a loan on a pool of properties to get it up to the $60-100K-200K+ range where banks start caring, and the % fees drop more..

Good luck!

Matt Devincenzo and J Martin thanks guys for the response. Now I have a clearer picture of what the loan is. I think we will go with the conventional loan. My father and I are from Southern California and this will be the fifth house we will be purchasing in Antelope Valley. At this point we are trying to learn different ways to secure loans for further purchases.

Most investors utilize the Blanket Loan because the investor is capped by the conventional Fannie Mae guidelines. Fannie Mae has a limit of 10 properties and in many cases the lender will limit the number of investment properties to 4. Investors typically will put a minimum of 5+ properties into a blanket loan which allows the investor to go back out and purchase a new property with a Fannie Mae loan. When a Fannie Mae lender is looking at your credit, all they see is one investment loan that is not Fannie Mae.

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