If I am Preapproved for $200K can I get seperate loans totaling this amount?

5 Replies

Hello everybody. I have a questions about conventional loans for mortgages. I have a preapproval for $200K. As an investment strategy I want to buy two houses, one to live in and one to rent out. If the mortgage for both properties came to under $200K would a bank approve such a thing? How are two seperate mortgages treated compared to one mortgage for the same amount?

If someone could let me know if such a plan is realistic I would be grateful.

Hi Kevin The short answer is not exactly. When calculating your pre approval that 200,000 is going to be based off of a few things like available funds, income, debt, etc. Let's take funds for example on a primary residence you can get away with as little as 3.5 percent down with FHA ( there are also zero percent down options) whereas an investment property the downpayment will likely be anywhere from 20 to 30 percent of the purchase price. For this reason alone that 200,000 pre approval might need to be changed if you don't have the funds for both down payments not to mention the closing costs required to close both properties. As you continue down the list the numbers will also necessitate your pre approval amount being changed

So if I were able to put 20% down on each property that would increase the chance of me being approved for both loans?

Yes it would as it would lower the total amount that you have borrowed, eliminate MI, and have a lower monthly payment which should keep your DTI within limits. That being said you will also need to see what the individual lenders want as far as reserve requirements go for your properties which may affect what you will be able to purchase.

Thank you for the advice.

@Kevin Beres

Actually you should be able to qualify for that amount split into two loans. Closing costs will be more for two property's versus one. If you are going from 4 to 5 properties guidelines get more strict. I do this generally when I have clients wanting to purchase several low priced homes that want to see what total purchase price they can go up to. It gives you a general good idea, when it comes to DTI's.

Jerry Padilla, Lender in NY (#NMLS 1084877)

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