10 Fannie Mae Loan Limit?

19 Replies

Is it true that there is a limit of 10 Fannie Mae loans over a person's lifetime? 

If so, is that 10 concurrent loans, or just 10 total?

Does it apply to non-owner occupied/investment properties as well? 

This is in regards to conventional loans.

Thanks!

Originally posted by @Max T. :

10 concurrent. If you sell or pay one off you can get a new one.

 This, with caveats:

  • Financed properties are being counted, not number of mortgages. 1 property with 3 mortgages counts as 1 financed property. 1 property with 1 hard money loan also counts as 1 financed property, doesn't matter that it's not a FNMA loan.
  • Primary residences aren't held to the cap. 

@Chris Mason Quick question: if primary residences aren't held to the cap, would that mean a house hacker could potentially buy a property with a conventional loan each year as much as he or she wants since they are all primary residence mortgages?   

Originally posted by @Jeff White :

@Chris Mason Quick question: if primary residences aren't held to the cap, would that mean a house hacker could potentially buy a property with a conventional loan each year as much as he or she wants since they are all primary residence mortgages?   

 Yup, but won't be able to refinance them after you've converted them to rentals. At least not with the Fannie-subsidized interest rate. 

Pragmatically what happens is you expand the Fannie cap to 20 by putting each property/loan only in one spouses name (we can thank feminism for that, once upon a time women didn't have individual credit, only EITHER joint with their dad or joint with their husband). And then before you hit that cap you will have moved onto bigger deals & commercial real estate anyways. That's typically what happens.

@Chris Mason

I too had thought my wife and I could get to 20 if only 1 of us was on the loan, but both were on Title. So we have 4 already where we're both on Title. Do you happen to know if we can simply remove one of us from Title on the first 4?

Would anyone have an insight if properties in an LLC go towards that count? And despite being in an LLC not normally be counted, would it count if the financed properties are in my Schedule E of my personal tax returns? I have 3 properties with loans in my name and 6 properties with commercial and private loans in an LLC. I originally thought I have 7 slots left because the 6 properties are in an LLC and the loans on them don't show up in my credit report. But a mortgage broker consultant with a couple of lenders who both said they need to count them because of they are on my Schedule E, and therefore I only have one slot left. They told me get to around it, when I do my taxes next year put the LLC properties in Schedule C instead. But I consultant my CPA who says that rental properties don't go in Schedule C and even if I was able to put them on Schedule C, I would be subject to self-employment taxes.

@Chris Mason - when you say Primary residences aren't held to the cap, do you mean that your primary residence doesn't count as 1 of the 10?

@Greg Hoffmann the co-signers to the loan and the names on title can be two different things. We have recently financed properties with my husband on the loan solely but we hold title to the properties in both our names. We are doing that specifically to max out his Fannie/Freddie loan opportunities before he retires.

@Charles Situ ...that's usually the issue, even if you put them in an LLC but you're liable. Any loan on a property that you are personally liable for the debt even if a business owns it, counts. They shouldn't be giving you tax advice b/c that really doesn't make sense. You're just going to need to find an investor friendly bank or lender.

@Jared Rine Yes, definitely have to consult the right person. My accountant said Schedule C is not for passive real estate investment and I would be subject to self-employment. But he said he has clients that puts them in S Corporations. Now I have to consult my attorney about creating the S Corp, have my LLC deed the properties to the S Corp, and make sure I am not required to pay off the loans the LLC has when I deed the properties to the S Corp. All of this comes at a cost and I have to make sure it is worth it for obtaining the lower financing cost from conventional versus commercial financing.

@Charles Situ ...completely understand. I honestly think it's not necessarily worth it, but you have to obviously figure that out.  I have many clients using the 'dscr/cash flow' loans, and for the ease of use, convenience, and other factors, the cost difference vs a Fannie loan is usually negligible in the long run.  Rather than trying to fit Fannie's box, there's really something to be said about flexibility.  

@Jared Rine I think you are right. I am finding there are some longer term unintended consequences with an S Corp.. And this lender shouldn't have been giving me accounting advice. But at least she pointed out I had fewer Fannie slot than I thought. I done 3 conventional loans in the last year, but none of these lenders pointed this out to me.

I started with turnkey remote rentals in 2009-2015 while working my engineering W2 job. Then went into syndications once my net worth went over 500k. At one time I was going after this goal of 10 in my name and 10 in my spouses name. Soon you will find a network of higher net worth investors who got out of the sfh direct investment game and now laugh at this race to 10.

Ah the old 10 financed properties rule. Let me clarify, it is 10 financed properties that you are personally liable for. If you take out a commercial loan, even if it is in your personal name or an entities name, it doesn't count. You can get around the 10 financed properties rule by buying a new owner occupied home and turning your last owner occupied home into a rental. 

See the link to the rule: https://selling-guide.fanniema...

You can refinance existing residential loans into commercial loans where you don't have a personal guarantee. This will open up your Conventional slots again. There are a few Non-QM lenders that don't require a personal guarantee, they will just lend to your entity. Doing that will also up your conventional slots. 

I hope this helps. 

Originally posted by @Greg Hoffmann :

@Chris Mason

I too had thought my wife and I could get to 20 if only 1 of us was on the loan, but both were on Title. So we have 4 already where we're both on Title. Do you happen to know if we can simply remove one of us from Title on the first 4?

 Yes.

Originally posted by @Bonnie Low :

@Chris Mason - when you say Primary residences aren't held to the cap, do you mean that your primary residence doesn't count as 1 of the 10?

No, that means if the subject property is a primary residence, the cap does not apply.