Bundling Rental Properties into a Single Mortgage: What to Know

Answer

Investors often wonder if they can combine multiple rental properties into one mortgage to simplify their portfolio financing. This strategy, commonly known as a blanket mortgage, lets you use a single loan to cover two or more income‑producing properties. While it can streamline payments and unlock cross‑property equity, it involves unique terms and risks compared to individual loans.

Most blanket mortgages fall under commercial lending, even when financing residential rentals. Lenders typically require:

• Down payment of 25–30% of the total loan amount.
• All properties to be income‑producing and in good condition.
• A release clause if you plan to sell a property without paying off the entire loan.
• Properties located within the same state or geographic region, per lender policy.

Key advantages of a blanket mortgage include:

• One monthly payment instead of juggling several mortgages.
• Potentially lower interest rates due to larger loan size and stronger bargaining power.
• Ability to leverage equity across properties for renovations or new acquisitions.

However, consider these limitations before proceeding:

• Cross‑collateralization risk: defaulting threatens all properties, not just one.
• Some loans include balloon payments after 5–10 years or prepayment penalties.
• Not all lenders offer blanket mortgages—look to portfolio lenders, credit unions, or specialized commercial banks.

Interest rates on blanket loans can range from 4% to 6% depending on your credit profile and market conditions. Terms usually span 5 to 20 years with amortization schedules up to 30 years. For up‑to‑date figures, consult resources like HUD or the National Association of Realtors®.

Before you bundle rental mortgages, it’s advisable to compare this option against separate loans or a portfolio mortgage. Consider your exit strategy, cash flow needs, and risk tolerance. Consult a licensed mortgage broker or real estate attorney to determine whether a blanket mortgage aligns with your investment goals and complies with state‑specific regulations.