When a borrower hits the Fannie Mae 10-property limit or the Freddie Mac 6-property limit, they can no longer originate agency-backed loans for investment properties regardless of credit or income. The limit applies to the total number of financed properties, not just investment properties. This wall reaches active investors faster than many MLOs anticipate.
What Counts Toward the Limit
Any property with a mortgage against it counts, including the primary residence and second homes. Properties held in LLCs where the borrower has a personal guarantee count. Properties where the borrower is a co-borrower count. Properties owned free and clear do not count. Timeshares do not count.
- ✦Primary residence with a mortgage: counts as 1
- ✦Second home with a mortgage: counts as 1
- ✦Each investment property with a mortgage: counts as 1
- ✦Properties owned free and clear: do not count
- ✦LLC-owned with personal guarantee: counts
- ✦LLC-owned without personal guarantee: lender-specific interpretation
Freddie Mac Is More Restrictive
Freddie Mac caps investors at 6 financed properties, not 10. For MLOs using Loan Product Advisor, the 6-property cap is hit faster and there is no exception path. Borrowers approaching the Freddie cap should migrate to Fannie lenders to extend to 10 before hitting the wall.
Alternative Financing After the Limit
DSCR loans from non-QM lenders have no portfolio limits. Private and hard money lenders do not count against agency limits. Portfolio lenders who hold loans in-house have their own guidelines and many do not apply a financed-property count at all. Investors who hit the 10-property limit are ideal DSCR loan candidates.
Aria can count financed properties, identify which ones count under Fannie and Freddie rules, and recommend the right non-QM alternative when the agency limit is hit. Ask at vicariointel.com.
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