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What Is A Blanket Mortgage?

Lauren Nowacki2-minute read

April 27, 2022

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*Rocket Mortgage® does not currently offer blanket mortgages.

When you’re looking to purchase multiple investment properties, getting a mortgage for each one would cost a lot of time and money – and could be difficult to achieve given the qualification standards for each mortgage. Let’s take a closer look at blanket mortgages and whether you should consider one for your properties.

Blanket Mortgage Definition

A blanket mortgage, often called a blanket loan, is a type of mortgage that finances multiple real estate properties at the same time. Popular among real estate investors, developers and owners of commercial property, blanket loans can make the lending process more efficient and cost effective. 

Typically, when one property under the “blanket” is sold or refinanced, a release clause is triggered for that property while the rest remain as part of the mortgage. That means the borrower can sell the property or refinance without having to pay off the full loan.

Although Rocket Mortgage® doesn’t offer blanket mortgages at this time, here’s what you need to know about them.

Take the first step toward the right mortgage.

Apply online for expert recommendations with real interest rates and payments.

Should You Consider A Blanket Mortgage Loan?

Blanket loans are best for people who wish to purchase multiple investment properties, such as experienced real estate investors, house flippers, builders, developers and businesses looking to open multiple locations.

If you’re buying your first rental property, a blanket mortgage may not be the best fit for you. Since you’re just getting your feet wet with one property, it may be less risky to look into other loan options. Blanket loans are better for people with larger portfolios of property. Remember, you can always refinance to a blanket mortgage as your portfolio grows.

Pros Of Blanket Mortgages

When blanket mortgages or blanket loans are the right fit, they can have several advantages:

  • A blanket mortgage puts all of your properties under one single mortgage versus multiple mortgages. This can make your portfolio and mortgage payments easier to manage.
  • By purchasing multiple properties with one loan, you may have the ability to avoid multiple loan origination fees.
  • Since it is one loan, you’ll have one monthly payment and one interest rate. If you had multiple loans for your different properties, you could be charged multiple interest rates.

Cons Of Blanket Mortgages

No matter the advantages, these loans do come with risks. Make sure you consider these before getting a blanket mortgage:

  • Since your properties are used as collateral for one another, if you default on the loan, you risk losing some or all of your properties to foreclosure.
  • Not all lenders offer blanket loans and those that do may have strict requirements, so you may have difficulty obtaining this type of loan. At this time, Rocket Mortgage doesn’t offer blanket mortgages.
  • Since laws and guidelines for blanket loans are different in each state, you cannot use the loan to purchase properties in multiple states.
  • While you may not have to pay multiple origination fees, the closing costs on a blanket mortgage are much higher than a traditional mortgage.

The Bottom Line

A blanket mortgage loan allows you to pool all of your properties into one loan total, making it easier to manage your mortgage payment and mortgage terms. While this type of loan is not the best fit for everyone, it can help real estate investors with larger portfolios consisting of many properties.

Before making a decision on whether to get this type of loan, consider your financial situation, your real estate investing goals and all of your mortgage options.

Take the first step toward the right mortgage.

Apply online for expert recommendations with real interest rates and payments.

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Lauren Nowacki

Lauren Nowacki is a staff writer specializing in personal finance, homeownership and the mortgage industry. She has a B.A. in Communications and has worked as a writer and editor for various publications in Philadelphia, Chicago and Metro Detroit.