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What Is A Blanket Mortgage?

Lauren Nowacki2-minute read

December 23, 2020

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*Rocket Mortgage does not currently offer blanket mortgages.

When 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.

A blanket mortgage allows real estate investors, developers and owners of commercial property to finance multiple properties under the same mortgage agreement, resulting in a more efficient and cost-effective lending process. Typically, when one property under the “blanket” is sold or refinanced, a release clause is triggered for that property while the rest remain part of the mortgage. That means the borrower can sell the property or refinance without having to pay off the full loan.

Who Are Blanket Mortgages Best For?

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

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 mortgages are better for those with larger portfolios of property. Remember, you can always refinance to a blanket mortgage as your portfolio grows.

Take the first step toward the right mortgage.

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

Advantages Of Blanket Mortgages

When blanket mortgages are the right fit, they can have several advantages.

  • A blanket mortgage puts all of your properties under one loan. 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’d be charged multiple interest rates.

Risks And Downsides 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 mortgages 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 state laws and guidelines for blanket mortgages 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.

Key Takeaways

Blanket mortgages allow you to pool all of your properties into one loan, 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 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.