Uncommon Circumstances: Can I Buy Two Houses At The Same Time?
Scott Steinberg7-minute read
January 11, 2023
Can I buy two houses at the same time? We should all be so lucky to find ourselves asking that question. But in all seriousness, the short answer is yes. If you can afford the down payment and are able to meet your lender’s credit score and debt ratio requirements, many lenders will be happy to provide you with the funds that you need to do so.
Whether you’re a first-time buyer or investor considering adding rental property to your portfolio, you may therefore find yourself asking: Can I buy two properties at the same time? If you’re wondering how to buy two houses, the following overview will provide a helpful guide.
Can I Buy Two Houses On The Same Property?
Yes – in general, someone with good credit and a sizable down payment could expect to buy two or more houses on the same property at the same time using traditional methods. In fact, for many first-time or repeat home buyers, you’ll find that the process is quite similar to buying a single-family home.
However, regardless of how many properties you’re looking to buy, mortgage lenders will look at your total debt obligations overall. In effect, you must not only meet other criteria, but also minimum debt-to-income ratio (DTI) requirements, which means assuring lenders that you enjoy ample amounts of cushion within your budget to be able to afford these properties without encountering undue financial hardship. Mortgage lenders will also look for a solid credit history and credit score.
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Can I Buy Two Properties At The Same Time?
Buying two houses on separate properties is more complicated than buying a single property with two houses upon it. For example, part of financial providers’ willingness to lend will be based on the intent to which you aim to put the property. If you’re looking to create rental property income vs. whether or not you intend to occupy a unit can influence mortgage loan decisions and what type of mortgage that you’re able to obtain.
Reasons why you might need to buy two houses vary but may include such examples as the desire to use one of the properties as a guest house or in-law residence or the desire to produce income-generating rental activity. Whatever the case, note that it’s still possible to buy two houses at the same time – just more complicated than buying a single home at once.
How To Buy Two Houses At The Same Time
As you can see, buying two new homes will be different than purchasing a single property, and will come with both greater upfront investment on your part and greater scrutiny on the part of your financial lender. Those seeking to purchase two houses at the same time are encouraged to extensively research this process and know how to best prepare beforehand.
Decide How The Houses Will Be Used
Before shopping around as a potential new home buyer, you’ll need to decide if one of the houses will be used as a second home or an investment property with an eye toward generating rental income. Alternately, you will need to determine if one of these properties will be used as a primary residence or residence for others such as family members. In any event, it’s an important first decision to consider and discuss with your REALTOR® before you submit a mortgage loan application.
Analyze Your Personal Finances
You will also need to assess your personal financial situation to determine whether you can afford two mortgage payments. That means thinking about how much income that you expect to be bringing in both now and potentially in the future, as well as any recurring or one-time expenses that you anticipate incurring going forward. It’s also important to check with credit bureaus, obtain an up-to-date credit report and get the latest insights into your credit score and credit history.
As you go about considering your ability to make multiple payments – a task which mortgage and interest rate calculators can assist with – don’t forget to keep your DTI ratio in mind here as well. Your DTI ratio (which provides a way for lenders to gauge your income against your expenses) will serve as a core guideline for them when considering if it makes sense to extend you a loan on a property.
Hunt For The Perfect Homes
Picking the perfect home takes considerable time and research. Shopping for two at the same time is only more of a challenge. Be sure to talk to your real estate agent about your goals and plans for the two houses that you plan to buy. Searching MLS listings and popular real estate websites, as well as driving around neighborhoods that you’re looking to shop in, can help you find eligible properties. Also make a point to take a tour of any homes (whether via a private showing or open house) that you’re considering purchasing before putting in an offer.
Find The Right Loans For Your Purchases
Happily, there are several loan options available for prospective real estate buyers looking to finance a home purchase if they do not intend to pay for these properties with cash. You’ll wish to consider the pros, cons and particulars of each as you review your options here, and if you have further questions, you may want to consult with your loan officer.
- FHA Loan – Backed by the Federal Housing Administration (FHA), an FHA loan often comes with lower down payments, credit scores and credit history requirements attached. However, certain requirements must be met to qualify for an FHA loan, e.g., the property must be FHA appraiser-approved and utilized as your primary residence, not as an investment property or second home. Bearing this in mind, you may be able to use an FHA loan for one of your properties (if you yourself plan to occupy it within 60 days of closing). However, you can only have one FHA loan out at a time, so you would not be able to use it to purchase your other property.
- VA Loan – VA loans (which are provided by the Department of Veterans Affairs) are a form of military loan that’s available to qualified service members, spouses and veterans. Because the VA offers specific guarantees to private lenders to help underwrite these loans, it reduces potential risk for financial providers and reduces some of the burdens (e.g., in the form of lower interest rates) placed on borrowers. But a VA loan cannot be used to obtain an investment property.
- First-Time Home Buyer Program – First-time home buyer programs are financial incentives programs designed to help support potential home buyers in their initial efforts to obtain real-estate properties. Typically, these loan programs (which may come with lower down payments, interest rates and credit history requirements attached) are crafted in such a way as to make home purchases more accessible. Happily, select first-time home buyer programs options will allow you to purchase two properties, making them a great option for first-time shoppers, especially those seeking a no-down-payment option.
- Home Equity Loan – A home equity loan (often referred to as a second mortgage) lets you tap into equity that you’ve built up in your current home as collateral against which to borrow money. You can also use it as a means through which to finance the purchase of one of your potential two new homes. Be advised though that under the terms of a home equity loan, your current house will be utilized as a form of security to help protect your lender’s investment. That means that your current residence may be put at risk if you wind up defaulting on loan payments when utilizing this type of financing.
- Conventional Loan – A conventional mortgage loan can be used at the same time on multiple properties. But it’s not uncommon to see larger down payments attached to such loans or for lenders to require extra documentation to be provided by borrowers as well. This documentation might include additional asset statements from bank, retirement and brokerage accounts; records relating to any divorces, bankruptcies and foreclosures; and expanded details surrounding your income and expenses, including W-2s, tax returns, and 1099s.
Apply To Your Chosen Lenders
No two financial providers, be they banks, credit unions, online mortgage lenders, etc. extend mortgage loans under the exact same terms and conditions. Noting this, you’ll want to do extensive research upfront to compare down payment amounts, credit score and history requirements, interest rates, term lengths, closing costs and other factors when comparing competing offers. Note that to secure the best rates and obtain a mortgage loan, you’ll need to provide certain documents and identification (e.g., social security number, tax returns, W-2 forms, etc.) establishing your identity, credit history and income.
Prepare Your Down Payments
Down payments (monies paid upfront to secure a loan) help provide lenders with a level of risk mitigation and insurance against debts going unpaid. In other words, these initial investments on the part of buyers serve as a form of good faith and are commonly utilized to help secure mortgage loan opportunities. (Although it’s also possible to secure select loans under no down payment options.) In any event, saving up for one down payment can be demanding – saving up for two (which lenders may require to be 20% – 30% or more of the total loan amount) can be an even more challenging task. Whether it means eating out less often or going to movies and concerts less frequently, potential two-home buyers might expect to do some belt-tightening.
Arrange The Closing Dates
Closing dates are specific times at which ownership rights to properties trade hands. It’s important to set these deadlines in real estate contracts and account for how closing costs (fees paid to facilitate these transactions) will be paid for. This may mean coming out of pocket for these expenses, financing them as part of your loan or receiving credits from home sellers.
The Bottom Line: Buying Two Properties At Once May Be A Worthwhile Investment
Ultimately, when it comes to the key question here – can I buy two houses at the same time? – the answer is an emphatic yes. But doing so is generally more complicated than purchasing a single piece of real estate, especially if you’re doing so for purposes of building out your portfolio of investment properties. Nonetheless, there may be many good reasons that you’re looking to purchase a piece of land with two properties on it or buy two properties at the same time. (Whether for purposes of accommodation or real estate investing.) If you wish to get started with the home buying process, you can begin today by filling out an application.
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