You can qualify for two mortgage loans at the same time, but doing so won't be easy. If you are using a second mortgage to purchase an investment property, it might come with a higher interest rate and require a larger down payment to cover the risk the lender assumes by lending money for investment properties. You'll also have to convince lenders that you make enough money each month to afford two mortgage payments and prove, through your credit history, that you have paid your bills on time in the past.
Gather and make copies of the financial documents that prove your gross monthly income. This includes your paycheck stubs, bank account statements and most recent income tax returns. Your lender will look carefully at your gross monthly income -- your income before taxes are taken out -- before approving your request to carry two different mortgage loans. Your lender wants your total monthly debts -- including minimum credit card payments, mortgage loan payments, car loan payments and other recurring debts to equal no more than 36 percent of your gross monthly income. Your lender will consider your two mortgage payments as part of your total monthly debts, even if it has to estimate what those payments might be.
Fill out your lender's Uniform Residential Loan Application. This application officially starts the mortgage lending process. To complete this form, you'll need to provide your Social Security number, full name and address. You'll need, too, to provide information about your employment, salary, monthly debts and gross monthly income. You'll have to state that you have not gone through a bankruptcy or foreclosure in the last seven years.
Send your loan application and the copies of your financial documents to your lender. Your lender will then begin the process of determining whether you can afford two monthly mortgage payments.
Give your lender permission to run your credit. This is an important part of the loan process, and will give lenders your three-digit credit score. This number shows how well you've handled your finances and paid your bills in the past. If you've missed several car loan payments or regularly pay your credit card bills late, your credit score will suffer. Most lenders today consider a credit score of 740 on the FICO scoring scale to be a good one. If your score is 740 or higher, you'll not only qualify for lower interest rates, you'll also have a better chance of convincing your mortgage lender that you can handle the financial responsibility of two mortgage payments.
Sign the closing documents to close your mortgage loans if your lender approves your application. You'll also have to pay any closing costs at this time.
- Bankrate: Good Credit Score of Past Not so Good Now
- Bankrate: Debt-to-Income Ratio as Important as Credit Score
- Freddie Mac: Uniform Residential Loan Application
- Federal Housing Administration. "Annual Report to Congress Regarding the Financial Status of the Mutual Mortgage Insurance Fund," Page 52. Accessed April 10, 2020.
- My Fico. "Loan Savings Calculator." Accessed 10, 2020.
- Fannie Mae. "Underwriting Factors and Documentation for a Self-Employed Borrower." Accessed April 10, 2020.
- Internal Revenue Service. "Form 4506-T: Request for Transcript of Tax Return," Page 1 - 2. Accessed April 10, 2020.
- Internal Revenue Service. "Form 8821: Tax Information Authorization," Page 1 Accessed April 10, 2020.
- Internal Revenue Service. "Form 4506: Request for Copy of Tax Return," Page 1 - 2 Accessed April 10, 2020.
Don Rafner has been writing professionally since 1992, with work published in "The Washington Post," "Chicago Tribune," "Phoenix Magazine" and several trade magazines. He is also the managing editor of "Midwest Real Estate News." He specializes in writing about mortgage lending, personal finance, business and real-estate topics. He holds a Bachelor of Arts in journalism from the University of Illinois.