Can you get two mortgages for 1 house instead of 1 big mortgage?

Question

for example, if i wanted to buy a house for $600,000, can i get two mortgages for $300k each or do I have to get one mortgage for the $600k? the reason i am asking is that you get better interest rates on smaller loans.

i am buying the house with another person, so can we each get a mortgage for 300k?

Answer 1

Short answer is NO.

One would be a second mortgage and would have a much higher interest rate. Also you can not even get the house in the first place if there is not a mortgage you can afford that covers the whole price.

Answer 2

Can I Have 2 Mortgages

Answer 3

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RE :Can you get two mortgages for 1 house instead of 1 big mortgage?
for example, if i wanted to buy a house for $600,000, can i get two mortgages for $300k each or do I have to get one mortgage for the $600k? the reason i am asking is that you get better interest rates on smaller loans.
Update: i am buying the house with another person, so can we each get a mortgage for 300k?
Follow 16 answers

Answer 4

You generally are not allowed to have two 'first' mortgages, but you are allowed to have a first mortgage and a second mortgage. A second mortgage can be a home equity loan or a home equity line.

It sounds like you are trying to avoid taking out a Jumbo mortgage. The only way to do this is to take out a the largest convnetional mortgage and then take out a 2nd mortgage for the rest. The only problem with this is that the 2nd mortgage will carry a much higher rate, 1% - 2% higher than the first, and it's repayment is usually up to 20 years (a traditional mortgage can be up to 30 years).

A jumbo mortgage is usually only about .25% - .5% higher than a conventional mortgage.

If you are looking to borrow that much money, you will pay a premium in one way or the other. But going the route of a Jumbo mortgage is probably the cheapest way.

Answer 5

While it is very common to get two mortgages, it is less common when dealing with larger loan amounts and it is normally divided according to the following:

80/20
90/10
80/15/5

Basically, the fist mortgage (also the larger one) has better interest rates. You are punished slightly on the first mortgage b/c your CLTV (or combined loan to value) will be higher. Finally, b/c, as you state, the first mortgage is typically a lower interest rate you would want that mortgage to be as large as possible and the second, which will be at a higher rate (whether that second is a second mortgage, a home equity line or credit).

What you really need to do is find a local mortgage broker who you have been referred to and they can work up different scenarios based on your income, credit, ltv-cltv (if there is equity beyond the 600k).

Best of Luck,

Joe...

Licensed Mortgage Broker, FL

Answer 6

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RE :Can you get two mortgages for 1 house instead of 1 big mortgage?
for example, if i wanted to buy a house for $600,000, can i get two mortgages for $300k each or do I have to get one mortgage for the $600k? the reason i am asking is that you get better interest rates on smaller loans.
Update: i am buying the house with another person, so can we each get a mortgage for 300k?
Follow 19 answers

Answer 7

Yes, you can get two mortgages. It is commonly called a piggy back loan. Usually 80% first mortgage and 20% second. The problem is that the second might be have some combination of these factors, higher rate, variable rate, interest only, if a term loan only 15 or 20 year term (higher payments), etc.

I think you are trying to get under the jumbo loan amount of around $417,000. You need to get with a mortgage lender or broker who undersands the options on structuring a deal like this. Get names from a realtor. Shop around to at least 3 places.

Answer 8

You can get 2 mortgages for 1 house, but it is not going to save you money. The first mortgage say 600k amount (jumbo loan / good credit 620> / + 10-20% down payment = right now about a 6.25 maybe a tad lower

Getting 2 mortgages

415k (says under the limit so it is not considered a jumbo loan) plus all the above will get you 5.75 % par rate but then the 185k at no less than 7.25% will screw you ---

Answer 9

The source for all funds for a house will be accounted for by any mortgage lender. Having two will not do anything but double (at least) the paperwork and raise questions. They might be less interested in making any loan since a default would then be more complicated also.

Answer 10

You usaully can't get a 2nd mortage (which in most cases has a higher interest rate) unless you have earn equity in a home, which is impossible until you've signed your closing papers. You could wait 2 years to get a line of credit and then get a 2nd mortage. You'll need to speak to a loan officer for all of you options for your situation. Bring the appropate paper work, bank statments, pay stubs, tax returns. They'll get a copy of your credit report to see your outstanding balances on accounts, such as vehicals, credit cards, student loans... You may have to look for a cheaper home if you cannot afford the mortage for $600,000. Plus you'll need to keep in mind if you don't have a 20% down payment you'll be paying PMI Insurance (which i think is a waste of money, but it is the law) and house insurance, and taxes (if you escrow it) on top of the mortage.