Blanket and cross-collateral loans
A blanket loan finances several investment properties under one loan. Cross-collateral loans use equity in one property to help finance another.
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What is a blanket loan for rental properties?
A blanket loan finances several investment properties under one loan, giving a rental portfolio one closing, one payment and the ability to cash out equity from several properties at once. Blanket loans are business-purpose loans, priced on the properties and their rents, and the release clause decides how easily you can sell one property later.
On this page
How they work
- Several properties secure one loan, often held in an LLC.
- Qualifying looks at the portfolio's rents and values more than your personal income.
- A release clause sets what you must pay down to sell or refinance one property out of the loan.
Use a free calculator, or get your HELOC rate from Shawn.
When it fits
- You own 5 or more rentals and want one loan.
- You want to pull equity across the portfolio to buy more.
- Individual properties are too small for lenders' minimum loan sizes.
Check each property's coverage with the DSCR calculator.
These are the situations where shopping more than 180 lenders matters most: one lender's "no" is often another's standard loan. Tell us about your situation.
Example
An investor owns five rentals worth $2.4 million together, with $900,000 in mortgages spread across them. A blanket loan at 70% of combined value could total $1.68 million, paying off the existing loans and providing roughly $700,000 in cash before costs, all with one closing and one payment.
The release clause
If you sell one property, the lender requires a payment to release it from the blanket loan, often 110%–125% of that property's share of the loan. Negotiate this up front; it decides how easily you can sell or refinance properties individually later.
Risks
- Cross-collateralization: trouble on one property affects the whole loan.
- Balloon payments: many blanket loans are due in 5–10 years.
- Prepayment penalties are common.
For one or two properties, individual DSCR loans are usually simpler.
What lenders ask for
- A schedule of real estate: each property's value, rent, mortgage, taxes, insurance and HOA dues.
- Current leases and rent rolls for every unit.
- Two years of operating history, often from Schedule E or property statements.
- Entity documents and personal financial statements for guarantors.
- Appraisals for each property, which add time and cost compared with a single-property loan.
Expect underwriting to take longer than a single DSCR loan, often 45 to 60 days, because each property needs its own title, appraisal and review. Plan cash needs around that timeline, and ask whether the lender can close properties in phases if one property's paperwork lags behind the others.
Also asked
Can a blanket loan include properties in different states?
Sometimes. Some lenders allow a blanket loan to cover properties in different states, while others limit blanket loans to one state. Expect more title and legal work when the properties span multiple states.
Do I need an LLC to get a blanket loan?
Often, yes. Many blanket loan lenders require or prefer the properties to be held in an entity such as an LLC, and they'll also ask for a personal guarantee.
What happens to a blanket loan if one property sits vacant?
One vacancy usually doesn't sink a blanket loan, because the lender looks at the portfolio's combined rent coverage. A single empty property may be absorbed, but several vacancies can strain the loan's covenants.
How many properties do I need for a blanket loan?
Many lenders start at two to five properties. Smaller portfolios are often better served by individual DSCR loans, which are easier to sell or refinance one at a time.
Can I add properties to an existing blanket loan?
Sometimes. Some lenders let you add properties to an existing blanket loan with a new appraisal and underwriting; others require you to take out a new loan instead.
Is a blanket loan the same as a portfolio loan?
Not exactly. A portfolio loan is one the lender keeps on its own books; a blanket loan covers several properties under one lien. A blanket loan is often also a portfolio loan.
Is a blanket loan a commercial loan?
Usually yes. Blanket loans on rental portfolios are business-purpose loans, priced on the properties' combined income, and often from commercial or portfolio lenders rather than standard residential programs.
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