Finance a portfolio
Blanket Loans in California
A blanket loan covers several rental properties with one mortgage, one closing and one payment. Lenders typically look at the whole portfolio’s combined rent against the combined payment, and the properties together secure the loan. It suits experienced investors who plan to hold, and it works differently from separate DSCR loans. Terms vary by lender, and Save Financial compares several for your portfolio.
Quick Answer
A blanket loan is a single loan secured by several rental properties. Typical terms: up to about 75% LTV, a portfolio DSCR of roughly 1.1x to 1.2x, 680 credit minimum (700+ for better pricing), a prepayment penalty, and a release premium of 110% to 120% if you want to sell one property. Expect 45 to 60 days to close.
Quick reference: typical terms
| Item | Typical (varies by lender) |
|---|---|
| Maximum LTV | 75%; up to 80% on a flawless purchase |
| Portfolio DSCR | Total rents ÷ total new payment of about 1.1x to 1.2x |
| Credit score | 680 minimum; 700+ for decent pricing |
| Loan size | From about $500,000 up to tens of millions; roughly $75,000–$100,000 minimum value per property |
| Term | 30-year fixed available; many better-priced options are 5-, 7- or 10-year fixed periods amortized over 30 years, with a balloon or rate adjustment at the end |
| Prepayment | Almost always; usually a step-down such as 5-4-3-2-1% over five years |
| Time to close | About 45 to 60 days |
Typical ranges, not an offer. Terms vary by lender and borrower.
What is a blanket loan?
A blanket loan is one mortgage, with one closing and one payment, that covers several rental properties. Blanket loans straddle the line between residential non-QM and commercial lending. Instead of qualifying each property on its own, the lender looks at the global cash flow: the combined rent of the whole portfolio against the combined new payment.
If you are comparing it with separate DSCR loans on each property, or with other investment property loans, the biggest differences are the release clause, the cross-collateralization and the timeline, covered below.
Who uses blanket loans
Usually the heavy-hitting investors who have moved past the amateur phase. They are tired of juggling five, ten or twenty different mortgages, servicers and insurance policies, and want one clean monthly payment. Others use a blanket loan for a portfolio-wide cash-out refinance, then take that liquidity and buy something bigger, such as a 20-unit commercial building. You also see them when an investor buys a “package” of turnkey rentals from a retiring landlord.
Some lenders will do a blanket loan on as few as two properties, but in reality the fees do not make sense until you are rolling at least three to five properties into the deal.
The release clause: how you sell just one property
This is the most important part of the contract. If you have five houses on one loan and want to sell one, you cannot just pay off 20% of the loan. The lender does not want to be left holding only the weakest properties.
So lenders use a release premium, usually 110% to 120% of that specific property’s allocated loan amount. If the house you want to sell carries $200,000 of the total loan, you pay the lender $220,000 to release the lien. It protects the lender and pays down your principal faster, but it eats into your cash proceeds at the closing table.
Blanket loan or separate DSCR loans?
Separate DSCR loans are usually better if you plan to sell properties one by one in the near future: they keep you nimble and avoid the 110% to 120% release premium. They are also better if one property has terrible cash flow, because in a blanket loan that one weak property can drag down your portfolio DSCR and hurt the whole deal.
A blanket loan is usually better if you are buying and holding for the next 10 to 20 years. You get one payment, one LLC to manage, and one set of closing costs, instead of paying title, escrow and lender fees five separate times. We price both for your real portfolio and show you the trade-offs side by side.
Three traps to know before you apply
- Cross-collateralization. All of the properties are tied together. If one tenant damages a house and stops paying rent, and you default on the loan, the lender can foreclose on the whole portfolio, including the properties that are performing.
- The appraisals. Every property has to be appraised, often at commercial-style cost, which can add up to several thousand dollars for a portfolio, and you must coordinate access with each tenant. If one tenant refuses to let the appraiser in, the whole loan can stall.
- Timing. Borrowers expect these to close in 21 days like a single-family loan. With multiple appraisals, title work across different counties and entity reviews, plan on 45 to 60 days.
— Mike Basti, President and Mortgage Broker · Save Financial
Frequently asked questions about blanket loans
What is a blanket loan?
A blanket loan is one mortgage, with one closing and one monthly payment, that covers several rental properties. All of the properties secure the loan. It sits between residential non-QM and commercial lending, and the lender looks at the combined rent of the whole portfolio against the combined payment.
How many properties do I need for a blanket loan?
Some lenders will do a blanket loan on as few as two properties, but the fees usually do not make sense until you are rolling in at least three to five. Most lenders also want a minimum value of roughly $75,000 to $100,000 per property.
What is a release clause on a blanket loan?
A release clause lets you sell one property without refinancing the rest. You cannot simply pay off a proportional share. Lenders use a release premium, usually 110% to 120% of that property's allocated loan amount. For example, if the house you want to sell carries $200,000 of the loan, you would pay $220,000 to release it. It protects the lender and pays down your principal faster, but it reduces your cash proceeds at closing.
Should I use a blanket loan or separate DSCR loans?
Separate DSCR loans are usually better if you plan to sell properties one at a time soon, because you avoid the release premium, or if one property has weak cash flow, because it can drag down the portfolio ratio in a blanket loan. A blanket loan is usually better if you plan to hold for 10 to 20 years and want one payment, one entity and one set of closing costs.
Do blanket loans have prepayment penalties?
Almost always. A step-down structure is typical, such as 5-4-3-2-1% over the first five years. Terms vary by lender.
How long does a blanket loan take to close?
Plan on roughly 45 to 60 days, not the 21 days of a standard single-family loan. Every property needs an appraisal, title work can span different counties, and the borrowing entity is reviewed.
Can I do a cash-out refinance with a blanket loan?
Yes. Many investors use a blanket loan for a portfolio-wide cash-out refinance, then use that liquidity to buy their next property, such as a larger multifamily or commercial building. Maximum loan-to-value is typically lower on cash-out, around 75%.
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