If you own a business or manage investments through an LLC, you might be wondering: can an LLC get a conventional mortgage? The answer is both straightforward and nuanced. While conventional mortgages are typically designed for individuals, LLCs can still explore home financing options with the right preparation.

What Is a Conventional Mortgage?
Let's start by understanding what a conventional mortgage is to begin. A conventional mortgage is a home loan that isn’t insured by the government, such as FHA or VA loans. These loans are popular among homebuyers because they often come with competitive interest rates and fewer restrictions on property types. However, they’re primarily designed for individuals, not entities like LLCs.
Can an LLC Qualify for a Conventional Mortgage?
The short answer: it’s complicated. Most conventional mortgage lenders require a borrower to be an individual because personal creditworthiness plays a significant role in loan approval. However, there are just a few scenarios where an LLC can secure financing.
Personal Guarantee Required: Many lenders will allow an LLC to obtain a loan if one or more members of the LLC personally guarantee the mortgage. This means the individual’s credit score, income, and assets will be evaluated, and they’ll take on personal liability for the loan.
Strong Financial Records: Lenders may require your LLC to provide detailed financial records, including tax returns, profit-and-loss statements, and bank statements, to demonstrate the business’s ability to repay the loan.
Higher Interest Rates: Even if an LLC qualifies, lenders may charge higher interest rates because loans to LLCs are seen as riskier than loans to individuals.
Benefits of Buying Property Through an LLC
Why would an LLC want to take out a mortgage instead of an individual? Here are some potential benefits:
Ease of Ownership Transfer: LLCs simplify transferring ownership of a property. Instead of going through the hassle and costs of retitling, you can transfer or sell ownership shares of the LLC itself. This flexibility is particularly valuable for estate planning, bringing in new investors, or selling the property.
Tax Benefits: Depending on your circumstances, owning property through an LLC can offer tax advantages, such as deductions for business expenses.
Privacy: Buying property under an LLC name can help keep your ownership private, as the property will be listed under the business name, not your personal one.
Challenges for LLCs Getting a Conventional Mortgage
While there are benefits, there are also challenges LLCs face when seeking a conventional mortgage:
Limited Lender Options: Not all lenders are willing to work with LLCs, particularly for conventional loans. You may need to look for a specialized lender or consider alternative loan products.
Higher Costs: LLCs may face higher interest rates, fees, or down payment requirements, making it more expensive than financing as an individual.
Personal Liability: If a personal guarantee is required, you’ll still be personally responsible for the loan, which could negate some of the liability protection benefits of using an LLC.
Alternatives to Conventional Mortgages for LLCs
If your LLC struggles to qualify for a conventional mortgage, consider these alternatives:
Commercial Loans: Designed specifically for businesses, commercial loans are more flexible for LLCs but often come with higher interest rates.
Portfolio Loans: Some lenders offer portfolio loans, which are kept in-house rather than sold to investors. These loans may have more flexible terms for LLCs.
Hard Money Loans: If speed is essential, hard money lenders may provide financing for LLCs, though these loans come with higher rates and shorter repayment terms.
Should Your LLC Apply for a Conventional Mortgage?
While it’s possible for an LLC to get a conventional mortgage, the process can be more complex than it is for individuals. At 14 Days To Close, we specialize in helping clients navigate their financing options, whether they’re applying as individuals or through an LLC. If your business is exploring property investments, our team can guide you toward the right loan product for your goals.
Ready to explore your options? Give us a call and let’s find the financing solution that works for you.