Can You Use One Loan to Buy Two Continuous Parcels?

Two continuous parcels in the country

If you want to purchase a single parcel of land, the process is fairly simple. There is a clearly-defined, well-understood system for purchasing a single piece of property. Whether that property is for personal use, development, or commercial gain, buying a single parcel of land is done every single day, and there are many lending organizations that can help.

But what if you want to purchase two continuous parcels that are connected together? Can you get one loan or do you need two loans, one for each parcel? What loan programs will provide solutions to this problem, and what are the requirements for those that do?

The Problem: Purchasing Two Continuous Parcels Connected Together

Let’s look at a typical example of this situation. It’s common for a buyer, often a developer or company but also homebuyers, to want to purchase two parcels that are connected. There may be a structure that runs across both parcels but is not a main dwelling unit; it might be an accessory dwelling unit.

What can you do? Can you purchase these two parcels with one loan?

Yes. But you’ll need to research available loan programs that allow for this transaction.

The Solution: Finding Loans for these Properties

You might purchase two continuous parcels to build your dream home on a large plot of land.

Fannie Mae

Fannie Mae has the most detailed guidelines for purchasing multiple parcels, so it is often the best solution to this problem. To use a loan backed by Fannie Mae, the parcels must be conveyed in entirety. This basically means that the entirety of the parcel must be sold in the transaction; it can’t be divided up and sold as part of the transaction. For example, you couldn’t use a single loan to purchase the entirety of one parcel and half of the adjoining parcel, the entirety of both must to be sold.

The parcels involved must be connected to each other, unless they meet a specific exception: if they would be adjoined but there is a road running through them, it would qualify.

The parcels must also have the same zoning. So if one parcel is zoned for residential only, while the other is zoned for commercial use only, you cannot use a single mortgage to fund the purchase. If they are both zoned for only residential use, you can use a Fannie Mae loan to make the purchase.

Altogether, the entire purchase can only contain one dwelling. This means that if one parcel has a single family home, but the other does not, the purchase can be made with one loan. However, if both have single-family homes, Fannie Mae loans are not available for this purchase. Certain improvements and structures, such as garages, workshops, or sheds may be acceptable. An improvement that is built across both lines of the parcels is acceptable.

Most importantly, the mortgage must be a first-lien that covers both parcels together. If the Fannie Mae loan is secondary to any other loans, on either the first, second, or both parcels, the loan will not be approved.

VA Loans

The Department of Veteran’s Affairs (VA) offers many loan solutions for veterans and qualifying family members. If you qualify for VA benefits, you may be able to use their resources to purchase two continuous parcels at once. Unfortunately, the VA does not have posted guidelines on this option, so you will likely have to qualify using the VA’s typical requirements for a single parcel or property.

One of the main barriers here will be the VA’s loan limits. If you are using a single loan to purchase the two parcels, you will be limited to the loan amounts allowed by the VA, which are the same conforming loan limits from the Federal Housing Finance Agency. These limits are different for each county in the country. In San Diego County, for example, the loan limit is $649,750. While this is certainly a large amount, it may limit your options for using this program to purchase two continuous parcels. 

How the FHA Approaches This Issue

To start, we need to understand the FHA’s definition and treatment of “excess and surplus land.” According to the FHA, “excess land” is simply land that is not needed for the existing improvement project. It does not serve or support the improvements in any way. The best use of the excess land may not be the same as the best use of the improved parcel, and excess land can be sold separately. “Surplus land” is defined slightly differently. Surplus land is land that is not currently needed to support the existing changes but cannot be separated from the property and sold off to a buyer. It does not have a best use that is independent from the rest of the land, and may or may not contribute to the overall value of the improved parcel.

The FHA will also require specific analysis and reporting. The appraiser must include the “highest and best use” in the report, which will be used to support the appraiser’s conclusion that excess land exists. The appraiser must also include surplus land in the valuation. If the appraised area contains multiple legally-conforming platted lots that are under one legal description and ownership, then the second vacant lot could be divided and sold or developed as a separate parcel, assuming the division will not result in a break from zoning regulations for the second vacant lot. The value of the second lot will be excluded from the final value brought by the appraisal. The appraiser will also need to provide a value for the hypothetical principle site and improvements.

Get the Right Advice on Purchasing Multiple Parcels

If you are considering an investment in two continuous parcels, contact the loan experts at San Diego Purchase Loans. We have a deep understanding of the mortgage and real estate industries, and we’ll do our best to help you get the right loan for your specific needs.

Whether you need a jumbo loan for a commercial property or a conforming loan for your own personal residence, you can count on our staff to help from start to finish!



Thank you, Chad. You have been amazingly responsive to all my questions, and you have a great staff assisting you. Thanks so much for all your help!

Excellent service!. Recently purchased a property in Northern San Diego County. Chad and his team were recommended to me to check out. The rate he acquired was a full point & a half better than the Broker I have been using for years. His team was exceptional and did great follow through. Definitely 5 star service!”

“Hi Juliann and Chad, I wanted to take a moment and thank you guys for what would have been impossible for us to do without you. We wouldn’t have our keys in hand if it had not been for your help in navigating the financing, and Juliann’s perseverance in getting the rest of the players in the transaction to deliver. Out of everything, our interaction with your office has been a highlight – and your customer service has been beyond everything we’ve experienced in the real estate industry. Is there a way we can provide any reviews, ratings, testimonials, or other statements that can express to your potential future customers how much you guys do to make the customer’s life easy? Please let us know how we can share our great experience with you to the rest of the public. Whether we refinance this under a VA, or get in a bigger/better house in a few years, we’re not going to go anywhere else for financing. We are customers of yours as long as you are in business. Thanks again for getting us in a house!”

I hope you enjoyed reading this article. It's my goal to keep you updated with the latest real estate mortgage news. I'm proud to provide you with 100% original and unique content. Subscribe now to get high quality real estate mortgage content and articles delivered directly to your inbox. Chad Baker is Regional Manager for LendUS. Chad is consistently recognized in the top 1% of mortgage originators in the United States 2011-2017. Got a question for Chad? Call (858) 353-8331 or submit your question online