A trust can get a mortgage, but the answer to can a trust get a mortgage depends almost entirely on what kind of trust it is. A revocable living trust qualifies for standard conventional financing under Fannie Mae and Freddie Mac guidelines, with the person who created the trust qualifying on their own credit and income. An irrevocable trust is a much harder case: conventional lenders generally won’t lend to one, so trustees have to look to portfolio lenders, specialized trust lenders, or private lenders, usually on stricter terms.
Revocable Trusts Qualify Like the Grantor Personally
A revocable living trust (also called an inter vivos revocable trust) is the easiest trust structure to finance. Because the grantor can change or cancel the trust at any time, Fannie Mae treats a loan to the trust as essentially a loan to the grantor. The trust appears on the security instrument as the entity that holds title, but the underwriting is built around at least one individual who established the trust.1Fannie Mae. Inter Vivos Revocable Trusts
To qualify, the trust generally has to have been created by one or more natural people during their lifetime, and the grantor has to be the primary beneficiary. In a joint trust with more than one primary beneficiary, the income or assets of at least one of them must be used to qualify. At least one grantor must serve as trustee (or an institutional trustee authorized under state law must serve), and the trustee must have the power to mortgage the property. If the home will be the borrower’s principal residence, at least one grantor has to live there and sign the loan documents.1Fannie Mae. Inter Vivos Revocable Trusts
One point that trips people up: Fannie Mae only accepts individuals as credit-qualifying borrowers. The trust owns the property and appears on the security instrument, but an actual person signs the promissory note and qualifies on their own credit, income, and assets. The grantor isn’t backstopping the trust’s loan. The grantor is the borrower.2Fannie Mae. General Borrower Eligibility Requirements
Irrevocable Trusts Have to Look Outside the Conventional Market
Irrevocable trusts are a different situation. Because the grantor has permanently given up control, the trust operates as a genuinely separate entity, and Fannie Mae does not accept irrevocable trusts as eligible mortgagors. Its exceptions to the natural-person borrower rule cover only revocable trusts and certain land trusts.2Fannie Mae. General Borrower Eligibility Requirements
That effectively closes off any lender who sells loans on the secondary market. A trustee who needs a mortgage on irrevocable trust property has to work with a portfolio lender that keeps loans on its own books, a specialized trust lender, or a private lender. These loans commonly carry higher interest rates, larger down payment requirements, and stricter terms than conventional financing.
Because the trust itself is the borrower, the lender underwrites the trust: its assets, its income (from rental property, investments, or other distributions), and its ability to service the debt. Many lenders also require a personal guarantee from a beneficiary or trustee, which puts that individual’s personal assets on the line if the trust defaults. Federal credit unions that lend to irrevocable trusts treat these as business loans and may require personal liability from members who are parties to the trust.3National Credit Union Administration. Loans to Trusts A personal guarantee is a serious commitment, and anyone asked to sign one should understand that their own wealth is at stake.
The Trustee Needs Power to Borrow
This is where a lot of trust mortgage applications stall. The trust agreement has to explicitly grant the trustee authority to borrow money and pledge trust property as collateral. Fannie Mae says it plainly: the trustee must have the power to mortgage the security property for the purpose of securing the loan.1Fannie Mae. Inter Vivos Revocable Trusts
If a revocable trust doesn’t contain that language, the grantor can amend the trust to add it. An irrevocable trust without borrowing authority is a much bigger problem, since the terms can’t be changed unilaterally. In that case the trustee may have to petition a court for modification, which adds time and legal cost. If there’s any realistic chance a trust will need mortgage financing at some point, the borrowing power clause belongs in the trust agreement from the start.
What the Lender Will Ask For
Whichever type of trust is involved, the lender has to verify the trust’s legal standing and the trustee’s authority. Expect to provide:
- The complete trust agreement, which the lender’s legal team reviews to confirm the trust is validly created, identify beneficiaries, verify the trustee’s powers, and check for provisions that could affect the loan.
- A certificate of trust (also called a certification or abstract of trust), which many lenders accept in place of the full agreement. It confirms the trust exists, names the trustees, sets out their powers, and gives the tax ID number, without disclosing private distribution terms.4Legal Information Institute. Certification of Trust
- Personal identification for whoever is acting as trustee.
- Financial records. For a revocable trust where the grantor qualifies individually, that means the grantor’s personal tax returns, bank statements, and asset documentation. For an irrevocable trust, it means the trust’s own financials.
For Fannie Mae loans, the lender is also responsible for confirming that the title insurer will provide full coverage without carving out exceptions for the trust or trustees.1Fannie Mae. Inter Vivos Revocable Trusts
Tax ID Number by Trust Type
The right tax identification number for the loan file depends on the trust. A revocable trust typically uses the grantor’s Social Security number during the grantor’s lifetime, because the IRS treats the grantor and the trust as the same taxpayer. An irrevocable trust is a separate tax entity and generally needs its own Employer Identification Number as soon as it’s created and funded. Using a grantor’s Social Security number on an irrevocable trust blurs the line between personal and trust assets, which makes lenders uncomfortable and creates tax reporting problems.
Moving an Already-Mortgaged Home Into a Trust
A lot of homeowners aren’t trying to get a new loan through a trust. They want to transfer a house they already own, with an existing mortgage, into a trust for estate planning. The worry is the due-on-sale clause in the mortgage, which lets the lender demand full repayment if ownership changes.
Federal law addresses this directly. The Garn-St. Germain Depository Institutions Act prohibits lenders from exercising a due-on-sale clause when property is transferred into an inter vivos trust, as long as the borrower remains a beneficiary and the transfer doesn’t change occupancy rights.5Office of the Law Revision Counsel. 12 U.S. Code 1701j-3 – Preemption of Due-on-Sale Prohibitions The protection applies to residential property with fewer than five units.
Transfers into a revocable trust are covered cleanly. Transfers into an irrevocable trust are less certain. If the borrower is no longer a beneficiary or occupancy rights change, the exemption may not apply. Review the specific trust terms against the statute before recording the deed.
Don’t Forget the Title Policy
If you already have an owner’s title insurance policy and you transfer the property into a trust, that policy may no longer cover you. Many policies extend coverage to revocable trust transfers, but not all do. If the named insured no longer owns the property because the trust does, coverage may have lapsed. Contact the title insurer to confirm coverage still applies or to add an endorsement naming the trust as an additional insured.