Portfolio loan products are specialized home loans that are backed by private investment companies creating flexible income approvals and non-traditional underwriting approaches. These are popular amongst investors and those who are self-employed. There are several different types of portfolio loans that we’ll discuss below.
Many self-employed borrowers may find it more difficult to secure a home loan due to traditional underwriting requirements. With most businesses looking to maximize tax write-offs, this can make your income appear lower than it really is. With a portfolio home loan, we can look to qualify your income based on your cash flow, not reported income. We do this by reviewing 12-24 months of bank statements and build out your income from there. This can help us to expand the amount of qualifying income and make it easier to qualify.
If you are looking for a simple way to build your real estate empire, a DSCR (debt service coverage ratio) may be for you. Unlike a traditional mortgage, these loan programs look at the expected monthly rent of a property to determine the income qualification. As long as the long-term market rent is at or above the expected mortgage payment (taxes and insurance included), there’s no further measure of the qualifying debt to income ratio. These loan programs typically require at least 20% down and a good credit score.
For higher net worth individuals who have a substantial net worth in lieu of regular income, we can leverage eligible asset accounts to derive a qualifying income figure from your liquid assets. This makes obtaining a home loan easier for someone who is recently retired, just sold a business, or inherited a sum of money from a family member. With conventional loan financing, these type of income approaches are for borrowers who are of retirement age only, but this isn’t the case with a portfolio asset based loan.