Portfolio Loan

A portfolio loan is a loan that a lender will keep in their portfolio, instead of selling to the secondary market.  A primary reason that these lenders keep the loans in their portfolio is to provide a lending option to those who may not fit secondary market eligibility guidelines and to help the local community. It’s part of their mission and purpose.

When borrowers who do not meet the criteria required for a conventional mortgage loan, such as those sold to Fannie Mae or Freddie Mac, a portfolio loan can be a more flexible option. Lenders offer these so that borrowers can get a loan, even though they may be self-employed, have a low credit score or have gone through a bankruptcy. These loans must be held and serviced by the lenders, as they cannot be sold in the secondary market.

Portfolio loan lenders like NASB will dig deep to find out about what caused your economic issues and what you’ve done to recover from it. This allows borrowers with blemishes on their financial history to have a chance at owning a home. Other situations that make a portfolio loan a good option include:

• Self-employed borrowers.
• Foreign nationals.
• Borrowers with high income, low credit.
• Borrowers without documented income but high net worth.

Because portfolio loans do not have to meet GSE (Government-Sponsored Enterprise) guidelines, the requirements for portfolio loans vary from lender to lender. The lender is assuming the risk, so they set the qualifications. Generally, if a borrower can show they have the ability to pay back the loan, can make a down payment, and has a FICO score and debt-to-income ratio above a certain threshold, they may qualify for a portfolio loan.

A minimum loan amount of $175,000 is required to apply. Exceptions include mortgage products for properties located within the Greater Kansas City metro and surrounding areas. Contact a NASB Loan Officer for details on the excluded areas and/or zip codes.