Exploring Portfolio Loan Programs for 2024: A Flexible Mortgage Option for Unique Borrowers
In the world of mortgages, there isn’t always a one-size-fits-all solution. If conventional loans aren’t a fit, portfolio loan programs might be the answer. Whether you’re an investor, retiree, entrepreneur, or someone with unique financials, portfolio loans open doors that traditional lending programs can’t.
Gustan Cho Associates specializes in portfolio loans, offering borrowers across the U.S. access to mortgage solutions without the lender overlays common in conventional programs. Let’s explore how portfolio loan programs could be your pathway to homeownership or refinancing in 2024.
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What Are Portfolio Loan Programs?
Unlike conventional loans that follow strict agency guidelines, portfolio loans are mortgages kept by lenders in their portfolios. These are often called “nonconforming” loans since they don’t need to meet Fannie Mae or Freddie Mac requirements. Instead, lenders can set their terms and customize options for those with non-traditional financial situations.
Gustan Cho Associates works with a network of trusted lending partners to help borrowers with tailored solutions, even when traditional options fall short.
Key Portfolio Loan Programs Available at Gustan Cho Associates
1. No Income Documentation Loans
- Perfect for borrowers who don’t have regular income to document.
- Suitable for self-employed, investors, or those with non-traditional income.
2. Asset Depletion Mortgages
- It enables borrowers to be assessed based on their assets instead of consistent income.
- It is ideal for retirees or individuals with substantial investments rather than a paycheck.
Both programs offer the flexibility that conventional and government loans lack, making them increasingly popular.
Understanding Asset Depletion Mortgages: No Income Required
One of the most in-demand portfolio loan programs is the Asset Depletion Mortgage. Asset depletion loans are built for borrowers who have substantial assets but may lack a steady income. This loan program allows lenders to use a borrower’s assets — think stocks, bonds, mutual funds, or gold — to calculate eligibility. Here’s how it works:
- Calculate Your Available Assets: Lenders consider 100% of liquid assets like cash or checking accounts. They generally use 70% for stocks and bonds due to market volatility.
- Convert Assets to Income: The lender divides a portion of your total assets by 360 (for monthly installments) to determine your qualifying income.
- No Income Documentation: Traditional income verification (tax returns or W-2s) isn’t required. Your assets take the place of income for qualifying.
Asset depletion loans can provide loan amounts from $100,000 to $3 million, making them a solid choice for high-net-worth individuals looking to buy or refinance a property. Talk To a Loan Officer About Your Mortgage, Click Here
Who Benefits from Asset-Based Lending?
These portfolio loan programs are great for borrowers who:
- They don’t have a steady paycheck but have significant assets.
- Need flexibility around income documentation.
- They have experienced recent life changes (like retirement) that affect their taxable income.
Common borrowers benefiting from asset-based loans include:
- Retirees: Those with substantial retirement savings but no regular income.
- Investors: Individuals with high net worth from investments rather than monthly income.
- Entrepreneurs and Business Owners: Those with fluctuating or minimal taxable income.
With this program, your wealth works in your favor, allowing you to secure financing that standard loans may not provide.
How Asset Depletion Programs Work for Mortgage Qualification
Asset depletion programs operate distinctly compared to standard loans. Below is an outline of the usual steps and factors to consider:
- Assess Your Total Assets: Lenders typically examine liquid assets and apply a percentage to offset market risks (e.g., 70% of your stock investments).
- Deduct Closing Costs: Any costs associated with closing will be subtracted.
- Calculate Monthly Income: The adjusted assets are divided by 360 months to determine your monthly qualifying income.
The amount required for a down payment can differ depending on the loan amount and your financial situation, but it typically falls between 10% and 30%. Get A Qualify For A Mortgage With Low Credit Scores, Click Here
Investor Portfolio Loan Programs
If you’re an investor, portfolio loans can give you access to high LTV (loan-to-value) ratios and more flexible income sources. At Gustan Cho Associates, our investor portfolio loan program allows you to finance up to 10 properties and hold up to 15 total real estate-owned (REO) properties. Here’s how it breaks down:
- 100% Asset Use: No reduction for stocks or bonds, meaning you get maximum value from your assets.
- Up to 75% LTV: Cash-out refinancing options are available with no rate adjustments.
- Multiple Income Sources: Asset depletion can be combined with other sources, such as W-2s, rental income, or even retirement income.
This portfolio loan program is designed to support investors who need access to financing without rigid income documentation or investment restrictions.
Qualifying Properties and Eligible Asset Types
Portfolio loans can be applied to a wide range of properties:
- Owner-occupied residences
- Second homes
- Investment properties
- Condotels, non-warrantable condos, and co-ops
Eligible asset types typically include:
- Cash in U.S. bank accounts
- Stocks, bonds, and other marketable securities
- Retirement funds (age requirements apply)
Funds held in private investments or trusts generally cannot be used unless unrestricted.
Conconforming Portfolio Loans on Co-Ops, Condos, and More
One standout feature of portfolio loan programs is that they allow financing on property types generally ineligible for conventional loans. This includes:
- Condotels and Non-Warrantable Condos: Up to 75% LTV for second homes.
- Co-Ops: Typically require only a single appraisal, saving time and expense.
- Investment Properties: Up to 60% LTV, even on cash-out refinances.
The maximum debt to income ratio of the borrower cannot exceed 40% DTI. 80% LTV up to $1 million loan amount with reduced LTV’s up to $3 million. 30-year amortization term. No prepayment penalty on all portfolio loan programs. 2/2/6 caps, 1-year CMT Index, 3.0% Margin, Floor= Note Rate. Escrows required.
These options are ideal for borrowers interested in less conventional properties. Gustan Cho Associates can assist with the application process, even for unique property types that don’t meet agency guidelines. Connect with our loan officer for your mortgage, Click Here
Foreign National Portfolio Loan Programs for Non-U.S. Citizens
Portfolio loans provide a practical option for foreign nationals looking to purchase or invest in real estate in the U.S. Foreign national programs at Gustan Cho Associates allow non-residents to qualify for mortgages on second homes and investments. Here’s what’s typically required:
- Up to 65% LTV: Certain nationalities may qualify for a higher LTV.
- Minimum 12 Months PITI Reserves: Necessary for loan amounts up to $1 million.
- Foreign Assets Accepted: These can be used as reserves but must be transferred to the U.S. before funding.
Foreign national loans cater to investors without U.S. credit histories, enabling global clients to access the American real estate market.
2024 Update: Non-QM Loans with Minimal Waiting Periods Post-Bankruptcy
In 2024, portfolio loan programs at Gustan Cho Associates now include non-QM loans for borrowers emerging from bankruptcy or foreclosure. Known as “one day out of bankruptcy” loans, these programs allow homebuyers to qualify for a mortgage with as little as 30% down after a recent bankruptcy or foreclosure, bypassing the traditional waiting periods.
How to Get Started with Portfolio Loan Programs
If you’re interested in exploring your options with a portfolio loan, here’s a simple guide to help you get started:
- Connect with a Loan Officer: Schedule a meeting to explore your financial objectives and identify the portfolio loan option that suits your requirements best.
- Evaluate Your Assets: Make a list of liquid assets, such as cash, stocks, or retirement funds, that you can use to qualify.
- Review Property Requirements: Check which property types qualify, especially considering a condotel, non-warrantable condo, or investment property.
- Choose Your Program: Asset depletion, no-income documentation, and foreign national loans offer unique benefits.
Portfolio loan programs require fewer traditional income documents but still involve a careful review of your assets and property type. By working with a lender who understands portfolio loans, you can streamline the process and get pre-approved faster.
Ready to Explore Portfolio Loan Programs?
Gustan Cho Associates is here to simplify the process. We recognize that borrowers with unconventional profiles have distinct needs, and we provide tailored solutions to help you reach your real estate goals. Whether you’re buying, refinancing, or investing, our team of loan specialists can guide you through each step.
Ready to start? Call us today or apply online to see how easy it can be to find a portfolio loan tailored to your needs. We’re excited to help you unlock the door to your next property with a portfolio loan that suits your financial picture.
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Frequently Asked Questions About Portfolio Loan Programs:
Q: Do Portfolio Loans Require a Credit Check?
A: Yes, but the focus is more on your assets than your credit score. Portfolio loans provide flexibility in credit requirements, especially if you have strong assets.
Q: Can I Refinance with a Portfolio Loan?
A: Yes, portfolio loans can be used to refinance properties, including high-value investment properties or unique residential units.
Q: What are the Interest Rates on Portfolio Loans?
A: Interest rates differ based on the lender, the amount of the loan, and the asset characteristics. Given that portfolio loans pose a greater risk to lenders, their rates may be somewhat elevated compared to conventional loans.
Q: How Long Does it Take to Close a Portfolio Loan?
A: Portfolio loans can close within a few weeks. Gustan Cho Associates offers rush closings in as little as two weeks for eligible borrowers.
Q: Are Portfolio Loans Eligible for All Property Types?
A: Portfolio loans are available for various properties, including condotels, co-ops, non-warrantable condos, and multi-family units.
Q: Can I Use a Portfolio Loan for a Vacation Home?
A: Absolutely! Portfolio loans are flexible and often ideal for second homes or vacation properties, including unique property types like condotels or properties in resort areas.
Q: Are Portfolio Loans Available for Foreign Nationals?
A: Yes, portfolio loans can be tailored for foreign nationals looking to purchase or invest in U.S. properties. These loans often have fewer restrictions on U.S. credit history and allow foreign assets to be used for reserves.
Q: What Types of Assets are Eligible for Asset Depletion Calculations?
A: Portfolio loans typically consider cash, stocks, bonds, mutual funds, and retirement accounts (for borrowers over 59½). Private investments, like hedge funds, may not qualify unless fully accessible.
Q: Is There a Prepayment Penalty with Portfolio Loans?
A: Gustan Cho Associates offers a variety of portfolio loan options that do not include a prepayment penalty, allowing borrowers to settle their mortgage early without facing extra fees.
Q: Can I Qualify for a Portfolio Loan After a Recent Bankruptcy?
A: Yes, portfolio loans often provide options for borrowers coming out of bankruptcy. With a larger down payment, some portfolio loan programs allow qualification as soon as one day after a bankruptcy or foreclosure.
This blog about “Portfolio Loan Programs: No Income Documentation Mortgages” was updated on October 25th, 2024.
