When and Why Should You Consider a Portfolio Loan?
By Mark Kimoto, Residential Loan Manager, American Savings Bank, Equal Housing Lender, Member FDIC

Portfolio loans are designed for clients in a unique borrowing situation, such as financing the purchase of a specific property type (e.g. a unique condominium unit or condo hotel) or a property with unusual zoning.

Also known as non-conforming or non-saleable loans, portfolio loans do not meet “agency guidelines” for Fannie Mae (FNMA) or Freddie Mac (FHLMC). Instead, they are offered by local lenders with portfolio lending capabilities, such as American Savings Bank, who understand Hawaii’s unique real estate market. 

Other situations that would merit a portfolio loan include residential loans to professional corporations and limited liability corporations; borrowers whose income history does not meet agency guidelines (e.g. a new medical doctor/professional in residency in which employment will start without two-year history); and loans for a unit in a co-op (a building owned by a corporation)/condos with a high concentration of investor owners or commercial usage.

Other common portfolio loan situations include financing the purchase of a vacant lot, construction-to-permanent loan financing, and borrowing more than the FNMA/FHLMC loan maximum of $726,525.

Each client situation is unique. Consult an experienced residential loan officer with your client’s specific situation to learn more. Loans are subject to qualification and approval, and to each lender’s credit and underwriting policy.