Portfolio loans are mortgage loans that aren’t sold to Fannie Mae or Freddie Mac on the secondary market. Small business owners that cannot qualify for a traditional mortgage or want to finance multiple properties with a single mortgage can turn to portfolio lenders for financing.
Because portfolio lenders don’t have to use federal guidelines in underwriting, this allows them to underwrite the loans using their own guidelines, potentially charging higher rates and closing fees. However, it does let them go outside of federal guidelines regarding debt-to-income (DTI), loan-to-value (LTV), and loan size maximums.
The list below contains the five best portfolio lenders and what each lender is best for:
Portfolio Lender | Best For |
|---|---|
Fix-and-flip investors | |
Growing a large portfolio | |
Competitive rates, terms, and great customer service | |
Aggressive ground-up construction loans | |
High-income borrowers with lower credit scores |
Lima One Capital: Best for Fix-and-Flip Investors
Lima One Capital has a wide variety of lending options, including several construction options, like fix-and-flip, fix-to-rent, and a traditional construction loan. Fix-and-flip and construction loans go up to a maximum of $3 million. The value-add bridge maximum amount borrowed is $20 million. Terms and percentages vary among the products.
Lima One Capital is an excellent choice for both new and experienced investors. Minimum credit scores range between 600 and 660. Check out its website for more information and to begin the application process.
CoreVest: Best Portfolio Lender for Growth
Because of a couple of excellent products it offers, CoreVest is a great choice for business owners looking to continue to grow their portfolios. The blanket mortgage product has terms of five, seven, or 10 years, with up to a 75% loan-to-value ratio. The fix-and-flip credit line allows builders to complete projects, sell them, and continue with a revolving line of credit they can use for their next flip. Credit lines go from $1 million to $50 million.
CoreVest offers both an online application and a chatbot on its website, which can help you get the process started. CoreVest also offers an 800 number if you would prefer to speak to someone on the phone. Contact the lender today to begin the application process.
Haus Lending: Best for Competitive Rates
With starting interest rates between 3.75% and 7.95%, Haus Lending is a great choice for business owners looking for the best interest rates on the market. Most loan products have a maximum of between $2 million and $5 million, except for fix-and-flip ($25 million) and rental portfolio ($50 million).
Haus Lending has both an 800 number and a website application available. It also has a button for translating its website into Spanish. Check out its website to lock in some of the lowest rates on the market today.
LendingOne: Best for New Construction
With up to 24 months for a new construction loan at 85% loan-to-cost, LendingOne is a good choice for business owners looking to start a construction project. New construction loans go up to $5 million, with redevelopment, conversion, and condo loans also permitted.
LendingOne promises fast funding because it’s a nonbank. Some loans will be funded in as soon as 10 days. You can get approval right on its website or you can call an 800 number to speak to a lending advisor. Check out its website for more information or to apply.
North American Savings Bank: Best for High-income Borrower with Lower Credit Score
The biggest selling point for North American Savings Bank (NASB) is its willingness to work with borrowers with recent bankruptcies or short sales on their credit reports. For many loan types listed, as long as the bankruptcy or short sale was at least two years before application, NASB can work with the borrower to find a lending solution.
NASB has been recognized as one of the top mortgage lenders, including for noncommercial products, such as United States Department of Veterans Affairs (VA) loans and loans for first-time homebuyers. It also works with borrowers who are self-employed and looking for nonconforming loans. Check out NASB’s website for more information or to apply.
How We Evaluated Best Real Estate Portfolio Lenders
We evaluated the best real estate portfolio lenders by comparing the product offerings, the terms of each, and the qualifications required from borrowers to obtain a loan. We also considered the interest rate of the loan, the funding speed, and maximum loan amount offerings.
Bottom Line
Real estate portfolio loans can be tricky because they don’t have to follow federal guidelines for loans sold on the secondary mortgage market. This can mean the borrower might have to pay higher interest rates and fees with these loans. On the flip side, the borrower can benefit from higher DTI ratio limits and higher LTV limits, in some cases without mortgage insurance. Understand your financing needs for your business and compare the product offerings listed here before choosing a lender.
