A portfolio loan is a mortgage that is originated and held by a bank or lender, rather than being sold to investors on the secondary market. Portfolio loans allow for more flexibility than conventional mortgages. For borrowers with unique financial situations in Texas, a portfolio loan may be a good option.
What is a Portfolio Loan?
With a portfolio loan, the lending institution that originates the loan also services and keeps it as an asset on their own books. This contrasts with most conventional mortgages, which are pooled together and sold to third-party investors like Fannie Mae and Freddie Mac.
Key features of portfolio loans:
- More flexible underwriting than conventional loans
- May qualify with lower credit scores or higher debt-to-income ratios
- Unique properties like log cabins often require a portfolio loan
- Offered by small banks, credit unions, and mortgage companies
Downsides are they often have higher interest rates and you have just one lender to work with if any issues arise.
Top 5 Lenders for Portfolio Loans in Texas
Here are five recommended lenders to consider for portfolio mortgage loans in the Lone Star State:
1. Benchmark Mortgage
This Texas-based lender offers portfolio loans alongside their conventional, FHA, VA, and USDA loan products. Their portfolio loans are popular with self-employed and low-to-moderate income borrowers.
Pros
- Loan amounts up to $3 million
- Competitive interest rates
- Down payment assistance programs
Cons
- Only serves Texas residents
2. Supreme Lending
Headquartered in Dallas, Supreme Lending offers a variety of portfolio loan programs. They specialize in loans for investment properties and have flexible qualifying guidelines.
Pros
- Will finance investment properties
- Allows higher debt-to-income ratios
- Bridge loan program available
Cons
- Rates can be high
3. Legacy Mutual Mortgage
This lender based in Houston provides fixed and adjustable rate portfolio loans across Texas. They tout customized options for unusual properties and unique borrower situations.
Pros
- Refinancing available up to 95% loan-to-value
- Delayed financing for construction loans
- Renovation loans available
Cons
- Website lacks information on rates/fees
4. Plains Capital Bank
Based in Dallas, this community bank offers a variety of portfolio lending options. Their programs include interest-only loans and terms up to 40 years for unique cases.
Pros
- Will work with unconventional properties
- Flexible qualifying guidelines
- Local branches across Texas
Cons
- Limited info available online
5. gulflender
While headquartered in Florida, gulflender operates in Texas and specializes in portfolio loans. They advertise that they can close loans in as little as 10 days.
Pros
- Rapid approvals/closing timelines
- Loan amounts up to $15 million
- Works with low credit scores
Cons
- Not a well-known lender
- High interest rates
Finding the Right Portfolio Lender
The best portfolio lender depends on your specific financial situation. Make sure to get multiple quotes, read reviews, and ask plenty of questions before selecting a lender. A local community bank that holds its own mortgages may be more motivated to work with unique cases. With the right lender, portfolio loans can be a great option for Texas borrowers needing a more flexible mortgage solution.
