Typically, conventional loans are made by the lender and then sold to enterprises that market the loans as securities. These loans are packaged and sold on the market as bonds backed by the loans.
Portfolio loans are different. Instead of being sold the loans are held onto by the lender and kept on their books.
One of the benefits of a portfolio loan is the fact that you do not have to pay for private mortgage insurance, the bank assumes the default risk.
Another side benefit of a portfolio loan is that you can maintain your relationship with the lender you originally worked with. Sometimes this can help provide a better customer service experience.
Here are few frequently asked questions:
Because the lender is assuming the risk of the loan they typically prefer to offer portfolio loans as an option to borrowers who have good credit. Scores of 620 or higher can be considered but this varies from lender to lender.
If you don't qualify for a portfolio loan and don't have the cash for a conventional loan you do have options. Try looking into other types of loans like an FHA loan. FHA Loans are less restrictive and you may qualify to borrower with only 3.5% down.
Speak to a licensed mortgage professional to weigh your options.