Question 1

What happens when the rate adjusts on a portfolio ARM?

Accepted Answer

It adjusts based on an index plus margin, usually tied to SOFR or Treasury rates. Caps limit the increase—typically 2% at first adjustment, 5-6% over life of loan.

Question 2

Can I refinance before the ARM adjusts?

Accepted Answer

Yes, most borrowers refinance during the fixed period once their credit improves or income documentation becomes easier. No prepayment penalties on most portfolio ARMs after year three.

Question 3

Do portfolio ARM lenders count rental income in San Pablo?

Accepted Answer

Most count 75% of market rent with a signed lease, or use an appraiser's rent schedule for vacant units. They're more flexible than Fannie Mae on this.

Question 4

What credit score do I really need for a portfolio ARM?

Accepted Answer

620 opens doors with most lenders. Some go to 600 with larger down payments or compensating factors like significant reserves.

Question 5

How much does self-employment cost me on rate?

Accepted Answer

Self-employed borrowers using bank statements or 1099s pay 0.5-1% more than W-2 borrowers. The rate hit comes from documentation method, not the fact you're self-employed.

Portfolio ARM Loans in San Pablo: Flexible Financing for Non-Traditional Borrowers