Question 1

What happens when the fixed period ends on a portfolio ARM?

Accepted Answer

The rate adjusts based on the index plus margin, typically capped at 2% per year and 5-6% over the life of the loan. You can refinance before adjustment if rates drop.

Question 2

Can I use stock options as income for a portfolio ARM in Redwood City?

Accepted Answer

Yes, most portfolio lenders count RSUs and exercised options as income with proper documentation. Unvested options typically don't qualify but can strengthen reserves.

Question 3

Do portfolio ARMs have prepayment penalties?

Accepted Answer

About half include 3-year step-down penalties. The trade-off is usually better rates with the penalty versus higher rates without it.

Question 4

How much can I borrow with a portfolio ARM in San Mateo County?

Accepted Answer

Most lenders cap at $3-4 million on single-family homes. Higher amounts exist but pricing jumps significantly above $3 million in portfolio programs.

Question 5

Will rate cuts in 2026 affect my ARM adjustment?

Accepted Answer

If cuts happen after your fixed period ends, yes. During the fixed period, Fed rate changes don't affect your payment regardless of market moves.

Portfolio ARMs in Redwood City: Flexible Financing for Non-Traditional Borrowers