Question 1

How do portfolio ARM rate adjustments work after the fixed period?

Accepted Answer

Rate adjusts annually based on an index plus the lender's margin. Most products cap annual increases at 2% and lifetime increases at 5-6% above your start rate.

Question 2

Can I qualify using 1099 income in Scotts Valley?

Accepted Answer

Yes. Portfolio lenders review 12-24 months of bank statements showing consistent deposits. They calculate income based on average monthly inflows rather than tax return net.

Question 3

What property types qualify for portfolio ARMs here?

Accepted Answer

Most residential properties work including unique builds common in Santa Cruz County. Lenders review each property individually rather than applying rigid agency checklists.

Question 4

How much do portfolio ARMs cost versus conforming loans?

Accepted Answer

Expect 0.5-1.5% higher rates than agency ARMs. Trade-off is flexible underwriting that gets deals approved when conventional financing won't work.

Question 5

Should I worry about rate increases if I plan to move in 5 years?

Accepted Answer

No. Choose a 5 or 7-year fixed period that covers your expected ownership timeline. You'll sell or refinance before the adjustable phase begins.

Portfolio ARM Loans in Scotts Valley — Flexible Financing Beyond Agency Rules