Question 1

What credit score do I need for a portfolio ARM in Shasta Lake?

Accepted Answer

Most lenders start at 620, but some go to 580 with 25% down and strong reserves. Your total profile matters more than the score alone.

Question 2

How do adjustment caps work on these ARMs?

Accepted Answer

Typical structure is 2/2/5: 2% max increase at first adjustment, 2% each period after, 5% lifetime cap. Always confirm your specific loan's caps before locking.

Question 3

Can I use rental income from the property to qualify?

Accepted Answer

Yes, most portfolio ARM lenders allow 75% of projected rent to offset the mortgage payment. DSCR programs use 100% but require the property to fully carry itself.

Question 4

Do these loans have prepayment penalties?

Accepted Answer

About half do, typically declining over 3 years. Always negotiate this before locking. Penalties range from 6 months interest to 80% of yield differential.

Question 5

How does a portfolio ARM differ from a standard ARM?

Accepted Answer

Portfolio ARMs stay with the lender instead of being sold to Fannie or Freddie. That means more flexible underwriting but usually higher rates than agency ARMs.

Question 6

What happens when my rate adjusts?

Accepted Answer

Your rate changes based on an index plus your margin, subject to adjustment caps. Most adjust annually after an initial fixed period of 3, 5, or 7 years.

Portfolio ARMs in Shasta Lake: Flexible Financing Beyond Agency Limits