Portfolio Loan

A portfolio loan is one the lender holds on its own balance sheet instead of selling it to Fannie Mae or Freddie Mac. Because the bank keeps the risk, it can set its own rules, which gives it room to underwrite borrowers who do not fit conforming guidelines, such as investors who already own several financed properties.

That flexibility comes with variety: terms differ widely from one lender to the next, and these loans may include features like balloon payments or shorter fixed periods. They tend to suit experienced investors who have outgrown conventional limits, rather than first-time buyers, so read the structure carefully before committing.