Lenders hold portfolio loans on their own books, which allows them to set their own rules. Portfolio loans are often a good choice for people with a different income recourse, other than paycheck. For instance, “private contractors” generally have a solid income showing on their 1099, but have unique write-offs on their taxes, which does not allow them to be qualified for conventional loans.
Two year income history is required by lenders on all conventional loans, portfolio loans, on the other hand, are more flexible in that area. Before the housing meltdown few years ago, the lenders offered a “stated income” program, which basically just required the borrower to say how much they earned. Portfolio programs, these days, offer similar programs, which allow to support your income with other documents then W2 and paystubs.
Such portfolio programs are beneficial to “private contractors” and self-employed borrowers, however, portfolio programs sometimes require a higher down payment.