Personal Finance

Here’s How to Buy a Home in a Million-Dollar City

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To say U.S. home prices have jumped is an understatement. Zillow reports 481 “million-dollar cities” in the U.S., meaning the typical home value in these locations is at least $1 million. This list grew by 146 cities in 2021, and it’s anticipated an additional 49 cities could join the ranks by mid-2022.

If you live in one of these newly minted million-dollar locales and are shopping for a new home or investment property, or considering a refinance, you may wonder: Will I qualify for a loan? What’s the best loan option? How can I maximize my money?

The answer may be a portfolio loan.

Buying a Million-Dollar Home? Consider a Portfolio Loan.

You’re likely familiar with conforming home loans, mortgages available through Freddie Mac and Fannie Mae. They tend to have the lowest rates but come with restrictions, including loan amount limits.

Properties in million-dollar cities may qualify for a conforming loan. The 2022 conforming loan limit is $647,200 for most U.S. counties – but it goes up to $970,800 in high-cost areas. You can find the limit for your area with this map.

If your desired loan amount is less than the conforming limit, you’ll still face down payment plus income and credit requirements. Many homebuyers discover they need more flexibility, which is where the portfolio loan comes into play.

What Is a Portfolio Loan?

A portfolio loan is a home loan that offers customizations not found in many traditional mortgages. This type of loan is often referred to as a Non-Qualified Mortgage (Non-QM).

Traditional mortgages often are sold to a large institutional investor like Fannie Mae or Freddie Mac. The underwriting guidelines of portfolio loans differ from those required by Fannie Mae and Freddie Mac. As a result, portfolio loans are funded by banks and private investors. This allows the lender to build flexibility into the loan because it’s not tied to external agency standards.

Who Qualifies for a Portfolio Loan?

Here’s the great news – because portfolio loans are customizable, they’re a solution for a wide range of people, from first-time homebuyers to seasoned real estate investors.

They also provide flexibility for unique financial situations. Portfolio loans aren’t a credit free-for-all – the lender is taking on the risk of the loan – but can offer greater latitude in the underwriting process. They offer creative solutions for income documentation, debt ratios, past credit challenges, and unique properties that conventional lenders can’t accommodate.

What’s the Benefit of a Portfolio Loan?

The flexibility of a portfolio loan allows you to get a mortgage that’s customized to fit your purchase. It helps many homebuyers and real estate investors secure financing when they don’t qualify for conforming loans. This is thanks to larger limits and expanded underwriting. There’s also the possibility to eliminate selling contingencies, maximize cash flow, and minimize liability.

1. Jumbo Loan Amounts

Portfolio loans help you get the money you need to buy a home that exceeds conforming limits – perfect for the high prices you’re likely to face in a million-dollar city.

The loans often fit into the jumbo or super jumbo category. A mortgage is generally considered a jumbo loan when it exceeds the conforming loan limit, and a super jumbo loan if it’s over $1 million.

Axos Bank’s portfolio program accommodates loans from $500,000 up to $30 million.

2. Flexible Underwriting & Income Documentation

If you’ve heard from a conventional lender that you won’t qualify for a mortgage, reach out to a portfolio lender before you give up. They tend to have more flexibility when it comes to the underwriting and documentation of complex financial situations.

For example, Axos Bank’s portfolio loan program allows for:

  • Bank statement income documentation for borrowers with fluctuating income
  • Debt service coverage ratio (DSCR) for real estate investors wanting to use potential property income instead of income tax returns
  • Asset depletion, which uses liquid assets (including cryptocurrency) to establish the ability to pay monthly expenses – but doesn’t require the borrower to pay with the assets

3. Eliminate Selling Contingencies

In a competitive market, selling contingencies can put you at the bottom of the list. Avoid the sell-before-you-buy dilemma with a portfolio loan option that’s known as a bridge loan. Bridge financing uses a short-term loan to cover your down payment or pay off your existing loan so you can buy a new home while selling the old one.

4. Maximize Cash Flow

If you’re worried about tying up your assets with a large home purchase, a portfolio loan can help reduce your initial out-of-pocket costs.

Axos Bank has no-money-down programs using cross collateralization of a free-and-clear property. We also allow for asset-based lending, which uses pledged assets (like stocks or bonds) alongside a smaller down payment.

You can also seek an interest-only loan. This gives you lower monthly payments during the early years of your loan to free up room in your monthly budget.

5. Minimize Liability & Allow for Anonymity 

Portfolio loans can also protect your privacy and security. Some lenders, like Axos Bank, allow for vesting titles in entities so clients can hold property ownership in a trust, LLC, sub S corporation, or partnership. It’s a great option when purchasing investment properties.

You may also consider Privacy Mortgages, which are ideal for actors, athletes, public officials, and other individuals who prefer that their address and property ownership not be available through public records associated with a typical mortgage recording.


Portfolio loans aren’t just for people looking to purchase million-dollar homes. They also help others qualify for home financing, including self-employed borrowers and non-resident aliens. You can dive deeper with our article The Power of Portfolio Loans Is Flexibility.

If you have questions or would like to explore a portfolio loan for your upcoming home purchase, reach out to our residential mortgage team. They specialize in jumbo loans and offer a diverse range of mortgages to help with the purchase or refinance of a primary home, second home, or investment property. You can contact them at 888-546-2634.

Here’s How to Buy a Home in a Million-Dollar City

This blog was published by Axos Bank on June 8, 2022, and last updated on June 8, 2022

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