Question 1

What's the difference between interest-only and a standard 30-year mortgage?

Accepted Answer

Interest-only lets you pay just interest for 5–10 years, then principal kicks in. A 30-year fixed includes principal from day one, so you build equity immediately.

Question 2

How much do I need to put down for an interest-only loan?

Accepted Answer

Most lenders require 20% to 25% down. Interest-only loans carry more risk, so lenders demand stronger equity cushions. Conventional loans can go as low as 5% down with PMI.

Question 3

What happens when the interest-only period ends?

Accepted Answer

Your payment jumps to include principal. A $500,000 loan at 6% might run $2,500/month interest-only, then $3,200/month when principal begins. You need a plan—refinance, sell, or absorb the increase—before that date arrives.

Question 4

Do I need a higher credit score for an interest-only loan?

Accepted Answer

Yes. Most lenders require 700+ FICO for interest-only. Conventional loans can go as low as 620 FICO. The higher score reflects the lender's concern about payment shock and your ability to manage the reset.

Question 5

Can I refinance before the interest-only period ends?

Accepted Answer

Yes. Refinancing is a common exit strategy. If rates drop or your income rises, you can refinance into a conventional loan before the reset. Plan for refinancing costs and timeline.

Interest Only Loans in Dublin: Lower Payments, Strategic Equity Building