Question 1

Do interest-only loans build equity?

Accepted Answer

Not during the IO period. You only build equity through appreciation or a down payment. Principal paydown starts after the IO term ends.

Question 2

What credit score do I need for an IO loan in Piedmont?

Accepted Answer

Most lenders want 700 or higher. Some non-QM programs stretch to 680, but you'll pay for it in rate. Rates vary by borrower profile and market conditions.

Question 3

How long is the interest-only period?

Accepted Answer

Typically 5 to 10 years depending on the lender. After that, the loan recasts and payments include principal.

Question 4

Can I get an interest-only loan on an investment property in Piedmont?

Accepted Answer

Yes. IO structures are common on investment properties. Some lenders combine IO with DSCR qualifying for rental purchases.

Question 5

Are interest-only loans harder to qualify for than conventional?

Accepted Answer

Yes. These are non-QM products with stricter reserve and credit requirements. Lenders want to see you can absorb the higher post-recast payment.

Question 6

What happens when the interest-only period ends?

Accepted Answer

Your payment recasts to cover principal and interest over the remaining term. That increase can be significant — model it before you close.

Interest-Only Loans in Piedmont, CA