Question 1

What happens when the interest-only period ends?

Accepted Answer

Your payment jumps 40-50% because you start paying principal over the remaining loan term. Most borrowers refinance or sell before this happens to avoid the shock.

Question 2

Can I get interest-only with less than 20% down in Brentwood?

Accepted Answer

No. Every lender we work with requires 20% minimum, most want 25-30%. The higher risk of deferred principal means lenders demand significant equity from day one.

Question 3

Do interest-only loans make sense for investment properties?

Accepted Answer

Yes, if rent covers the interest payment and you plan to sell or refinance within 5-7 years. Cash flow matters more than equity buildup for many investors.

Question 4

How much higher are interest-only rates compared to conventional?

Accepted Answer

Expect 1-2 percentage points higher. A conventional 30-year fixed at 6.5% becomes 7.5-8.5% interest-only. Rates vary by borrower profile and market conditions.

Question 5

Can I make principal payments during the interest-only period?

Accepted Answer

Most lenders allow extra principal payments without penalty. You control when and how much, which gives flexibility while preserving the option for minimum payments when needed.

Interest-Only Loans in Brentwood: Lower Payments for Non-Traditional Income