Question 1

What happens when my interest-only period ends?

Accepted Answer

Your payment resets to fully amortized over the remaining term—typically jumping 40-50%. You'll need to refinance, pay down principal, or handle the higher payment.

Question 2

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

Accepted Answer

Yes, most loans allow voluntary principal payments without penalty. You're not required to pay principal, but you can reduce the balance anytime.

Question 3

Do interest-only loans make sense for Moraga investment properties?

Accepted Answer

Usually not. DSCR loans underwrite to rental income and cost less. Interest-only works better for primary residences where you need maximum cash flow flexibility.

Question 4

How much higher are interest-only rates in Moraga?

Accepted Answer

Expect 0.5-1.5% above conventional rates. Exact pricing depends on credit, down payment, and loan amount. Rates vary by borrower profile and market conditions.

Question 5

What credit score do I need for interest-only in Moraga?

Accepted Answer

Most lenders want 700 minimum, though 720+ gets better pricing. Higher scores offset the added risk lenders see in interest-only structures.

Question 6

Can self-employed borrowers get interest-only loans?

Accepted Answer

Yes. Bank statement programs work well here—12 or 24 months of deposits instead of tax returns. You'll still need strong reserves and down payment.

Interest-Only Loans in Moraga: Strategic Financing for High-Equity Borrowers