Question 1

How long does the interest-only period last?

Accepted Answer

Most IO loans have a 5 to 10 year interest-only window. After that, the loan recasts and you pay principal plus interest.

Question 2

Can I use rental income to qualify?

Accepted Answer

Some IO lenders allow rental income with proper documentation. A DSCR loan may be a stronger option if rental income is your primary qualifier.

Question 3

Do interest-only loans work for vacation homes?

Accepted Answer

Yes, but lenders apply tighter standards to second homes. Expect higher reserves and larger down payment requirements.

Question 4

What happens when the IO period ends?

Accepted Answer

Payments increase because you begin paying principal. Many investors refinance or sell before that reset date.

Question 5

Is an interest-only loan available in El Dorado County?

Accepted Answer

Yes. These are non-QM products available through wholesale lenders. Not every lender offers them, so broker access matters.

Interest-Only Loans in South Lake Tahoe