Question 1

What happens when the interest-only period ends?

Accepted Answer

Your payment resets to include principal, typically jumping 30-40%. You can refinance before that happens, sell the property, or continue with the higher payment.

Question 2

Can I qualify without tax returns?

Accepted Answer

Yes. Bank statement loans let you qualify using 12-24 months of business or personal account deposits. Most non-QM lenders offer this for self-employed borrowers.

Question 3

Do interest-only loans work for primary residences?

Accepted Answer

Yes, though most lenders prefer them for investment properties. You'll need stronger credit and reserves for a primary residence IO loan.

Question 4

How much can I save during the interest-only period?

Accepted Answer

On a $400K loan, expect to save $800-1,000 monthly compared to a fully amortized payment. Exact savings depend on rate and term length.

Question 5

Are interest-only loans riskier than regular mortgages?

Accepted Answer

They carry payment shock risk when the IO period ends. If you plan properly and qualify for the full payment, risk is manageable. Poor planning creates problems.

Interest-Only Loans in Parlier: Lower Payments for Self-Employed & Investors