Question 1

What happens when the interest-only period ends?

Accepted Answer

Your payment jumps — you start paying principal and interest on the remaining balance. Budget for that increase before you sign.

Question 2

Can I get an interest-only loan with a W-2 job?

Accepted Answer

Yes, but lenders still want strong reserves and a high credit score. IO loans aren't just for self-employed borrowers.

Question 3

Is equity building during the interest-only period?

Accepted Answer

Not through your payments. Equity only grows if the property appreciates. Your balance stays flat until amortization begins.

Question 4

Are interest-only rates higher than conventional rates?

Accepted Answer

Yes, typically. These are Non-QM products and lenders price in more risk. Rates vary by borrower profile and market conditions.

Question 5

Can I pay extra principal during the IO period?

Accepted Answer

Most programs allow it. Paying extra reduces your balance early and softens the payment jump later.

Question 6

Do interest-only loans work for Hanford rental properties?

Accepted Answer

They can, but DSCR loans often qualify more easily for investment properties. Ask us to compare both options side by side.

Interest-Only Loans in Hanford, CA