Loading
Interest-Only Loans in Commerce
Commerce sits at the industrial heart of LA County—warehouses, logistics hubs, and commercial properties dominate. Interest-only loans fit here because cash flow matters more than equity buildup for most buyers.
This isn't a market where W-2 earners buy starter homes. It's investors acquiring rental units near the Commerce Casino corridor and business owners leveraging property income.
You need 20-30% down minimum. Lenders want 680+ credit and reserves covering 6-12 months of payments. These are Non-QM loans—no income limits, but stricter asset requirements.
Most lenders cap interest-only periods at 10 years. After that, payments jump when principal amortization kicks in. You need a clear exit strategy before closing.
Only about 30 of our 200+ wholesale lenders touch interest-only products. They price based on liquidity risk—expect rates 1-2% above conventional mortgages.
Each lender has different DTI caps and reserve requirements. Some allow DSCR underwriting for investment properties, others require full income documentation. Shopping this properly saves $500+ monthly.
I use interest-only for three Commerce scenarios: investors buying multi-units near Citadel Outlets, business owners cycling capital through properties, and high earners who max retirement accounts instead of paying down mortgages.
The mistake I see constantly: borrowers focusing only on the low payment. You're not building equity during the IO period. If property values drop or you can't refinance before amortization starts, you're stuck with payments that jump 40-60%.
Compare this to DSCR loans if you're buying investment property. DSCR requires no personal income verification and offers similar investor benefits. Interest-only gives lower payments but requires stronger personal financials.
ARMs also start with lower payments, but they build equity from day one. Interest-only works when you're deliberately choosing cash flow over equity—not just chasing the lowest payment.
Commerce properties skew toward commercial-residential mixed use and older multi-family units. Lenders scrutinize property condition more here because industrial proximity affects resale value.
The city's assessment tax rates impact your carrying costs. Factor that into your interest-only payment advantage. What looks like $800 monthly savings becomes $600 after accounting for higher property tax on commercial-zoned parcels.
Payments jump 40-60% as principal amortization starts. Most borrowers refinance before this happens. You need enough equity or income to handle the new payment.
Yes. DSCR underwriting is available for multi-family and rental properties. The property's rental income qualifies you instead of personal income.
Rates run 1-2% above conventional mortgages. A $500k loan costs $400-800 more monthly in interest compared to traditional financing.
Not easier—different documentation. You'll show bank statements or business cash flow instead of W-2s. Reserve requirements stay strict regardless of income type.
Yes, most borrowers refinance years before amortization starts. You need sufficient equity and qualifying income. Market conditions affect your refinance options.
Mortgage financing for independent contractors and freelancers who earn 1099 income instead of traditional W-2 wages.
Mortgage programs that allow borrowers to qualify based on liquid assets rather than traditional employment income.
Non-QM loans that use 12 to 24 months of bank statements to verify income for self-employed borrowers.
Short-term financing that bridges the gap between buying a new property and selling an existing one.
Debt Service Coverage Ratio loans that qualify investors based on a rental property's income rather than personal income.
Mortgage programs designed for non-US citizens and non-permanent residents who want to purchase property in the United States.
Asset-based short-term loans primarily used by real estate investors for property acquisition and renovation projects.
Financing solutions tailored for real estate investors purchasing rental properties, fix-and-flip projects, or investment portfolios.
Home loans for borrowers who have an Individual Taxpayer Identification Number instead of a Social Security number.
Adjustable rate mortgages held in a lender's portfolio rather than sold on the secondary market, offering more flexible terms.
Non-QM mortgages that use a CPA-prepared profit and loss statement to verify income for self-employed borrowers.
Home loans with interest rates that adjust periodically based on market conditions after an initial fixed-rate period.
Specialized mortgage programs designed to support homeownership in underserved communities with flexible qualification criteria.
Mortgages that meet the guidelines and loan limits set by Fannie Mae and Freddie Mac for secondary market purchase.
Financing for building a new home or making major renovations, typically converting to a permanent mortgage upon completion.
Traditional mortgage financing not backed by a government agency, offering flexible terms and competitive rates for qualified borrowers.
Innovative loan products that leverage projected home equity growth to provide favorable financing terms.
Government-insured mortgages from the Federal Housing Administration with low down payments and flexible credit requirements.
A revolving line of credit secured by your home equity that allows you to borrow funds as needed during a draw period.
A fixed-rate second mortgage that provides a lump sum of cash by borrowing against the equity built in your home.
Mortgages that exceed the conforming loan limits set by the FHFA, designed for financing high-value luxury properties.
Loans for homeowners aged 62 and older that convert home equity into cash without requiring monthly mortgage payments.
Government-backed zero down payment mortgages for eligible rural and suburban homebuyers who meet income limits.
Government-guaranteed mortgages for eligible veterans, active-duty service members, and surviving spouses with zero down payment.