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Interest-Only Loans in Paramount
Paramount buyers use interest-only loans to minimize monthly payments during the first 5-10 years of the mortgage. This works well for investors with rental properties or W-2 earners expecting income growth.
Most borrowers in this LA County city leverage the payment flexibility to free up cash for renovations or other investments. The trade-off: you're not building equity during the interest-only period.
Lenders typically require 680+ credit and 20-25% down for interest-only loans. This is Non-QM territory—underwriting focuses on assets and loan-to-value more than W-2 income.
You'll need documented reserves (6-12 months of payments in the bank) and strong debt-to-income ratios. Expect rates 0.5-1.5% higher than standard conventional loans.
Interest-only loans come from Non-QM lenders, not Fannie Mae or Freddie Mac. We work with about 30 lenders who offer IO products with varying rate structures and terms.
Some lenders offer fixed-rate IO periods, others use adjustable rates. The differences in prepayment penalties and post-IO payment shock vary widely—this is where broker access to multiple lenders matters.
The biggest mistake borrowers make is ignoring the payment jump after the IO period ends. If you're paying $2,000/month interest-only, expect $3,200+ when principal payments start.
Smart use case: investors buying below-market properties in Paramount who plan to renovate and refinance within 3-5 years. Poor use case: stretching to afford a home you can't handle when full payments kick in.
Interest-only loans beat ARMs when you want maximum payment flexibility short-term. ARMs save you money on rate but still require principal payments from day one.
Compared to DSCR loans, IO products offer lower initial payments but require more documentation. Jumbo borrowers often choose IO to deploy capital elsewhere—Paramount investors use it to carry multiple rentals.
Paramount sits near the 710 and 105 freeways, attracting investors who buy properties under $700K and rent to working-class tenants. IO loans help these investors stack multiple properties faster.
The city's rental demand from the industrial corridor means steady tenant pools. Buyers using IO loans here typically hold 2-5 years, then sell or refinance before the payment adjustment hits.
Your loan converts to fully amortizing payments including principal. Monthly costs jump 40-60% depending on remaining term and balance.
Yes, most borrowers refinance within 3-7 years. Check for prepayment penalties before closing—they vary widely across Non-QM lenders.
They can, but most lenders prefer investment properties. Rates and terms are usually better for rental properties than owner-occupied homes.
Expect 25-40% lower monthly payments during the IO period. A $500K loan might cost $2,100 IO versus $3,200 with principal.
Most lenders require 680 minimum. Stronger credit (720+) unlocks better rates and more flexible terms from Non-QM lenders.
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.