Question 1

Can I get an interest-only loan on a Carmel second home?

Accepted Answer

Yes, but expect tighter reserve requirements. Lenders typically want 18-24 months of reserves for second home IO loans.

Question 2

What happens when the interest-only period ends?

Accepted Answer

Payments reset to cover both principal and interest. That increase can be substantial on a Carmel-sized loan balance.

Question 3

Do interest-only loans require a jumbo loan amount in Carmel?

Accepted Answer

Almost always. Carmel property values push most purchases well past conforming loan limits in Monterey County.

Question 4

Is my credit score enough to qualify?

Accepted Answer

Most IO lenders want 700 or above. Strong reserves and a low debt-to-income ratio matter just as much.

Question 5

Are interest-only loans riskier than standard loans?

Accepted Answer

You build no equity during the IO period. If values drop, you can end up underwater faster than with a standard loan.

Interest-Only Loans in Carmel By The Sea