Question 1

How long is the interest-only period on these loans?

Accepted Answer

Most IO loans offer a 5 to 10 year interest-only period. After that, your payment recalculates to cover principal and interest over the remaining term.

Question 2

Do I build any equity during the interest-only period?

Accepted Answer

Only through appreciation — not payments. Your loan balance stays flat until the amortization period begins.

Question 3

What credit score do I need for an interest-only loan?

Accepted Answer

Most lenders want 700 or above. Some portfolio lenders set the bar higher, especially on Napa-sized loan amounts.

Question 4

Can I use an interest-only loan for a Yountville rental property?

Accepted Answer

Yes. Investors often use IO loans on short-term rentals to maximize early cash flow. We can pair this with DSCR structures depending on the deal.

Question 5

Are interest-only loans harder to qualify for than conventional loans?

Accepted Answer

Yes. They're non-QM, so lenders use their own guidelines. Expect stricter reserve and income documentation requirements.

Question 6

What happens if I can't sell or refinance before the IO period ends?

Accepted Answer

Your payment increases — sometimes significantly. Always model the fully amortized payment before committing to this loan structure.

Interest-Only Loans in Yountville, CA