Question 1

How long is the interest-only period?

Accepted Answer

Usually 5 to 10 years, depending on the lender. After that, the loan fully amortizes over the remaining term.

Question 2

Do I build equity during the IO period?

Accepted Answer

Only if the property appreciates. You're not paying down principal, so equity comes from market value gains only.

Question 3

Can I make principal payments during the IO period?

Accepted Answer

Most IO loans allow it. Extra principal payments reduce your balance and lower the later amortized payment.

Question 4

What credit score do I need for an IO loan in Costa Mesa?

Accepted Answer

Most lenders want 700 or higher. Some portfolio lenders go lower, but expect tighter terms. Rates vary by borrower profile and market conditions.

Question 5

Are interest-only loans available for investment properties?

Accepted Answer

Yes. They're common for short-term holds and value-add plays in Orange County. Ask us about IO versus DSCR for your situation.

Question 6

Is an interest-only loan harder to get than a conventional loan?

Accepted Answer

Yes. IO is non-QM, so lender standards are stricter. Stronger credit, more reserves, and larger down payments are the norm.

Interest-Only Loans in Costa Mesa, CA