Question 1

How long is the interest-only period?

Accepted Answer

Most IO loans offer 5 to 10 years of interest-only payments. After that, the loan recasts and you pay principal plus interest for the remaining term.

Question 2

Do I build any equity during the IO period?

Accepted Answer

Only if property values rise. Your payments cover no principal, so you're not paying down the balance at all during that initial period.

Question 3

Can I get an interest-only loan in Mission Viejo?

Accepted Answer

Yes — through non-QM lenders. These aren't conventional loans, so you won't find them at most retail banks. A broker with wholesale access is your best path.

Question 4

What credit score do I need?

Accepted Answer

Most non-QM lenders want 700 or higher for interest-only. Some go lower with stronger reserves or a larger down payment.

Question 5

Is an interest-only loan risky?

Accepted Answer

It depends on your plan. Without a clear exit strategy — refinance, sell, or income growth — the payment jump after the IO period can be a real problem.

Question 6

Can I use an IO loan for an investment property?

Accepted Answer

Yes, and it's one of the stronger use cases. Investors often pair IO with DSCR programs to maximize cash flow on Orange County rentals.

Interest-Only Loans in Mission Viejo, CA