Question 1

What happens when the interest-only period ends?

Accepted Answer

Your payment jumps to cover principal and interest over the remaining loan term. On a 30-year loan with 10 years I-O, you'd amortize the full balance over 20 years, raising monthly payments significantly.

Question 2

Can I get a fixed-rate interest-only loan?

Accepted Answer

Yes, but they're rare and expensive. Most lenders price fixed I-O loans 1.5-2% above adjustable-rate I-O, and they require stronger credit and lower loan-to-value ratios.

Question 3

Do interest-only loans work for owner-occupied homes in Colfax?

Accepted Answer

They can, but you need a clear reason—expected income growth, planned sale, or upcoming refinance. Most lenders allow I-O on primary residences with 20-25% down and solid credit.

Question 4

How much lower are the payments during the interest-only period?

Accepted Answer

Roughly 30-40% lower than a fully amortizing loan at the same rate. A $400K loan at 7% might cost $2,100/month I-O versus $3,200/month with principal and interest.

Question 5

Can self-employed borrowers in Colfax qualify?

Accepted Answer

Yes. Non-QM lenders often use bank statements or profit-and-loss statements instead of tax returns. Expect to show 12-24 months of business deposits and strong reserves.

Interest-Only Loans in Colfax: Lower Payments for California's Historic Gold Country