Question 1

How long is the interest-only period?

Accepted Answer

Most IO loans have a 5 or 10-year interest-only term. After that, payments reset to cover both principal and interest over the remaining loan life.

Question 2

Can I pay down principal during the IO period?

Accepted Answer

Yes. Most IO loans allow voluntary principal payments. You're just not required to make them during the initial period.

Question 3

Is an interest-only loan a good fit for Rocklin investors?

Accepted Answer

It can be. IO loans lower monthly carrying costs on investment properties. Run the numbers against DSCR loans — both serve investors differently.

Question 4

What credit score do I need for an IO loan?

Accepted Answer

Most lenders require at least 700. Some portfolio lenders go lower with compensating factors like large reserves or strong income.

Question 5

Will my rate be higher on an IO loan?

Accepted Answer

Typically yes. IO loans carry a rate premium over conventional mortgages. Rates vary by borrower profile and market conditions.

Question 6

Do IO loans require a large down payment?

Accepted Answer

Most lenders require 20% down, sometimes more on investment properties. This is a non-QM product — expect tighter terms across the board.

Interest-Only Loans in Rocklin, CA