Question 1

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

Accepted Answer

Most lenders want 700 or above. Lower scores mean fewer options and higher rates. Rates vary by borrower profile and market conditions.

Question 2

Do I build equity during the interest-only period?

Accepted Answer

No. You pay zero principal during that phase. Equity only grows if the property appreciates.

Question 3

Can I use rental income to qualify?

Accepted Answer

Yes, many Non-QM lenders accept rental income. Some use DSCR calculations instead of personal income entirely.

Question 4

How long is the interest-only period?

Accepted Answer

Typically 5 to 10 years depending on the lender and loan structure. After that, payments convert to full principal and interest.

Question 5

Is an interest-only loan right for a second home in Palm Desert?

Accepted Answer

It can be. High earners who want to preserve cash flow in early years use this often. Have a plan for when the payment resets.

Question 6

What happens when the interest-only period ends?

Accepted Answer

Your payment resets to cover principal and interest on the full remaining balance. Payments increase — sometimes significantly. Plan ahead.

Interest-Only Loans in Palm Desert, CA