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Fontana buyers facing high purchase prices use interest-only loans to keep monthly payments manageable early on.
Bankrate's latest lender survey shows 30-year rates at 6.27%. An interest-only structure can meaningfully cut your initial payment versus a fully amortizing loan.
700+ typical
Min Credit Score
5–10 years
IO Period Length
Non-QM
Loan Type
12+ months
Reserves Required
6.27% (Bankrate)
Rate Benchmark
Interest-only loans are Non-QM products. Lenders set their own rules — expect stricter credit and reserve requirements than conventional loans.
Most lenders want a 700+ credit score, 12+ months of reserves, and a debt-to-income ratio under 43%. Some will go higher on DTI with strong assets.
Big retail banks rarely offer interest-only terms anymore. Wholesale lenders and portfolio shops are where these programs actually live.
At SRK CAPITAL, we shop across 200+ wholesale lenders. That matters here — interest-only pricing and guidelines vary dramatically by lender.
Interest-only works best for borrowers with irregular income — investors, self-employed buyers, or those expecting big income jumps ahead.
Know this: the interest-only period ends. Typically after 5 or 10 years, your payment resets to fully amortizing — and it jumps. Plan for that now.
Compare interest-only against an ARM. ARMs also lower initial payments but carry rate risk. Interest-only paired with a fixed rate gives you payment flexibility without rate surprise.
DSCR loans serve Fontana investors differently — they qualify on rental income, not personal income. If this is a rental property, DSCR may be a cleaner fit.
Fontana sits in San Bernardino County, which has seen sustained demand from buyers priced out of LA and Orange counties.
That price pressure makes cash-flow tools like interest-only more relevant here. Investors targeting Fontana rentals often use IO to maximize early cash position.
Most IO loans have a 5 or 10-year interest-only period. After that, payments recalculate on the remaining balance over the remaining term.
Yes. IO loans are common on investment properties. Some lenders will also consider DSCR qualification if the rental income supports the payment.
Most Non-QM lenders want 700 or higher. A few programs go down to 680 with compensating factors like large reserves.
No — during the IO period, your balance doesn't shrink. Equity only grows if the property appreciates in value.
Yes, typically. Non-QM IO loans carry a rate premium over conventional loans. Rates vary by borrower profile and market conditions.
Most IO loan structures allow voluntary principal payments. Paying down principal during the IO phase reduces the reset payment later.
Interest-Only Loans in Fontana