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Interest-only loans are non-QM products. That means they sit outside standard Fannie Mae and Freddie Mac guidelines.
In San Bernardino County, these loans attract investors and high-income borrowers who want lower payments upfront while keeping capital free.
700+
Typical Min Credit Score
20–30%
Down Payment Range
5–10 Years
Interest-Only Period
Non-QM
Loan Classification
Often Adjustable
Rate Type
Lenders typically want a 700+ credit score for interest-only. Some go lower, but the rate premium gets steep fast.
Expect a 20-30% down payment. Lenders price the risk of deferred principal repayment into both the rate and LTV requirements.
Your local bank won't offer this. Interest-only is a wholesale and non-QM product — you need a broker with the right lender relationships.
HousingWire noted Pennymac TPO just expanded its non-QM suite. More wholesale options means more competition, which can benefit borrowers on pricing.
The interest-only period typically runs 5-10 years. After that, the loan recasts — and the payment jumps to cover full principal and interest.
Most borrowers using these loans have a clear exit plan: sell, refinance, or pay down principal before the recast hits.
A standard 30-year fixed gives you predictability. An interest-only loan gives you cash flow flexibility — but you build zero equity during the IO period.
DSCR loans serve a similar investor niche. If the property generates rental income, DSCR often qualifies more cleanly than interest-only.
Grand Terrace sits between Colton and Riverside. It's a small, owner-occupied-heavy community — not a high-volume investor market.
Interest-only loans see more use in higher-priced Inland Empire submarkets. In Grand Terrace, they're a niche fit for specific buyer profiles.
Most lenders want 700 or above. Below that, rates climb fast and some lenders won't approve at all.
Not during the IO period. Once it ends, your payment recasts to cover both principal and interest.
Yes. Investors use them to maximize cash flow during the hold period. A DSCR loan may also be worth comparing.
Usually 5 to 10 years depending on the loan structure. Your rate and program determine the exact term.
Yes, and most borrowers plan on it. Just account for rate conditions and closing costs in that exit strategy.
Unlikely. These are wholesale non-QM products. You need a broker with access to the right lenders.
Interest-Only Loans in Grand Terrace