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Interest-only loans give you lower payments upfront by skipping principal for the first 5-10 years. That flexibility matters when cash flow is tight or you're buying to flip.
Highland sits in San Bernardino County, where investors and self-employed buyers are active. An interest-only structure can make deals pencil out that a standard 30-year won't.
700+ typical
Min Credit Score
20%
Min Down Payment
5-10 years
Interest-Only Period
Non-QM
Loan Category
12-24 months
Cash Reserves
This is a non-QM loan. Lenders don't use standard debt-to-income rules. Expect stricter credit and reserve requirements instead.
Most lenders want a 700+ credit score and 12-24 months of reserves. Down payments typically start at 20%. Rates vary by borrower profile and market conditions.
Not every lender touches interest-only loans. Your bank almost certainly doesn't offer them. Wholesale lenders are where these programs actually live.
HousingWire noted Pennymac TPO just expanded its non-QM wholesale lineup. More wholesale options mean more competition — which is good for your rate.
I see interest-only loans used two ways: investors managing cash flow, and high earners preserving liquidity. Both make sense. Using one just to afford a payment you can't sustain doesn't.
After the interest-only period ends, your payment jumps — principal plus interest on the remaining balance. Underwrite yourself against that higher number before you commit.
Compare this to a DSCR loan if you're buying a rental. DSCR qualifies on the property's income, not yours. Interest-only can stack on top of DSCR for even lower carry costs.
ARMs are the closest conventional alternative. An ARM adjusts rate after a fixed period. An interest-only loan adjusts payment structure. They solve different problems.
Highland has a mix of owner-occupied homes and investor-held rentals. Interest-only loans show up most on the investor side, especially for buyers holding short-term.
San Bernardino County has no special restrictions on non-QM lending. State licensing rules apply, but the loan type itself is available countywide.
Your payment increases to cover principal and interest. Underwrite against that higher number before you close.
Most IO lenders want 700 or higher. A 680 may work with strong reserves and a larger down payment.
It depends on your strategy. Investors with clear exit plans use them well. Buyers stretching to afford payments take on real risk.
Typically 5-10 years depending on the lender and program. After that, principal repayment kicks in.
Only through appreciation. You pay zero principal during that phase, so your loan balance doesn't shrink.
Interest-Only Loans in Highland