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Encinitas sits in one of San Diego County's most expensive coastal corridors. Properties here routinely require jumbo financing — and that's exactly where interest-only loans start making sense.
Lower monthly payments during the interest-only period free up cash flow. For high earners with variable income, that flexibility is worth real money.
700+
Min Credit Score
20%+
Typical Down Payment
5–10 Years
IO Period Length
Non-QM
Loan Classification
12+ Months
Reserves Required
Interest-Only Loans in Encinitas
Interest-only loans are non-QM products. That means lenders write their own rules — expect stricter credit and reserve requirements than a conventional loan.
Most lenders want 700+ credit, 12+ months reserves, and a real down payment. Twenty percent down is common. Less than that gets expensive fast.
Local decision guide
Use this guide to connect interest-only loans eligibility, lender expectations, and local market factors before comparing payment options in Encinitas.
Encinitas sits in one of San Diego County's most expensive coastal corridors. Properties here routinely require jumbo financing — and that's exactly where interest-only loans start making sense.
Lower monthly payments during the interest-only period free up cash flow. For high earners with variable income, that flexibility is worth real money.
Interest-only loans are non-QM products. That means lenders write their own rules — expect stricter credit and reserve requirements than a conventional loan.
Retail banks rarely offer interest-only products anymore. The options live inside wholesale and portfolio lenders — the ones most borrowers can't access directly.
At SRK CAPITAL, we work with 200+ wholesale lenders. Several specialize in interest-only and non-QM products built for high-value coastal markets like Encinitas.
I see interest-only work best for two borrowers: high earners with lumpy income who want low base payments, and investors who want to minimize carry costs while a property appreciates.
The mistake I see often? Treating the interest-only period as a plan — not a strategy. Know what happens in year 10 before you sign in year one.
A 30-year fixed gives you a predictable payment and steady equity build. An interest-only loan gives you lower payments now — but zero equity build during the IO period.
ARMs and interest-only loans often get bundled together. They're different tools. An ARM adjusts your rate. An IO loan adjusts what you pay toward principal. You can have both at once.
Encinitas has a mix of primary residences, vacation properties, and investor rentals. Interest-only loans fit all three — as long as the borrower profile supports the program.
As of April 2026, San Diego County's coastal market remains supply-constrained. Buyers here compete hard. Lower IO payments can help buyers stretch into the right property without overextending monthly.
Most IO loans offer a 5 or 10-year interest-only period. After that, the loan recasts — you start paying principal and interest on the remaining balance.
Not through payments. You build equity only if the property appreciates. No principal is paid down during the IO period.
Yes. IO loans work for investment properties. Some lenders pair them with DSCR qualification, so rental income — not your tax returns — drives approval.
Most lenders want 700 or higher. Some portfolio lenders go lower with compensating factors, but expect tighter terms below 720.
It depends on your plan. The risk is real if you're counting on refinancing but rates rise or the property doesn't appreciate as expected.
Yes — most IO loans allow voluntary principal payments. You're just not required to make them during the initial period.