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San Diego property values run high. Interest-only loans give buyers a way to afford more home with lower initial payments.
These are non-QM loans — they sit outside standard lending guidelines. Not every lender offers them, and terms vary widely.
700+ typical
Min Credit Score
20–30% typical
Down Payment
5–10 years
Interest-Only Period
Non-QM
Loan Classification
Fixed or adjustable
Rate Type
Expect lenders to want a 700+ credit score for most interest-only programs. Some go lower, but pricing gets ugly fast.
Strong reserves matter here. Lenders want to see you can handle the payment when principal kicks in.
Big retail banks rarely touch interest-only anymore. This product lives in the wholesale and private lending space.
At SRK CAPITAL, we run this across 200+ wholesale lenders. Rate and reserve requirements shift a lot between them.
Most borrowers using interest-only in San Diego are investors or self-employed with irregular income. It's not a starter loan.
Know your exit. When the interest-only period ends, your payment jumps. Plan for that before you close.
A DSCR loan covers the same investor use case. If your rental income qualifies, DSCR often has cleaner terms.
ARMs also offer lower initial rates. The difference: with interest-only, you build zero equity during the initial period.
San Diego's coastal and luxury segments — La Jolla, Del Mar, Rancho Santa Fe — see the most interest-only activity.
High price points mean jumbo loan sizes. Many interest-only deals here exceed conforming limits by a wide margin.
Mostly investors and self-employed borrowers. High earners who want lower monthly payments while deploying cash elsewhere also use them.
Your payment increases to cover principal and interest. The jump can be significant — calculate it before you commit.
Yes. Many wholesale lenders accept 12-24 months of bank statements in place of tax returns for this product.
It can work, but it's not ideal for long-term holds. You build no equity during the interest-only period.
Typically 5 to 10 years, depending on the lender and program. After that, payments fully amortize over the remaining term.
Interest-Only Loans in San Diego