Question 1

How long does the interest-only period last?

Accepted Answer

Most IO loans run 5-10 years interest-only. After that, the loan fully amortizes over the remaining term — and your payment increases.

Question 2

Will I build any equity during the IO period?

Accepted Answer

Not through paydown. Equity only grows if the property appreciates. In a flat market, your balance stays exactly where it started.

Question 3

Can I use an interest-only loan for a rental property in Lathrop?

Accepted Answer

Yes. Rental investors are the most common IO borrowers. Pairing it with strong rental income is the cleanest way to justify the product.

Question 4

What credit score do I need for an interest-only loan?

Accepted Answer

Most non-QM lenders want 700 or above. A few go lower with larger down payments or strong reserves.

Question 5

Are interest-only loans riskier than conventional loans?

Accepted Answer

The payment jump at reset is real risk. If you haven't planned a refinance or sale by then, you could face payment shock.

Question 6

Can I pay down principal during the interest-only period?

Accepted Answer

Usually yes. Most IO loans allow extra principal payments. You just aren't required to make them during the IO window.

Interest-Only Loans in Lathrop, CA