Question 1

How long does the interest-only period last?

Accepted Answer

Most IO periods run 5 to 10 years. After that, the loan recasts and you pay principal plus interest on the remaining balance.

Question 2

Will I build equity during the IO period?

Accepted Answer

Not through payments — only through property appreciation. That's the core trade-off with this structure.

Question 3

Can I get an interest-only loan for a primary home in Arroyo Grande?

Accepted Answer

Yes. IO loans aren't just for investors. Primary buyers with strong profiles use them in high-cost markets like SLO County.

Question 4

What happens to my payment after the IO period ends?

Accepted Answer

It jumps — sometimes significantly. Your payment recalculates to pay off the full balance over the remaining loan term.

Question 5

What credit score do I need for an IO loan?

Accepted Answer

Most lenders want 700 or higher. Rates vary by borrower profile and market conditions, so stronger credit means better pricing.

Question 6

Are interest-only loans harder to get than conventional loans?

Accepted Answer

Yes. These are non-QM products with stricter reserve and down payment requirements. Fewer lenders offer them.

Interest-Only Loans in Arroyo Grande, CA