Question 1

What happens when the interest-only period ends?

Accepted Answer

Your payment increases 30-40% as you start repaying principal over the remaining loan term. Most borrowers refinance or sell before this happens.

Question 2

Can I get an interest-only loan with less than 20% down?

Accepted Answer

Rarely. Most non-QM lenders require 20-30% down for interest-only products. Lower down payments make approval nearly impossible.

Question 3

Do interest-only loans make sense for vacation homes?

Accepted Answer

Yes, if rental income covers costs during peak season. Verify your lender allows short-term rentals before closing.

Question 4

How much higher are interest-only rates?

Accepted Answer

Expect rates 0.5-1.5% above conventional loans as of February 2026. Exact pricing depends on credit, down payment, and reserves.

Question 5

Can I pay principal during the interest-only period?

Accepted Answer

Most loans allow voluntary principal payments with no penalty. Check your loan documents to confirm prepayment terms.

Interest-Only Loans in Grover Beach: Lower Payments, Strategic Flexibility