Question 1

What happens when my interest-only period ends in Pismo Beach?

Accepted Answer

Your payment jumps to include principal, typically increasing 20-30%. Most borrowers refinance or sell before this happens, but you must qualify based on the full payment amount upfront.

Question 2

Can I use rental income to qualify for an interest-only loan?

Accepted Answer

Some lenders allow it, but most IO programs qualify you on personal income, assets, or bank statements. DSCR loans are better if you want to rely solely on rental cash flow.

Question 3

Do interest-only loans work for primary residences in Pismo Beach?

Accepted Answer

Yes, though they're less common. Buyers who expect income growth or plan to move in a few years use them to keep payments low while living in a high-cost coastal area.

Question 4

How much can I save monthly with an interest-only loan?

Accepted Answer

Payments drop 20-30% during the IO period compared to a fully amortizing loan. On a $1 million loan, that's $2,000-3,000 per month in extra cash flow.

Question 5

Can I pay principal during the interest-only period?

Accepted Answer

Yes, most lenders allow extra principal payments without penalty. This reduces your balance before the full payment kicks in and gives you flexibility on when to build equity.

Interest-Only Loans in Pismo Beach: Lower Payments for Coastal Property Investors