Question 1

What happens when the interest-only period ends?

Accepted Answer

Your payment increases to include principal, typically jumping 30-40%. You can refinance before that, but plan to afford the full payment regardless.

Question 2

Can I pay principal during the interest-only period?

Accepted Answer

Yes, most lenders allow extra principal payments without penalty. You're paying interest-only by choice, not requirement.

Question 3

Do interest-only loans make sense for primary residences?

Accepted Answer

Only if you have a specific strategy—expecting income growth, equity comp, or investment returns exceeding the rate. Not for basic affordability.

Question 4

How much down payment do I need in South San Francisco?

Accepted Answer

Expect 20-30% down. Higher loan amounts often require larger down payments. Your credit and income affect the exact requirement.

Question 5

Are interest-only rates fixed or adjustable?

Accepted Answer

Both exist. Fixed interest-only locks your rate for the full term. Adjustable interest-only offers lower initial rates but adds rate risk.

Interest-Only Loans in South San Francisco: Lower Payments, Strategic Flexibility