Question 1

Am I building equity during the interest-only period?

Accepted Answer

No — you're only paying interest, not principal. Equity grows only if the property appreciates.

Question 2

How long does the interest-only period last?

Accepted Answer

Usually 5 or 10 years. After that, your payment recasts to include principal over the remaining term.

Question 3

Can I use this loan for a rental property in Santa Maria?

Accepted Answer

Yes. Investors often use IO loans to maximize monthly cash flow. DSCR IO products are also available.

Question 4

What credit score do I need for an IO loan?

Accepted Answer

Most lenders want 700 or higher. Lower scores are possible but expect a higher rate.

Question 5

Is an interest-only loan risky?

Accepted Answer

It carries real risk if you don't plan for the recast. Borrowers with a clear strategy manage it well.

Question 6

Can self-employed borrowers qualify for IO loans in Santa Maria?

Accepted Answer

Yes. Non-QM lenders accept bank statements or P&L statements instead of tax returns.

Interest-Only Loans in Santa Maria, CA