Question 1

How long does the interest-only period last?

Accepted Answer

Usually 5 to 10 years, depending on the lender. After that, payments reset to include principal — and they jump noticeably.

Question 2

Can I pay down principal during the IO period?

Accepted Answer

Yes, most loans allow it. You're not required to — but making principal payments reduces your balance before the reset.

Question 3

Will I build equity during the interest-only period?

Accepted Answer

Only if your home appreciates. You're not paying down the loan balance, so no equity is built through payments alone.

Question 4

Are interest-only loans available in Santa Clara County?

Accepted Answer

Yes, through portfolio and wholesale lenders. Most retail banks don't offer them — a broker is your best path to finding them.

Question 5

What income types qualify for interest-only loans?

Accepted Answer

W-2, self-employed, and asset-based income can all work. Lenders underwrite these more conservatively than conventional loans.

Question 6

Is an interest-only loan risky in Campbell's market?

Accepted Answer

It depends on your plan. Without a clear strategy for the payment reset, the risk is real. Rates vary by borrower profile and market conditions.

Interest-Only Loans in Campbell, CA