Question 1

How long is the interest-only period?

Accepted Answer

Most IO loans have a 5 or 10-year interest-only period. After that, the loan recasts and you pay both principal and interest.

Question 2

Do I need to refinance after the IO period ends?

Accepted Answer

No, but your payment will increase. Many borrowers plan to refinance or sell before the IO period ends.

Question 3

Can I pay down principal during the IO period?

Accepted Answer

Yes. You're not required to, but most IO loans allow voluntary principal payments. That reduces your balance before the recast.

Question 4

Is an interest-only loan right for a Gilroy rental property?

Accepted Answer

It can work well. Lower payments mean better monthly cash flow. Compare it against a DSCR loan for the same property first.

Question 5

What credit score do I need for an IO loan in Gilroy?

Accepted Answer

Most non-QM lenders want 700 or above. Some will go to 680 with a larger down payment and strong reserves.

Interest-Only Loans in Gilroy, CA