Question 1

What is an interest-only loan?

Accepted Answer

You pay only the interest each month for an initial period. Principal balance doesn't decrease until the IO period ends.

Question 2

How long does the interest-only period last?

Accepted Answer

Most IO loans offer 5 or 10 year IO periods. After that, your payment recasts to cover principal and interest.

Question 3

Can I get an IO loan at Los Altos Hills price points?

Accepted Answer

Yes. Portfolio and wholesale lenders routinely do IO loans well above conforming limits. This is exactly what those lenders are built for.

Question 4

Does an IO loan build equity?

Accepted Answer

Not through payments during the IO period. Equity grows only if the property appreciates — which is historically strong in Los Altos Hills.

Question 5

Is an interest-only loan harder to qualify for?

Accepted Answer

Yes. As a Non-QM product, lenders apply stricter credit, reserve, and down payment standards than conventional loans.

Question 6

How does IO compare to a jumbo ARM here?

Accepted Answer

An ARM shifts rate risk to you after the fixed period. IO gives payment flexibility without necessarily changing your rate structure.

Interest-Only Loans in Los Altos Hills, CA