Question 1

How long does the interest-only period last?

Accepted Answer

Most IO loans offer 5 or 10 years of interest-only payments. After that, the loan fully amortizes over the remaining term.

Question 2

Can I pay down principal during the IO period?

Accepted Answer

Yes. You're not required to pay principal, but you can. Extra payments reduce your balance and lower the future reset payment.

Question 3

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

Accepted Answer

Most lenders require 700 or higher. Some non-QM lenders go lower, but you'll pay for it in rate.

Question 4

Are interest-only loans risky?

Accepted Answer

They carry real risk if your income doesn't grow or the market turns. The payment jump after the IO period catches some borrowers off guard.

Question 5

Do IO loans work for investment properties in Los Altos?

Accepted Answer

They can. For rentals, a DSCR IO loan often prices better. Talk to us about which structure fits your property.

Question 6

Is an interest-only loan harder to qualify for than a jumbo loan?

Accepted Answer

Yes. IO is non-QM, so underwriting is stricter on reserves and documentation. Jumbo QM loans have more standardized guidelines.

Interest-Only Loans in Los Altos, CA