Question 1

What happens when the interest-only period ends?

Accepted Answer

Your payment jumps to cover principal plus interest over the remaining term. Most borrowers refinance or sell before this hits.

Question 2

Can I pay principal during the IO period?

Accepted Answer

Yes. Most programs let you pay extra toward principal without penalty. Check your loan docs for prepayment terms.

Question 3

Do interest-only loans require mortgage insurance?

Accepted Answer

No. You put down 20% minimum, so PMI doesn't apply. Lenders offset risk with higher rates and reserve requirements instead.

Question 4

Can I use stock options as income for qualifying?

Accepted Answer

Sometimes. Lenders want two years of vesting history and may haircut the value. Crypto holdings now count as reserves with some non-QM lenders.

Question 5

Are rates adjustable on interest-only loans?

Accepted Answer

Depends on the program. You can get fixed-rate IO or pair it with an ARM. ARM combos usually offer lower initial rates.

Interest-Only Loans in Morgan Hill: Lower Payments for Tech-Driven Buyers