Question 1

How long does the interest-only period last?

Accepted Answer

Most lenders offer 10 years interest-only. Some go to 15 years for strong borrowers. After that, you pay principal plus interest or refinance.

Question 2

What happens when the interest-only period ends?

Accepted Answer

Payments jump because you start paying principal over the remaining term. Most borrowers refinance before this happens, especially if equity has grown.

Question 3

Can self-employed borrowers qualify?

Accepted Answer

Yes, using bank statements or 1099s instead of tax returns. Non-QM lenders look at deposits, not tax write-offs. Credit and down payment still matter.

Question 4

Is interest-only good for investment properties in Santa Cruz?

Accepted Answer

Often, yes. Lower payments improve cash flow while appreciation builds equity. DSCR loans also work for rentals but require principal payments from day one.

Question 5

Do rates differ much between lenders?

Accepted Answer

Absolutely. I've seen 0.75% variance on identical borrower profiles. Shopping 20+ lenders matters more on non-QM products than conventional loans.

Interest-Only Loans in Santa Cruz: Smart Leverage for High-Income Earners