Question 1

Do I build equity on an interest-only loan?

Accepted Answer

No. You only build equity through price appreciation during the IO period. Principal balance stays the same until the loan recasts.

Question 2

Can I use rental income to qualify for an IO loan in Dunsmuir?

Accepted Answer

Some non-QM lenders allow rental income. A DSCR loan may be a cleaner path if rental income is your primary qualifier.

Question 3

What happens when the interest-only period ends?

Accepted Answer

The loan recasts and principal payments begin. Your monthly payment increases — sometimes significantly. Model that number before you commit.

Question 4

How long does the interest-only period typically last?

Accepted Answer

Most IO loans have a 5 or 10-year interest-only period. After that, you pay principal plus interest for the remaining loan term.

Question 5

Is an interest-only loan a good fit for a Dunsmuir vacation rental?

Accepted Answer

It can be, if you have reserves and an income plan. Lower early payments help while the rental ramps up, but the recast risk is real.

Interest-Only Loans in Dunsmuir, CA