Question 1

What happens when the interest-only period ends?

Accepted Answer

Your payment resets to cover both principal and interest. Monthly payments jump — sometimes significantly. Plan for that before you close.

Question 2

Can I use an IO loan to buy a cabin in Sonora?

Accepted Answer

Yes, if it qualifies as a second home or investment property. Non-QM lenders are more flexible on property type than conventional programs.

Question 3

Do I build equity during the IO period?

Accepted Answer

No — not from payments. Equity only grows if the property appreciates. That's a real risk if values dip.

Question 4

What credit score do I need for an IO loan?

Accepted Answer

Most non-QM lenders want 680 or higher. Some go lower with a bigger down payment. Rates vary by borrower profile and market conditions.

Question 5

Is an interest-only loan good for short-term rental investors?

Accepted Answer

It can be. Lower payments improve cash flow while the property builds its rental history. Pair it with an exit plan.

Question 6

How long does the interest-only period last?

Accepted Answer

Typically 5 to 10 years, depending on the lender and loan structure. After that, the loan fully amortizes over the remaining term.

Interest-Only Loans in Sonora, CA