Question 1

How long is the interest-only period?

Accepted Answer

Typically 5 to 10 years. After that, your payment jumps as you repay principal over the remaining term.

Question 2

Can I use this loan to buy a rental in Davis?

Accepted Answer

Yes. Investor interest-only loans exist, though terms differ from owner-occupied. A DSCR loan may also fit your goals.

Question 3

What credit score do I need?

Accepted Answer

Most lenders want 700 or higher. Some non-QM lenders go lower, but expect a bigger rate hit.

Question 4

Does interest-only mean I never pay down the loan?

Accepted Answer

During the IO period, yes — your balance stays flat. Principal repayment begins when the IO period ends.

Question 5

Are interest-only loans available as jumbos in Yolo County?

Accepted Answer

Yes. Many portfolio lenders offer interest-only on jumbo balances. Reserves and credit standards are tighter.

Question 6

Is this a good loan for a UC Davis faculty buyer?

Accepted Answer

Often, yes. Faculty with strong income but upfront cash constraints use IO loans to keep early payments manageable.

Interest-Only Loans in Davis, CA: Lower Payments, Sharper Strategy