Interest‑Only Mortgage
Pay interest only for 5–10 years, then principal + interest. Lower initial payments with tradeoffs.
10%+ (varies) down
Program Details
Minimum Down10%+ (varies)
Credit ScoreTypically 700+
DTI RatioTypically <= 43%
PMI/MIPNo PMI on Non‑QM/Jumbo; varies otherwise
Rate CapsAvailability varies by investor
Loan LimitsOften paired with Jumbo/Non‑QM
Key Benefits
- Cash‑flow management
- Potential investment leverage
Program Tags
interest-only
Who It's Best For
- Maximizing early cash flow
- Shorter hold periods
Advantages
- Lower initial payments
- Payment flexibility during IO period
Considerations
- •Higher payments later
- •Slower equity build
- •Potential negative amortization on certain structures
Eligibility Requirements
- Program and investor eligibility required
- Strong reserves often needed
Additional Requirements
- Higher credit and reserves
- Clear exit/refinance plan recommended
Pro Tips
- Model the step‑up when IO period ends
- Consider pairing with ARMs for flexibility
Commonly 5–10 years; varies by investor.
Payment resets to include principal and interest, increasing total payment.
Calculate Your Payment
Use our interactive calculators to estimate your monthly payment and see how much you could save.
Payment Example
Loan amount
$475,000
Est. P&I
$3,160/mo
Estimate only. Taxes, insurance, HOA, MI/MIP, and points/credits not included. Not a commitment to lend.
Scenario Snapshot
Down payment
$60,000
Loan amount
$540,000
Typical Documents
- Last 30 days of pay stubs or income docs
- Last 2 years W-2s or 1099s (as applicable)
- Most recent 2 months of bank statements
- Government-issued ID
Exact items vary by program and scenario.
Loan Limits (Estimate)
Use your ZIP to check your state and review baseline limits. County limits may be higher.
Enter a ZIP to detect your state. County-specific limits vary.
Conforming baseline (1‑unit)$766,550
FHA floor (1‑unit)$498,257
FHA ceiling (1‑unit)$1,149,825
Actual county/metro limits vary. See official resources at FHFA and HUD.
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