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Interest Only Loan Programs



Loan Program Advantages Disadvantages

Interest Only Programs

  • Lower monthly payment option

  • Qualify for a higher loan amount with the interest only payment

  • Option to pay the full principal and interest payment

  • Recast feature during interest-only term

  • Higher rates may apply

  • Principal balance will not decrease during the interest only payment period

  • Payments will be higher for the remaining term due to shorter remaining amortization period

Interest only loan programs provide the same features as fixed and variable rate programs, and they additionally offer a lower payment option - interest only. With this option you pay only the interest portion of the payment but no principal. You start making full principal and interest payments after the initial interest only period ends.

With such programs you can make payments towards the principal at any time without penalties. If you make a payment towards the principal during the initial interest only term, your mortgage balance decreases and your future payment amount is recalculated. Such recast feature can be of great value and is not available on programs with principal and interest payments.

Interest only payment options allow you to qualify at the starting interest only payment. This gives you more buying power and a lower monthly payment compared to an amortized loan.

Interest only feature is available on a variety of programs, both Conforming and Jumbo, including the following:

- 30 Year Fixed
- 1 to 10 Year Fixed Term ARM
- 12 MTA Option ARM (1.0% - 2.0% minimum payment rate programs)

Apply now or contact us to discuss your specific situation.