Interest Only
Pay Just The Interest For a Preset Period of Time
What is an Interest Only Loan
An interest only loan allows you to pay only the full monthly interest due on your loan for the fixed period of the loan, which can range from 5 to 10 years. During the fixed payment period, you’re required to make only the interest payments; the principal remains unchanged. When the fixed period expires, you begin paying on the principal, too, resulting in an increased mortgage payment.
One unique characteristic of an interest-only loan is that you may elect to make either the minimum monthly payment (the interest-only portion), or, at your discretion, additional payments to be applied to principal to reduce the principal balance. Doing so will reduce your minimum monthly payment in the following month, because the minimum payment will be recalculated based on the remaining loan principal.
This unique tool is very attractive to borrowers whose income ebbs and flows, as it maximizes cash flow between commissions or bonuses. When income periods are lower, only the interest payment is due. In those periods that your income surges, you can make additional payments towards your principal and lower your future IO payments.
How low can you go?
Borrowers with short-term home plans who would rather increase monthly cash flow than build equity
Borrowers with short-term home plans who would rather increase monthly cash flow than build equity
Borrowers with short-term home plans who would rather increase monthly cash flow than build equity
Borrowers with short-term home plans who would rather increase monthly cash flow than build equity
We’re here to help
The JJ Mack Team at American Pacific Mortgage specializes in interest-only loans and helping California homebuyers explore flexible financing options with confidence. With offices in Roseville, Sacramento, and Loomis, we combine local expertise with personal service to guide homebuyers every step of the way. If you’re considering an interest-only loan, contact us or fill out the form below to explore whether this financing option is the right fit for your homeownership goals.
Frequently Asked Questions
Q: What is an interest-only mortgage?
An interest-only mortgage allows borrowers to pay only the interest on the loan for a set period—typically 5 to 10 years. After that period, the loan converts to a standard principal-and-interest payment schedule.
Q: Who should consider an interest-only loan?
Interest-only loans can be a good option for borrowers who expect their income to increase in the future, plan to sell or refinance before the interest-only period ends, or want to keep payments lower for the short term.
Q: What are the risks of an interest-only mortgage?
The main risk is that your monthly payment will increase once the interest-only period ends because you’ll begin repaying both principal and interest. It’s important to plan ahead and ensure the higher future payments will fit your budget.
Q: Do I build equity during the interest-only period?
During the interest-only period, you don’t pay down your loan principal, so you don’t build equity through payments — though you may still gain equity if your home appreciates in value. Once the loan converts to principal-and-interest, you begin paying the balance down. Understanding this trade-off is key to deciding if an interest-only loan fits your goals.
Q: Are interest-only loans available in Roseville and Placer County?
Yes. The JJ Mack Team offers interest-only mortgage options to qualified buyers throughout Roseville, Rocklin, Loomis, and the greater Placer County and Sacramento area. We’ll help you weigh whether this structure makes sense for your situation and long-term plans.