An Interest-Only loan allows you to pay only the interest on your mortgage for a set period (typically 5, 7, or 10 years).
During this time, your required monthly payment is lower because you’re not paying down the principal balance. After the interest-only term ends, the loan converts to a fully amortizing payment for the remaining term.

This program is ideal for:

High-income earners with variable or commission-based income

Investors who want to maximize cash flow

Professionals or business owners expecting income growth in coming years

Luxury buyers who prefer to keep more money invested elsewhere

For the first 5–10 years, you make interest-only payments.
After that, your loan automatically converts into a principal-and-interest payment for the remaining term (often 20–25 years).
You can make extra payments toward the principal at any time without penalty.

Lower initial monthly payments

Improved cash flow for investors or self-employed borrowers

Payment flexibility — you control how much principal you pay

Short-term financial efficiency for buyers who don’t plan to stay in the home long-term

No equity built during the interest-only period unless you make extra payments

Payments increase once the interest-only term ends

Rates may be higher than fixed conventional loans

Best suited for borrowers with strong financial discipline and a clear exit or refinance strategy

Most lenders require a minimum score of 680–700, with the most competitive rates going to borrowers above 720.
Because this is a Non-QM program, lenders focus heavily on overall financial strength, assets, and reserves.

Down payment requirements typically range from:

20% for primary residences

25–30% for second homes or investment properties
The higher your credit and liquidity, the more flexibility you’ll have on down payment.

Yes, you can make extra principal payments at any time.
Doing so helps reduce your balance and lowers future payments when the amortization phase begins.

They can be either, but most modern interest-only programs are Adjustable-Rate Mortgages (ARMs) with initial fixed terms such as 5/6, 7/6, or 10/6 ARMs.
That means your rate is fixed during the initial term, then adjusts semiannually.

You can use an Interest-Only loan to purchase or refinance:

Primary residences

Second homes

Investment properties

Condos, townhomes, or single-family homes
Some lenders also offer jumbo interest-only loans for high-value properties.

Yes, you can refinance anytime into a traditional fixed-rate or another Non-QM loan.
Many borrowers choose to refinance before the interest-only period ends to avoid the higher amortizing payment.

No. These loans generally do not require PMI, even with less than 20% down, because they’re structured as Non-QM or jumbo products outside Fannie/Freddie guidelines.

Texas borrowers often use this structure for:

Luxury homes in Dallas, Austin, or Houston

High-balance jumbo loans

Investment properties or second homes

Bridge financing between home purchases

Maximize cash flow with lower monthly payments

Preserve liquidity for renovations or other investments

Hold properties short-term before selling or refinancing

Deductible interest for eligible investment scenarios (consult your CPA)