Interest-only loans offer a strategic financing option for borrowers who want to minimize their monthly payments during the initial years of their mortgage. By paying only the interest for a set period, you can significantly reduce your monthly obligation and keep more cash available for investments, renovations, or other financial priorities. These loans are particularly popular with real estate investors seeking to maximize rental property cash flow, house flippers who plan to sell before the interest-only period ends, and high-income professionals expecting their earnings to increase over time.
Pay only the interest during the initial period, significantly reducing your monthly payment.
Keep more money in your pocket for investments, renovations, or other financial goals.
Ideal for investors who want to maximize rental property cash flow or flip properties.
Interest payments are typically tax-deductible, potentially increasing your tax benefits.
Option to pay principal when you choose, giving you control over your payment strategy.
Perfect for borrowers expecting increased income or planning to sell before the interest-only period ends.
Interest-only loans allow you to pay only the interest on your mortgage for an initial period, typically 5-10 years. During this time, your monthly payments are significantly lower because you are not paying down the principal balance. For example, on a $500,000 loan at 7% interest, a fully amortizing 30-year payment would be approximately $3,327 per month, while an interest-only payment would be only $2,917 per month—a savings of $410 monthly. After the interest-only period ends, the loan converts to a fully amortizing loan, and your payments increase to pay off the remaining principal over the remaining term. This structure is popular with real estate investors who want to maximize cash flow, borrowers who expect their income to increase, or those planning to sell or refinance before the interest-only period ends.
Investors seeking to maximize cash flow on rental properties or hold properties for appreciation.
Investors who plan to renovate and sell properties before the interest-only period ends.
Borrowers expecting significant income increases who want lower payments now.
Financially savvy borrowers who prefer to invest the payment difference in higher-return opportunities.
Get answers to common questions about interest-only loans.
Q Home Loans specializes in interest-only loans for homebuyers and investors in Washington. Get expert guidance and competitive rates.