Low Payment Interest Only Mortgage Loans

An interest-only mortgage is a type of home loan that enables the borrower to makin payments solely towards the interest for the initial years of the mortgage, unlike payments that include both principal and interest.

Interest-only loan payments can be designated for a defined timeframe, offered as an option, or extend throughout the entire loan term, requiring repayment of the entire amount at the end.

Does an Interest Only Mortgage Offer a Lower Monthly Payment?

Typically, interest-only loans are configured as a specific subtype of adjustable-rate mortgage (ARM). Although interest-only mortgages result in lower payments temporarily, they also mean no accumulation of equity and entail a substantial increase in payments when the interest-only period concludes.

How Much Do You Want to Borrow?


See Lenders for Terms and Conditions

Many new home buyers have benefitted from the low monthly payment derived from an interest only mortgage. Let our lenders help you compare low interest loans online for home buying or refinancing.

What Is An Interest-Only Mortgage?

An interest-only mortgage involves paying only interest on your home loan every month for a limited time, such as five or 10 years. The reason some homeowners like these loans is that the initial payments are less because principal is not being paid.

The biggest pro of an interest-only mortgage is the low initial monthly payment. There are reasons that you could want a lower payment in the first few years. Perhaps your salary is lower right now but you expect more money to come in in a few years.

Also, some people who want to buy a house in a time of high real estate prices may find that they can more easily afford the payment by making interest-only payments.

Another reason to consider the interest-only option is if you are sure you will sell the home after a few years. For instance, if you are in the military and know you will move three years, interest only can be a smart choice. You can save money by paying interest only and do other things with it, such as build your savings or investing it.

The interest only mortgage has become very popular refinance options in the last few years. Interest only loan features offer borrowers a reduced payment option for home refinancing with cash out opportunities like second mortgage and home equity credit lines that include low rate payments for people with good and bad credit.
Whether you are purchasing a home, refinancing your mortgage or taking out a new second mortgage, interest only loans have become popular features for almost every loan program today.

Compare Low Payments with an Interest Only Loan or Credit Line.

interest only mortgage

People love interest only features because it keeps their monthly payments as low as possible.

Unlike negative amortization loans, interest only loans do not defer any interest so you will never have a mortgage lender adding debt to your principal loan balance.
Nationwide Mortgage Lenders offers hybrid loans that feature a fixed interest rate for 2,3,5,7, or 10-years with interest only payment options.
Take advantage of increased cash flow and benefit from the reduced monthly payments created by interest only mortgages from the premiere refinancing leader online.
  • Interest Only Mortgage Refinance
  • Home Purchase Loan with Interest Only Options
  • Interest Only Home Equity Line of Credit
  • Interest Only with Payment Option ARM
  • Fixed Rate-Interest Only Loans
  • Interest Only 2nd Mortgages
It’s not too late to refinance and a lower your monthly payment with the interest only mortgage loan. Nationwide Mortgage Loans offers many interest only programs for second mortgage, home equity loans and 1st mortgage loans. Refinancing your mortgage can save you thousands of dollars a year.

Are Interest Only Mortgages Too Risky?

Interest only home loans have been the topic of many industry conversations when considering risk factors. Interest only payments have lower monthly payments for the introductory period which lasts between 1 and 10 years in most cases.
Since interest only payments do not pay down any portions of the principal balances, and then borrowers must budget accordingly to pay off their balances.

Pros and Cons of an Interest Only Mortgage

Many homeowners have felt the pinch of rising costs and inflations in 2024. Some may consider obtaining an interest-only mortgage to keep costs down. Before applying for an interest-only mortgage, it is important to consider the pros and cons of these loan products. If you are ready to apply for a mortgage, speak to one of our dedicated loan experts today.

Cons To An Interest-Only Mortgage

While there are benefits to an interest-only mortgage, there are things to be aware of before signing on the dotted line. First, remember that the loan usually has a higher interest rate than a regular mortgage. The lower monthly payment only comes from not paying principal in the first five or 10 years. The principal will have to be paid eventually.

Also, because the interest rate is higher, you will pay more interest over the years. There also is a chance that the mortgage rates could rise, as we have seen in the last two years. Generally, rate hikes on interest-only mortgages have a cap around 2%, but after the interest-only period is over, the increased payment could be a shock.

Another potential problem is if your home drops in value. Then, when you sell the home later, it may not cover what you owe. Being upside down on a mortgage is a problem that you want to avoid.

Think About Why You Want An Interest-Only Loan

When considering an interest-only loan, financial experts say it is important to understand why you want it. It is common for people who are on the bubble of being able to afford the house to want an interest-only loan so they can reduce the payment.

This is not a good reason to get an interest-only home loan. If you get into the home and can barely afford the interest-only payment, it’s likely you will have problems making the higher payment later.

A strong candidate for an interest-only mortgage has a good source of steady income with sufficient cash flow to pay the full mortgage payment after the interest-only period is over.

Mortgage rates could still go up, but you would have enough income to handle it. Plus, if you plan to sell the home after a few years, going interest-only may make sense.

Other Options than An Interest-Only Mortgage

An interest-only mortgage can be a smart choice for certain situations. But there are other options to consider. You could reduce your monthly costs by getting an adjustable-rate mortgage. This loan may have a lower, fixed rate for five or seven years, and will readjust to market rates later. But the payment on this loan includes principal, so you are paying down what you owe.

An interest-only mortgage can be a wise choice for certain consumers. If you are sure you will sell the home in a few years, or have plenty of steady income to afford the higher payment later, you could consider the interest-only option. But if you are getting the loan with interest only so you can just get into the home, this isn’t a good option. It is probably better to buy a less expensive home, or apply for an adjustable-rate mortgage.

Our loan experts can go over a variety of loan options with you, including fixed rate, adjustable rate, and interest-only loans. Please contact us today for all of your mortgage needs.

Linda’s Advice for Interest Only Mortgages– Ask Linda?

Interest only loan require some discipline. If you make a little extra payment towards principal each month, then your loan can be paid off earlier. Get a plan, and request a few amortization schedules for 15, 20 & 30 years.

Should I Get a Refinance Loan With a Fixed or Adjustable Rate?

Home equity can be converted into money through one of several different instruments. The chore is to find out which one loan is right for your situation.
Need A Lower Payment? Check out our Interest Only Mortgages
Get lower monthly payment for your purchase or refinancing!

Interest Only Mortgage Term Options

  • 1 Year Fixed Rate- Interest Only
  • 2/28 Fixed Rate- Interest Only
  • Jumbo Interest Only Mortgage
  • 3/27 Fixed Rate- Interest Only
  • 5/1 Fixed Rate- Interest Only
  • 7/1 Fixed Rate- Interest Only
  • 10/1 Fixed Rate- Interest Only
  • 30 Fixed Rate- Interest Only
Mortgage Rate Statistics
  • The avg. contract interest rate for 30-year fixed-rate mortgages decreased to 6.18% from 6.22%
  • The avg. contract mortgage interest rate for 15-year fixed-rate mortgages decreased to 5.84% from 5.87%.
  • The avg. contract mortgage interest rate for 15-year fixed-rate second mortgages increased to 8.125% to 8.375%.
  • The avg. contract interest rate for 1-year ARMs increased to 5.64% from 5.60%.
For more information, please visit mbaa.org
Surveys recently found that almost 43% of first time homebuyers obtain their mortgage using 100% mortgage financing.
According to the National Association of Realtors 43 percent of first-time home buyers obtained no money down mortgages last year and that the average first-time home buyer made only a 2 percent down payment on a $150,000 property.
Typically there were 2 loans totaling 100% 80% first mortgage and a 20% second mortgage.
BD Nationwide will help you connect with lenders offering the best interest only mortgage loans available online. Please take a few minutes and complete the free quote for so you can start comparing mortgage rates for interest only loans today.