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Interest-Only Home Loans

An interest-only loan is a type of mortgage loan that gives you the option of paying just the interest or the interest and as much principal as you want on a monthly basis.

Most interest-only home loan programs are offered as interest-only loans for periods of either five or seven years.

For most people, the most appealing aspect of an interest-only loan is the the lower monthly payment it allows you to make during the first 5 or 7 years of the loan (the interest-only period). Interest only loans typically even offer lower interest rates than what you would get with a traditional mortgage.

5-Year Interest-Only Mortgage 30-Year Fixed Rate Mortgage
Loan Amount: $200,000.00 $200,000.00
Interest Rate: 4.75% 6.25%
Monthly Payment: $791.00 $1,231.43
Total Interest Paid at 5 years: $47,500 $63,070.12
Remaining Principal at 5 years: $200,000.00 $187,221.95


An Interest Only loan can be a great option to consider especially if...

  • You could use the extra money you save each month on your mortgage payment to put towards paying off higher interest credit card debt or car loans.

  • You plan on putting the money saved towards investments that would offer a higher rate of return.

  • You could use the extra money to put towards home improvements, college tuition, or even other expenses such as a new car.

  • You expect your home will increase in value over the next 5 - 7 years.

  • You plan on living in your home for less than 10 years.


Another thing to keep in mind is that just because you are not paying down the principal amount on your loan, that doesn't mean that your home is not building equity. Homes in the U.S. typically appreciate between 5 - 6% each year. In most cases, even if you're not paying down your principal, you're building equity in your home through appreciation.

Apply for a Mortgage Online!

We have access to an extremely wide variety of interest only mortgage programs. If you live in the Tucson area or elsewhere throughout Arizona and would like additional information, please feel free to Contact Us!

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