8 Best Interest-Only Mortgage Lenders of 2024
An interest-only mortgage is a niche product that can be difficult to find. See NerdWallet's picks for some of the best interest-only mortgage lenders in 2024.
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An interest-only mortgage can be hard to find. It is a niche product best suited for borrowers with strong cash flow, good credit and often for those looking for a short-term loan, typically from five to seven years.
Many interest-only mortgages are also jumbo loans for higher-priced properties that don't meet conventional loan standards.
NerdWallet has gathered some of the best mortgage lenders for people seeking interest-only mortgages to help you find the one that's right for your needs.
» MORE: How interest-only mortgages work
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- Governed by NerdWallet's strict guidelines for editorial integrity.
8 Best Interest-Only Mortgage Lenders of 2024
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Lender ▾ ▾ | NerdWallet Rating ▾ ▾ | Min. credit score ▾ ▾ | Min. down payment ▾ ▾ | Learn more |
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620 | 3% | Top 3 most visited 🏆 Learn more at Guaranteed Rate | ||
620 | 3% | LEARN MORE on NerdWallet | ||
620 | 3% | LEARN MORE on NerdWallet | ||
620 | 3% | LEARN MORE on NerdWallet | ||
620 | 3% | LEARN MORE on NerdWallet |
620
3%
- Offers a one-day mortgage approval process.
- Offers a generous selection of loans, including government-backed, interest-only, ITIN, jumbo and renovation loans.
- Advertises a HELOC that can be funded in as few as five business days.
- Origination fees are higher than average, according to the latest federal data.
- HELOC has a relatively short draw period, which may not provide flexibility for someone who wants the option of accessing home equity over a longer period.
- Offers several low-down-payment loan options, including FHA, VA, USDA and the PNC Community Loan.
- Receives high marks for customer satisfaction, according to J.D. Power and Zillow.
- Mortgage rates are lower than the industry average, according to the latest federal data.
- Jumbo loans available with 5% down payment.
- Doesn't offer renovation mortgages or home equity loans.
- In-person service is not available in every state.
- You’ll have to create an account or supply personal data to get answers by phone.
- Multiple loans for those who are renovating or building a home, including loans with interest-only payments during construction.
- Offers home equity loans and lines of credit.
- Offers down payment assistance and loans for underserved borrowers, including ITIN loans and loans with flexible qualifications in certain communities.
- Interest rates are on the low side relative to other lenders, according to the latest federal data.
- Borrowers can enter their information (including their desired loan amount, down payment and zip code) into the lender’s Mortgage Quote Comparison tool and receive a customized rate quote.
- Home equity loans are not available in all locations served by Flagstar.
- In 2022, the lender was fined for violating laws regarding properties in flood zones.
- Offers a wide variety of loan options, including construction loans, programs for early career doctors, a wide variety of jumbo loans and home equity lines of credit.
- Proprietary grant program can help borrowers afford down payment and closing costs.
- Mortgage rates are lower than industry average, according to the latest federal data.
- Customized rates aren't available online without contacting the lender.
- For borrowers who prefer to apply in person, branches are limited mostly to the South and East.
- Mortgages aren’t available in all 50 states.
620
3%
- Sample rates clearly posted for various loan products.
- Offers a wide variety of loan types and products, including options for borrowers who work for themselves and those without Social Security numbers.
- Mortgage rates tend to be on the low side compared with other lenders, according to the latest federal data.
- Home loans business is broadly focused on bank customers.
- Doesn’t offer home improvement loans, or home equity loans or lines of credit.
- Scandals and government actions have damaged consumer trust in recent years.
660
5%
National
- Offers down payment and closing cost assistance programs.
- May give existing customers a discount on mortgage lender origination fees and HELOC interest rates.
- Receives high marks for customer satisfaction, according to J.D. Power and Zillow.
- Doesn't offer renovation or construction-to-permanent mortgage loans.
- Must enroll in online banking to access Home Loan Navigator.
- Fined $12 million for reporting inaccurate mortgage applicant info to the federal government.
620
3%
- Has a fully online mortgage application and a highly rated mobile app.
- Offers financing for co-ops, a type of home that’s common on the East Coast.
- Interest rates are on the low side, according to the latest federal data.
- In-person service available only on Long Island, New York.
- Doesn’t offer renovation, construction-to-permanent or USDA loans.
- Customized rates not available online.
540
3%
- A good selection of loan products, including government-backed FHA and VA mortgages.
- Provides a “same-as-cash” loan that allows borrowers to compete with cash offers.
- Closing possible in as few as 15 days, the lender says.
- Doesn't lend in all states.
- Website doesn’t provide customized mortgage rates.
- Lender fees are on the high side, according to the latest federal data.
What is an interest-only mortgage?
An interest-only mortgage requires payments just of the interest — the "cost of money" — that a lender charges. You’re not paying back any of the borrowed money (the principal). That means you're not building equity in the house outside of your down payment or any gain in value that may occur due to local market circumstances.
These home loans are usually structured as adjustable-rate mortgages and frequently have terms of up to 10 years. After that, you’ll have to make amortized payments that are split between interest charges and principal reduction, or pay off the loan, or refinance.
Who can qualify for an interest-only mortgage?
Compared with a typical principal-and-interest mortgage, interest-only loans often require higher down payments and lower debt-to-income ratios, as well as good-to-excellent credit scores — for example, a FICO score of 700 or higher.
When would you use an interest-only mortgage?
An interest-only mortgage might be a good fit if you don't plan to live in the property for long and want to preserve the cash you'd spend on monthly payments for other investments. It's best if you are in a strong financial position and do not need to build equity.
More from NerdWallet
Last updated on January 30, 2024
Methodology
The star ratings on this page reflect each lender's overall star rating. Read more about how we determine those ratings.
The lenders on this page are chosen using this methodology:
NerdWallet reviewed more than 50 mortgage lenders, including the majority of the largest U.S. mortgage lenders by annual loan volume (measured among lenders with at least a 1% market share), lenders with significant online search volume and those that specialize in serving various audiences across the country.
For inclusion on this roundup, lenders must earn 4 stars or above according to our home loans overall methodology and must confirm the availability of interest-only loans in NerdWallet’s annual lender survey.
NerdWallet solicits information from reviewed lenders on a recurring basis throughout the year. All lender-provided information is verified through lender websites and interviews. We also utilized 2022 HMDA data for origination volume, origination fee, average interest rate and share-of-product data.
NerdWallet's Best Interest-Only Mortgage Lenders of 2024
- Guaranteed Rate: Best for easy-to-browse interest-only option
- PNC: Best for jumbo lending overall
- Flagstar: Best for jumbo loan variety
- Truist: Best for jumbo loan specialization
- Wells Fargo: Best for jumbo loan specialization
- Bank of America: Best for easy-to-browse interest-only option
- Bethpage Federal Credit Union: Best for credit union lending
- Network Capital: Best for streamlined closing