Mortgage Glossary
Interest-Only Loan
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
An interest-only loan lets the borrower pay only the interest for an initial period, with no principal reduction during that time.
What Interest-Only Loan means
Payments are lower at first but jump when the principal-and-interest period begins. You build no equity through paydown in the interim. These loans suit specific cash-flow or investment strategies.
Florida example
A Florida investor uses an interest-only loan to keep early payments low on a rental while rents rise. They plan to refinance or sell before the payment recasts, accepting the risk if those plans slip.
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