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8 Best Interest-Only Mortgage Lenders of 2022

An interest-only mortgage is a niche product that can be difficult to find these days. See NerdWallet's picks for some of the best interest-only mortgage lenders in 2022.

NerdWallet
Apr 4, 2022

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An interest-only mortgage can be hard to find these days. 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.

Best Interest-Only Mortgage Lenders

PNC
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at PNC

PNC: NMLS#446303

4.5

NerdWallet rating 
PNC

Min. credit score

620

Min. down payment

3%
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at PNC

Why we like it

Good for: borrowers with low-to-moderate incomes or limited down payments. PNC offers several low-down-payment loans, including one with no mortgage insurance.

Pros

  • Posts current mortgage rates on its website.

  • Has an online application for mortgage preapproval and a digital tool to track application progress.

  • Offers several affordable loan options, including FHA, VA, USDA and the PNC Community Loan.

Cons

  • Doesn't offer renovation mortgages.

  • In-person service is not available in every state.

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Bethpage Federal Credit Union
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at Bethpage Federal Credit Union

Bethpage Federal Credit Union: NMLS#449104

4.5

NerdWallet rating 
Bethpage Federal Credit Union

Min. credit score

620

Min. down payment

3%
Learn more

at Bethpage Federal Credit Union

Why we like it

Bethpage has a good selection of loan options but no USDA mortgages or renovation loans. And while it offers multiple online conveniences, you have to contact the lender for customized rates.

Pros

  • Offers a full array of online conveniences, including loan process updates.

  • Offers financing for cooperatives, a type of home that’s common on the East Coast.

  • Sample mortgage rates available for a variety of loan products.

Cons

  • In-person service available only in Queens and on Long Island, New York.

  • USDA loans are not available.

  • Customized rates not available online.

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Chase
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at Chase

Chase: NMLS#399798

4.5

NerdWallet rating 
Chase

Min. credit score

620

Min. down payment

3%
Learn more

at Chase

Why we like it

Good for: borrowers who want a name-brand bank with offices in more than half the states that charges lower rates and fees than many other lenders.

Pros

  • Allows electronic submission and tracking of loan documents.

  • Carries a wide variety of mortgage types and products.

  • Generally offers competitive rates, according to the latest data.

Cons

  • Doesn't offer home improvement loans, such as FHA 203(k) and HomeStyle.

  • You have to speak with a home loan adviser to complete the application.

  • Home equity lines of credit (HELOC) are currently unavailable.

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Network Capital
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at Network Capital

Network Capital: NMLS#11712

4.0

NerdWallet rating 
Network Capital

Min. credit score

620

Min. down payment

3%
Learn more

at Network Capital

Why we like it

Good for: borrowers looking for a lender with online convenience and mortgage banker assistance.

Pros

  • A good selection of loan products, including government-backed FHA and VA mortgages.

  • Provides “same-as-cash” loan that allows borrowers to compete with cash offers.

  • Online application process is clear and simple to follow.

Cons

  • 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.

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Watermark Home Loans
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Watermark Home Loans: NMLS#1838

4.5

NerdWallet rating 
Watermark Home Loans

Min. credit score

620

Min. down payment

3%
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Why we like it

Good for: borrowers looking for a decent selection of loan types with some not-so-standard options, such as reverse mortgages for seniors.

Pros

  • Offers reverse mortgages and interest-only loans for certain borrowers.

  • Online capabilities include a full application, as well as loan process updates.

Cons

  • Does not offer home improvement loans.

  • Fully customized mortgage rates not available without providing contact information.

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Golden 1 Credit Union
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Golden 1 Credit Union: NMLS#669333

4.5

NerdWallet rating 
Golden 1 Credit Union

Min. credit score

620

Min. down payment

3%
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Why we like it

Golden 1 offers a cost-saving real estate agent program, plus a range of loan types, including jumbos.

Pros

  • Offers a variety of purchase and refinance loans, including jumbo mortgages.

  • Has a preferred real estate agent program that can save a borrower money on closing costs.

  • Offers some flexibility on guidelines for loan qualification.

Cons

  • Does not offer VA or USDA loans.

  • Products available only to California residents.

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Wells Fargo
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Wells Fargo: NMLS#399801

4.5

NerdWallet rating 
Wells Fargo

Min. credit score

620

Min. down payment

3%
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Why we like it

Wells Fargo has a solid selection of mortgage products and offers easy-to-shop rates.

Pros

  • Provides numerous online conveniences, including loan application and process updates.

  • Current rates clearly posted for various loan products.

  • Offers a wide variety of loan types and products.

Cons

  • Home equity loans and lines of credit suspended due to COVID-19 are still unavailable.

  • Scandals and government actions have damaged consumer trust in recent years.

  • No home improvement loans offered.

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Carrington
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Carrington: NMLS#2600

4.5

NerdWallet rating 
Carrington

Min. credit score

620

Min. down payment

5%
Read review

Why we like it

Good for: first-time home buyers or credit-challenged borrowers interested in government loan products.

Pros

  • Offers multiple low-down-payment loan programs.

  • May consider alternative credit data, such as bank statements.

  • You can view customized rates for purchasing a home and apply online.

Cons

  • Doesn't offer home equity lines of credit.

  • Lender fees are on the high side, according to the latest Federal data.

Read Full Review

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 except from 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.

» MORE: How interest-only mortgages work

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. You must be in a strong financial position and not need to build equity.

More from NerdWallet

Last updated on April 4, 2022

Methodology

The star ratings on this page reflect each lender's overall star ratings. Read more about how we determine those ratings.

The lenders on this page are chosen using this methodology:

NerdWallet reviewed nearly 60 mortgage lenders, including the majority of the largest U.S. mortgage lenders by annual loan volume (lenders had to have 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 score a 4.5 or above according to our overall methodology and offer interest-only loans.

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 2020 HMDA data for origination volume, origination fee, rate spread and share-of-product data.

To recap our selections...

NerdWallet's Best Interest-Only Mortgage Lenders of 2022