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9 Best Interest-Only Mortgage Lenders of 2023

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 2023.

By NerdWallet  

Some or all of the mortgage lenders featured on our site are advertising partners of NerdWallet, but this does not influence our evaluations, lender star ratings or the order in which lenders are listed on the page. Our opinions are our own. Here is a list of our partners.

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

Bank of America
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Bank of America: NMLS#399802

4.5

NerdWallet rating 
Bank of America

Min. credit score

660

Min. down payment

5%

National / regional

National

National / regional

National

Why we like it

Good for: first-time home buyers looking for low- or no-down-payment options and homeowners interested in a home equity line of credit.

Pros

  • 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.

Cons

  • Doesn't offer renovation loans that roll costs into a mortgage.

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Chase
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Chase: NMLS#399798

4.5

NerdWallet rating 
Chase

Min. credit score

620

Min. down payment

3%

Why we like it

Good for: borrowers who want a wide selection of loan products, an in-person experience and comparatively low interest rates.

Pros

  • Carries a wide variety of mortgage types and products, including mortgages with down payments as low as 3%.

  • Offers low rates compared with other lenders, according to the latest federal data.

  • Offers a customizable mortgage calculator for personalized rate and payment estimates.

  • Receives high marks for customer satisfaction, according to J.D. Power and Zillow.

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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Flagstar
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Flagstar: NMLS#417490

4.5

NerdWallet rating 
Flagstar

Min. credit score

620

Min. down payment

3%

Why we like it

Good for: borrowers who want a wide range of choices — not only among mortgage products, but also in the channel they prefer, whether a branch, online or on the phone.

Pros

  • Offers a wide range of loan types and products, including FHA, VA and USDA.

  • Borrowers can apply and track loan status online.

  • Offers customized online rate quotes with monthly payment estimates, including mortgage insurance, when applicable.

Cons

  • Home equity loans are geographically limited.

  • Origination fees are on the high side compared with other lenders, according to the latest federal data.

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Guaranteed Rate
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at Guaranteed Rate

Guaranteed Rate: NMLS#2611

5.0

NerdWallet rating 
Guaranteed Rate

Min. credit score

620

Min. down payment

3%
Learn more

at Guaranteed Rate

Why we like it

Good for: borrowers seeking a solid variety of loan types, including jumbo and interest-only options, and a totally online experience.

Pros

  • Displays detailed sample rates for many of its loan products.

  • Offers a wide variety of loans, including jumbo and interest-only products.

  • Offers low rates compared with other lenders, according to the latest federal data.

Cons

  • Doesn't offer home equity loans.

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New American Funding
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at New American Funding

New American Funding: NMLS#6606

4.5

NerdWallet rating 
New American Funding

Min. credit score

620

Min. down payment

3%
Learn more

at New American Funding

Why we like it

Good for: First-time home buyers and other borrowers looking for a broad array of loan choices.

Pros

  • Offers a wide variety of purchase and refinance mortgages with an emphasis on helping underserved communities.

  • Its home equity line of credit can be used for an owner-occupied or second home.

  • Offers a program to enable buyers to make cash offers.

Cons

  • Mortgage origination fees tend to be on the high end, according to the latest federal data.

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PNC
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PNC: NMLS#446303

5.0

NerdWallet rating 
PNC

Min. credit score

620

Min. down payment

3%

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.

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

  • Receives high marks for customer satisfaction, according to J.D. Power and Zillow.

Cons

  • Doesn't offer renovation mortgages.

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

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Truist
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Truist: NMLS#399803

4.5

NerdWallet rating 
Truist

Min. credit score

620

Min. down payment

3%

Why we like it

Good for: first-time home buyers, doctors and other borrowers interested in low-down-payment mortgage options.

Pros

  • Offers a complete suite of online mortgage application tools and loan tracking.

  • Sample rates are easy to find on the website.

  • Offers a wide variety of loan options, including construction loans and programs for doctors.

Cons

  • Customized rates aren't available online without starting an application.

  • For borrowers who prefer to apply in person, branches are limited mostly to the South and East.

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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%

Why we like it

Good for: existing customers of the bank looking for a wide selection of mortgage products.

Pros

  • Sample rates clearly posted for various loan products.

  • Offers a wide variety of loan types and products.

  • Mortgage rates tend to be on the low side compared with other lenders, according to the latest federal data.

Cons

  • 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.

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Wintrust Mortgage
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Wintrust Mortgage: NMLS#449042

4.5

NerdWallet rating 
Wintrust Mortgage

Min. credit score

620

Min. down payment

3%

Why we like it

Wintrust Mortgage offers a variety of loan products, including home equity lines of credit and even home-improvement loans, and provides a number of online conveniences, such as loan process updates. But you won’t find rates posted online.

Pros

  • Offers specialty loans, such as construction and renovation loans and loans for second homes and investment properties.

  • Participates in first-time home buyer assistance programs in Illinois, Indiana and Wisconsin.

Cons

  • Sample rates for some loan products are available only by contacting a loan officer.

  • Physical locations aren't available in all states.

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 February 8, 2023

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 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 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 2021 HMDA data for origination volume, origination fee, average interest rate and share-of-product data.

To recap our selections...

NerdWallet's Best Interest-Only Mortgage Lenders of 2023