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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.

NerdWallet
By
Last updated on January 30, 2024
Edited by
✅ Fact checked and reviewed
Johanna Arnone
Edited by
✅ Fact checked and reviewed

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NerdWallet's mortgage content, including articles, reviews and recommendations, is produced by a team of writers and editors who specialize in home lending. Their work has appeared in The Associated Press, USA Today, The Washington Post, MarketWatch, Newsweek and many other national, regional and local publications. They have been cited in publications including The Wall Street Journal, and appeared on NerdWallet's "Smart Money" podcast as well as local TV and radio.

Best Interest-Only Mortgage Lenders

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Lender
NerdWallet Rating
Min. credit score
Min. down payment
Learn more
Guaranteed Rate

Guaranteed Rate: NMLS#2611

Top 3 most visited 🏆
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at Guaranteed Rate
at Guaranteed Rate
Home loans overall
Best for easy-to-browse interest-only option

620

3%

PNC

PNC: NMLS#446303

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on NerdWallet
5.0
/5
Home loans overall
Best for jumbo lending overall

620

3%

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on NerdWallet
Flagstar

Flagstar: NMLS#417490

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on NerdWallet
5.0
/5
Home loans overall
Best for jumbo loan variety

620

3%

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on NerdWallet
Truist

Truist: NMLS#399803

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on NerdWallet
4.5
/5
Home loans overall
Best for jumbo loan specialization

620

3%

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on NerdWallet
Wells Fargo

Wells Fargo: NMLS#399801

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on NerdWallet
4.0
/5
Home loans overall
Best for jumbo loan specialization

620

3%

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on NerdWallet
Guaranteed Rate
Learn more
at Guaranteed Rate
at Guaranteed Rate
Guaranteed Rate

Guaranteed Rate: NMLS#2611

5.0
Home loans overall
NerdWallet rating
Min. credit score

620

Min. down payment

3%

Why We Like ItGood for: borrowers seeking a broad menu of loans, including jumbo and interest-only options, renovation loans and government-backed mortgages, as well as home equity lines of credit.
Pros
  • 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.
Cons
  • 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.
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PNC
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on NerdWallet
PNC

PNC: NMLS#446303

5.0
Home loans overall
NerdWallet rating
Min. credit score

620

Min. down payment

3%

Why We Like ItGood for: borrowers with low to moderate incomes or limited down payments, as well as home buyers seeking mortgages in higher-priced regions of the nation.
Pros
  • 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.
Cons
  • 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.
Flagstar
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on NerdWallet
Flagstar

Flagstar: NMLS#417490

5.0
Home loans overall
NerdWallet rating
Min. credit score

620

Min. down payment

3%

Why We Like ItGood for: Borrowers who may benefit from Flagstar’s unique loan options, such as ITIN loans, loans for manufactured homes or physician loans.
Pros
  • 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.
Cons
  • 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.
Truist
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on NerdWallet
Truist

Truist: NMLS#399803

4.5
Home loans overall
NerdWallet rating
Min. credit score

620

Min. down payment

3%

Why We Like ItGood for: first-time and low-income home buyers, early career doctors and other borrowers interested in low-down-payment mortgages, especially those in South Carolina, North Carolina, Texas and Virginia.
Pros
  • 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.
Cons
  • 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.
Wells Fargo
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Wells Fargo

Wells Fargo: NMLS#399801

4.0
Home loans overall
NerdWallet rating
Min. credit score

620

Min. down payment

3%

Why We Like ItGood for: existing customers of the bank looking for a wide selection of mortgage products, as well as self-employed borrowers and home buyers without Social Security numbers.
Pros
  • 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.
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.
Bank of America
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Bank of America

Bank of America: NMLS#399802

4.0
Home loans overall
NerdWallet rating
Min. credit score

660

Min. down payment

5%

National / regional

National

Why We Like ItGood 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 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.
Bethpage Federal Credit Union
Learn more
at Bethpage Federal Credit Union
at Bethpage Federal Credit Union
Bethpage Federal Credit Union

Bethpage Federal Credit Union: NMLS#449104

4.0
Home loans overall
NerdWallet rating
Min. credit score

620

Min. down payment

3%

Why We Like ItGood for: borrowers seeking a solid selection of mortgages, low rates and the community-minded business model of a credit union.
Pros
  • 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.
Cons
  • 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.
Network Capital
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on NerdWallet
Network Capital

Network Capital: NMLS#11712

4.0
Home loans overall
NerdWallet rating
Min. credit score

540

Min. down payment

3%

Why We Like ItGood for: borrowers looking to compete with all-cash offers or hoping to close quickly, as well as self-employed home buyers.
Pros
  • 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.
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.

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.

To recap our selections...

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
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