Interest-only financing comes up for New Jersey borrowers whose income arrives unevenly, such as business owners, commission earners and people paid largely in bonuses. The feature lets you pay only interest for an initial period and pay principal when cash allows. It is offered as a non-QM loan, so pricing is often higher than on an agency loan. Before choosing it for a home in New Jersey, make sure you can handle the higher payment once the loan begins amortizing.
Call to talk with a licensed loan officer. Programs vary by borrower, property and investor.
Mortgage lenders, brokers and loan originators serving New Jersey are licensed by the New Jersey Department of Banking and Insurance. Non-QM loans are made by the same licensed lenders and brokers, so you can confirm any company's or loan officer's license on NMLS Consumer Access before you apply.
Where the numbers point in New Jersey
Counties with the most first liens with an interest-only feature (2024):
| County | First liens with an interest-only feature (2024) |
|---|---|
| Ocean County | 210 |
| Monmouth County | 202 |
| Bergen County | 148 |
| Cape May County | 87 |
| Morris County | 83 |
| Essex County | 73 |
| Union County | 70 |
| Atlantic County | 57 |
| Hudson County | 50 |
| Middlesex County | 42 |
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Local pages in New Jersey
- Non-QM lenders in Trenton
- Non-QM lenders in Newark
- Non-QM lenders in Jersey City
- Non-QM lenders in Atlantic City
- Non-QM lenders in Paterson
- Non-QM lenders in Elizabeth
- Non-QM lenders in Vineland
- Non-QM lenders in Clifton
- Non-QM lenders in Camden
- Non-QM lenders in Passaic
- Non-QM lenders in Union City
- Non-QM lenders in Bayonne
- Non-QM lenders in East Orange
- Non-QM lenders in New Brunswick
- Non-QM lenders in West New York
- Non-QM lenders in Hoboken
- Non-QM lenders in Perth Amboy
- Non-QM lenders in Plainfield
- Non-QM lenders in Hackensack
- Non-QM lenders in Sayreville
- Non-QM lenders in Linden
- Non-QM lenders in Kearny
- Non-QM lenders in Fort Lee
- Non-QM lenders in Bridgeton
- Non-QM lenders in Franklin
- Non-QM lenders in Fair Lawn
- Non-QM lenders in Garfield
- Non-QM lenders in Princeton
- Non-QM lenders in Long Branch
- Non-QM lenders in Rahway
Common questions
What is an interest-only mortgage?
An interest-only mortgage is a loan where the required payments cover only interest for an initial period. Your balance does not go down during that time unless you pay extra. After the interest-only period, the loan amortizes and payments include principal and interest, which raises the payment. The feature is offered on non-QM loans because Qualified Mortgage rules exclude interest-only payments.
Why isn't an interest-only loan a Qualified Mortgage?
The CFPB's Qualified Mortgage definition excludes loans with certain features, including interest-only payments, negative amortization and balloon payments. A loan with an interest-only period can still be made, but as a non-QM loan. The lender must still determine in good faith that you can repay, which includes looking at the payment after the interest-only period ends.
Do I build equity with an interest-only loan?
Only through a rise in the home's value or extra principal payments you choose to make. Required payments during the interest-only period do not reduce what you owe. If values fall, you could owe close to or more than the home is worth, which makes selling or refinancing harder. Plan for that possibility rather than counting on appreciation.
Other non-QM options in New Jersey
Bank statement loansNon-QM lendersSelf-employed1099 loansP&L loansAsset depletionNo-doc / stated incomeNew self-employedITIN loansForeign nationalNon-warrantable condoBank statement HELOC
Related guides
- QM vs. Non-QM Loans: What the Difference Means for You
- How to Compare Non-QM Loan Offers: Loan Estimates, Features and Fit
- What Is a Non-QM Loan?
Interest-Only Mortgages overview · New Jersey non-QM overview
- 2024 HMDA data