What is a Fixed Rate 30 Year Interest Only Mortgage?

Family outside of their home which they potentially bought with a 30 year interest only mortgage.

30/10 or 30/15 year loans can be a great fit for certain borrowers but they come with a certain amount of risk. Be sure to consult a mortgage professional before making a decision.

30 year interest only mortgages are fixed rate products where only the interest portion of the monthly payment is due for a set period of years. Sometimes these loans are referred to as 30/10 or 30/15 year interest only mortgages are the numbers after the trailing slashes indicate how long the interest only payment period is available (in this case, either 10 or 15 years). Interest only 30 year mortgage products can and do vary by investor so be sure to ask for details when speaking with a lender, broker, or bank.

30 Year Interest Only Loan Highlights

Rates for 30 year IO loans are typically higher than with adjustable rate interest only mortgages and can be less risky as your note rate will remain fixed throughout the life of the loan. However, what DOES makes this product risky, is that once the interest only period ends, the principal balance is then owed, in full, during the remaining years of the loan. For example, let’s say you took out a 30/10 IO mortgage and for the first ten years you only made interest payments. At the end of the IO period, you would only have 20 years to pay off the principal balance (and the remaining interest). Consumers just need to be very aware that this adjustment is going to be coming down the road in the future and they should plan accordingly.

These products are not available in every state. Be sure to ask a mortgage professional if a 30 year interest only loan is an option in your state.

You can research lenders and brokers serving your community using the Rate Tables on PriceAMortgage.com. Many companies do not post rates and closing costs for 30 yr IO loans but do still offer them. You’ll likely have to contact the various companies directly to find out if they have this product offering.