Enjoy significantly lower monthly payments for the first 10 years with a 40-Year Interest-Only mortgage. At Convoy Home Loans, we help savvy homeowners and investors in San Diego, El Segundo, and across California access this powerful financing option designed for maximum cash-flow flexibility and long-term wealth building.
A 40-Year Interest-Only Mortgage is a specialized fixed-rate loan structured in two phases:
Years 1-10: You pay only the interest - resulting in substantially lower monthly payments.
Years 11-40: The loan automatically converts to a fully amortizing 30-year fixed-rate mortgage (principal + interest).
The interest rate remains fixed for the entire 40 years - providing long-term payment predictability after the interest-only period.
This unique structure is available for both purchases and refinances and works on primary residences, second homes, and investment properties.
Dramatically improves cash flow for investments, renovations, or lifestyle needs.
No rate changes or payment shocks after year 10.
You can pay down principal during the first 10 years with no penalty (up to 20% per year in the first 3 years).
Save hundreds per month compared to conventional loans with mortgage insurance.
Excellent for cash-out refinances, rate-and-term refinances, and new purchases.
Can close in an LLC, corporation, trust, or other entity (with majority owners/members on the loan).
Interest-only payments mean slower equity build in the early years.
Monthly payments will rise when principal amortization begins.
Standard 6 months of interest if you refinance or pay off early (exceptions apply for sales; 20% annual principal reduction allowed penalty-free).
Limited to site-built single-family homes, condos, and 2-4 unit properties.
Lenders underwrite using the higher payment that begins in year 11.
This loan is ideal for:
✓ High-income professionals who want maximum cash flow in the early years
✓ Real estate investors seeking better returns on rental properties
✓ Buyers planning major home improvements or business investments
✓ Families purchasing in high-cost San Diego markets who need payment relief
✓ Homeowners refinancing to pull cash out while keeping payments manageable
✓ Self-employed borrowers or those who prefer entity ownership structures
We review your finances and run detailed scenarios showing payments in both phases.
Secure your fixed rate for the full 40-year term.
Make interest-only payments (and optional principal reductions).
Automatically switches to full principal-and-interest payments.
Enjoy flexibility with extra principal payments at any time.
We provide clear amortization schedules so you always know what to expect.
Loan Type | Initial Payment | Rate Stability | Term | Best For |
|---|---|---|---|---|
40-Year Interest Only | Lowest | Fixed 40 years | 40 yrs | Maximum cash flow & flexibility |
30-Year Fixed | Higher | Fixed 30 years | 30 yrs | Traditional stability |
15-Year Fixed | Highest | Fixed 15 years | 15 yrs | Fastest payoff |
Standard Jumbo/Super Jumbo | Varies | Fixed or ARM | 30 yrs | High-value purchases |
As a nationally licensed mortgage broker (NMLS #2130517) with offices in San Diego and El Segundo, we have access to specialized 40-year interest-only programs that most retail lenders do not offer. Our mission is to provide financing options that enhance your standard of living while treating you like family.
We excel at structuring complex loans and guiding clients through every detail with transparency and care.
Ready to lower your monthly payments with a 40-year interest-only mortgage? Get pre-approved today - no obligation.
The first 10 years are interest-only, followed by a 30-year fixed principal-and-interest period in years 11-40. The rate is fixed for the entire 40 years.
No - your interest rate remains fixed for all 40 years.
Yes, you can make principal payments at any time.
There is a prepayment penalty for the first 3 years (equivalent to 6 months of interest). You may pay up to 20% of the principal per year with no penalty. No penalty applies if you sell the home.
No - no private mortgage insurance is required at 15% down.
Unfortunately, no. It is available for single-family residences, condos, and 2-4 unit properties.
Absolutely - excellent for both cash-out and rate-and-term refinances.
Available for primary residences, second homes, and investment properties. Loans can close in an LLC, corporation, trust, or other entity (majority owners or members must be on the loan).
Yes - we are licensed in many states and can assist qualified borrowers nationwide where permitted.
Real Estate Investor Lending · NMLS #2130517 · Licensed Mortgage Broker
AZ · CA · CO · FL · GA · ID · MD · MI · MN · NC · NM · OH · OR · PA · TN · TX · VA · WA and more
This is not a commitment to lend. All loans subject to credit approval. Equal Housing Lender.