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Nevada Conventional Mortgage Experts
Understand how interest-only loans work, who they're right for, and safer alternatives for Nevada homebuyers. Lower payments now, but is it worth the risk?
Pay only interest for 5-10 years with lower monthly payments
Payments can jump 50-100% when principal payments begin
Your loan balance stays the same during interest-only period
If home values drop, you could owe more than the home is worth
Real estate agents, commission-based sales professionals, or business owners who expect income to increase significantly can benefit from lower initial payments.
If you plan to sell within 5-7 years (common for Las Vegas professionals who relocate frequently), you might save thousands in monthly payments.
Nevada investors who plan to flip properties or rely on rental income may use interest-only loans for cash flow advantages.
First-time homebuyers
Without equity cushion, you're vulnerable to market downturns
Fixed or declining income households
Payment shock when principal kicks in could be unaffordable
Long-term homeowners
You'll pay significantly more interest over 30 years with no equity gains early on
Predictable payments, steady equity growth, and long-term stability for Nevada homeowners.
Lower down payment with fixed rates and equity building from day one.
Put down 5-10% and remove PMI once you hit 20% equity – still builds wealth.
Lower payments for 2-3 years, then transition to a fixed rate that builds equity.
$400,000 home purchase in Las Vegas at 7% interest rate:
| Loan Type | Payment Years 1-10 | Payment Years 11-30 | Total Interest Paid |
|---|---|---|---|
| Interest-Only (10yr) | $2,333/mo | $3,592/mo | $578,000 |
| 30-Year Fixed | $2,661/mo | $2,661/mo | $558,000 |
*The interest-only saves $328/month initially, but costs $20,000 more over 30 years and creates a $1,259/month payment shock in year 11.
Interest-only mortgages carry significant risks for most Nevada homebuyers. Let our experts guide you to smarter financing options with predictable payments and equity building from day one.
For most Nevada homebuyers, traditional mortgage products offer better long-term value and lower risk. Here are proven alternatives to consider:
Best for: Most homebuyers seeking stability and predictable payments.
Advantages: Your payment never changes. You build equity from day one. No payment shock risk. Lower total interest than interest-only loans.
Nevada Context: With Nevada's median home price around $430,000 (2025), a 30-year fixed mortgage at 7% with 20% down gives you a payment of $2,279/month that never increases.
Best for: Borrowers who can afford higher payments and want to build equity fast.
Advantages: Lower interest rate (typically 0.5-0.75% below 30-year rates). Massive interest savings over loan life. Own your home outright in 15 years. Build equity rapidly.
Payment Comparison: Same $344,000 loan at 6.25% = $2,943/month. You'll pay $186,000 less in total interest vs. a 30-year loan.
Best for: Borrowers who plan to move or refinance within 5-7 years.
Advantages: Lower initial rate than fixed mortgages (often 0.5-1.0% lower). Unlike interest-only loans, you're paying principal from day one. If you sell or refinance before adjustment, you benefit from lower rate with equity building.
Nevada Strategy: If you're buying in a high-appreciation area like Henderson or Summerlin and plan to upgrade in 5-7 years, a 7/1 ARM at 6.5% vs. 7% fixed saves $72/month while building equity.
Best for: First-time buyers (FHA) or veterans (VA) seeking low down payments.
Advantages: FHA requires only 3.5% down. VA requires $0 down for eligible veterans. Both offer competitive fixed rates. You build equity from day one. Predictable payments.
Nevada Opportunity: With Nevada's high veteran population (9.1% of adults), VA loans are particularly attractive — $0 down, no PMI, and fixed payments. Explore VA loan benefits.
While interest-only loans can be strategic tools for specific borrowers, they come with significant risks that Nevada homebuyers must understand:
When the interest-only period ends, your payment could increase 30-50% overnight. If you're not prepared financially, this can lead to financial strain or even foreclosure. Nevada's housing market volatility makes this particularly risky — if home values decline, you won't be able to refinance to avoid the payment jump.
For the first 5-10 years, you're building zero equity through principal paydown. You're relying entirely on home appreciation. If Nevada's housing market stagnates or declines (as it did during the 2008-2012 recession when Las Vegas home values dropped 60%), you could end up underwater on your mortgage.
Nevada Historical Context: Las Vegas home prices peaked in 2006 at $315,000, crashed to $118,000 by 2012 (-62%), and didn't recover to 2006 levels until 2018.
Many borrowers plan to refinance before the interest-only period ends. But what if interest rates rise significantly? Or your home value drops and you can't qualify for refinancing? You'll be stuck with the payment shock. Never assume you'll be able to refinance — economic conditions change.
Because you're not paying down principal for years, you'll pay significantly more interest over the life of the loan. On a $400,000 loan, the difference between a standard 30-year mortgage and a 10-year interest-only loan can exceed $100,000 in additional interest paid over 30 years.
With a standard mortgage, your monthly payment includes both principal (paying down the loan balance) and interest (the cost of borrowing). An interest-only mortgage flips this on its head — during the initial period (typically 5-10 years), you only pay the interest portion. Your loan balance doesn't decrease.
Here's a breakdown of how it works:
During the initial 5-10 years, your payments consist solely of interest on the loan. This results in significantly lower monthly payments. For example, on a $400,000 loan at 7% interest, you'd pay approximately $2,333/month (interest only) vs. $2,661/month for a standard 30-year mortgage.
After the interest-only period ends, the loan converts to a fully-amortizing mortgage. Now your payments include both principal and interest, calculated over the remaining loan term (typically 20 years). This causes a dramatic payment shock — your payment could jump 30-50%. In our example, payments would leap to approximately $3,110/month.
Let's say you purchase a home in Henderson for $500,000 with a 20% down payment ($100,000), resulting in a $400,000 loan at 7% interest:
Our Nevada loan officers can show you safer, smarter alternatives to interest-only loans that build equity and protect your financial future.
Nevada's trusted conventional mortgage lender serving Las Vegas, Henderson, Reno and all of Nevada with competitive rates and expert guidance.
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