Estimate payments on an interest-only mortgage and understand the trade-off: a lower initial payment while you pay no principal, followed by a jump when principal repayment begins. Interest-only loans carry real risk — the CFPB notes your balance does not fall during the interest-only period.
For an initial period you pay only the interest, so the payment is lower but the balance never drops. When that period ends, payments rise sharply to repay principal over the remaining term — model the full payment here to see the eventual cost.
Because you build no equity during the interest-only period, you can owe as much as you borrowed and be exposed if home values fall. The CFPB warns that the later payment jump can be substantial — plan for it before choosing this structure.
They can suit borrowers with irregular income or a clear plan to sell or refinance before principal payments begin. For most buyers a fully amortizing loan is safer and cheaper over time.