March 18th, 2025 12:17 PM by Ken Morley
A 40-Year Loan refers to the loan term—the length of time over which the mortgage will be repaid. In this case, the loan is spread out over 40 years, which reduces the monthly payment. A longer term is often appealing because it means the borrower can pay less each month compared to a standard 30-year mortgage. The 10-Year Interest-Only aspect means that for the first 10 years of the loan, the borrower only has to pay the interest, not the principal. After this initial interest-only period, the loan will begin to amortize (meaning both interest and principal payments will be required) over the remaining 30 years.
While this type of loan can be suitable for various borrowers, it may be particularly advantageous for home buyers in high-cost areas, high income earners, real estate investors, and buyers looking for flexibility. The lower initial payments could allow buyers to purchase a more expensive home than they would be able to afford with a traditional 30-year fixed-rate mortgage.
A Jumbo 40-Year / 10-Year Interest-Only Home Loan can be an excellent option for borrowers who need more flexibility in their monthly payments, particularly those purchasing homes in high-cost areas or those with a strong belief that their financial situation will improve in the near future.
If you’re interested in this loan structure, please give us a call at (303) 650-9400 to speak with a mortgage professional who can help guide you through the complexities and ensure that this type of loan is the best fit for your financial situation and goals.