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An interest-only mortgage allows borrowers to make payments covering only interest for a specific introductory period, typically 5–10 years. After this phase, the loan converts to fully amortizing, requiring both principal and interest payments. While this structure lowers initial payments, it carries significant payment shock risk when amortization begins. These loans became popular in the nontraditional mortgage product marketplace but were heavily scrutinized after the 2008 housing crisis. NMLS standards highlight that loan officers must ensure borrowers understand risks, suitability, and repayment obligations. This product contrasts with adjustable-rate mortgages (ARMs), which adjust based on an index, and fully amortizing loans, which include principal from the start. Educating borrowers on payment structures and potential risks is essential to compliance and consumer protection (NMLS Nontraditional Lending section).