VA HLC does not recommend, nor guarantee interest only mortgages.

Interest only loans are shorter term adjustable rate mortgages where borrower is not required to make payment on the principal.

Because the borrower is not required to pay the principal, the ARM will usually reset and the borrower will suffer from payment adjustment shock. This usually results in a foreclosure because the borrower is not prepared for a major increase in monthly expenses. If you have been given an adjustable rate mortgage (ARM) and are unable to make your payment, you may qualify for free VA loan modification assistance. Call toll free (877) 827-3702 to speak with a VA Loan Technician

If VA is not able to help a veteran borrower retain his/her home (whether a VA-guaranteed loan or not), the HOPE NOW Alliance may be of assistance. HOPE NOW is a joint alliance consisting of servicers, counselors, and investors whose main goal is to assist distressed borrowers retain their homes and avoid foreclosure. They have expertise in financial counseling, as well as programs that take advantage of relief measures that VA can not. HOPE Now provides outreach, counseling and assistance to homeowners who have the willingness and ability to keep their homes but are facing financial difficulty as a result of the crisis in the mortgage market. The HOPE NOW Alliance can be reached at (888) 995-HOPE (4673), or by visiting www.hopenow.com.