My apologies, I assumed you were the husband, there are so many husbands who pop up here becuase their pregnant wife or just had a baby, just needs that new house (I’m thinking of coming up with a syndrome name as soon as my research is done with regards to granite counters and estrogen). Your loan person is a liar, an idiot, or works for the builder and knows you can’t afford it. Interest only is so wrong for someone who plans to be there long term. When does the loan convert to principal, is there a prepayment penaly, what are the adjustment terms? Just about when you decide to have a second kid or take time off work, your mortgage will double, you will need to refinance out of your interest only and rates will likely be higher. Find out the fully amortized, 30 year fixed payment and if you can’t afford it, then you have your answer. Mortgage calculators are all over the internet.

Interest only is for certain situations and markets, barely being able to afford the I/O payment in a falling market with rising rates and long term plans is not one of those situations. Quick, read some of the posts about getting your deposit back.