This is the most common type of program where your monthly payments for interest and principal never change. For example, on a 3 yr-1 ARM, the interest rate is the same for the first 3 years and will adjust periodically thereafter.
Many balloon mortgages offer the option to convert to a new loan after the initial term.
Some programs which have government subsidies may have a recapture tax if you sell the house too early. Programs Lower closing costs Less money required to close Higher rates Higher payments Loan Program Advantages Disadvantages Imperfect Credit Programs Potential for reestablishing credit if you pay your mortgage on time. Interest may be tax deductible Rates can change. The maximum interest rate is normally high. You may want to consider a mortgage that offers an interest only payment and allows you to qualify for a higher loan amount, while maintaining your monthly liquidity.