Requires down payment or monthly payments higher than 30 year loan. Loan is fully repaid in 15 years. Frequently offered at slightly reduced interest rate. Offers faster accumulation of equity than traditional fixed rate mortgage, but has higher monthly payments. Involves paying less interest, but this may result in smaller tax deductions.
Some plans have interest rate caps.
Starting interest rate is slightly below market, but payments can increase sharply and frequently if index increases. Payment caps prevent wide fluctuations in payments but may cause negative amortization. Payments may cover interest only with principal due in full at term end. Offers low montly payments but possibly no equity until loan is fully paid. When due, loan must be paid off or refinanced.