[quote=flu]In practice, do you really plan on paying off more than 20% of the loan amount in the first 3 years? If so why not just put that amount down and lower your total loan amount off the bat?[/quote]

Perhaps the borrower wants to have the option to refi again if rates drop significantly. (Not likely since rates are relatively low – but it’s good to keep options open.)

Or perhaps the borrower is expecting an inheritance – not yet in hand.

Lots of reasons why one might pay off a chunk in the first couple of years – but not have the cash to do it right now.