When lenders were giving loans to almost anyone with little or no down payment, the optional payment loan was created to offer the borrower the choice of the amount of a payment each month. The borrower could pay the amount to amortize the loan, interest only, or less than interest only.
If less than the amount to amortize was paid, the loan no longer fit the term (it could not be paid off in time). You can see the danger. These loans at some point had to be reset to fit the term or refinanced. Many borrowers got used to paying the lowest payment and the principal owed increased since less than interest only was paid. When the bubble burst in 2007 and property values declined, many borrowers lost their homes.
These loans are adjustable rate loans and differ from the graduated payment loan in that they do not have a set plan to fit the loan into the term. The graduated payment loan is discussed later.