There are some real advantages to an interest only mortgage:

1) Although you won't be building equity by paying off the principal, you would be able to buy a home that you want instead of settling for a home you can presently afford. Most likely you would still build equity over the years as your home increases in value.

2) Depending on the lender, you may be qualified on the interest only payment and therefore can qualify for more home on less income. (This will vary from lender to lender)

3) You could use the principal portion for funding your retirement plan giving you that tax advantage, and still retain the tax deductibility of a larger mortgage.

4) Most homeowners are holding their mortgages for shorter periods. Studies show that people either refinance or move every 1 to 7 years. Most people would rather buy a home that suits their lifestyle and worry about building equity through appreciation.

5) You can still choose to make principal payments at any time.

6) Most monthly payments are based on the outstanding principal balance. Therefore, if you do decide to make a principal payment, your monthly payments could potentially go down.