What characterizes a "graduated payment mortgage"?

A graduated payment mortgage is characterized by payments that initially increase and then level off. This type of mortgage is typically designed to accommodate borrowers who anticipate an increase in their income over time. Initially, the payments are lower, making it easier for borrowers to manage their monthly obligations. As the borrower's financial situation improves and their income rises, the payments gradually increase for a set period before stabilizing at a consistent level.

This structure is beneficial because it allows borrowers to ease into homeownership without the stress of high payments right away. It effectively bridges the gap for individuals who may not be able to afford standard mortgage payments initially but expect their financial circumstances to improve.