A graduated payment mortgage is a mortgage whose payments increase each year for a number of years and then level off. The early payments on the loan are lower even than the amount of interest that is due. Later payments are based on an increasing loan balance and are therefore larger. The objective of a graduated payment mortgage is to help borrowers qualify for loans by basing repayment schedules on salary expectations. With this type of mortgage, the interest rate and maturity is fixed, but the monthly payment varies. Created by the U.S. Department of Housing and Urban Development, it was designed to fit different buyer’s particular needs and will likely appeal to first time home buyers. For more information on graduated-payment mortgages, contact a real estate professional.