In an FHA graduated payment mortgage, what fluctuates over the term of the loan?

In an FHA graduated payment mortgage, the defining characteristic is that the monthly payments are designed to increase over time. This structure allows borrowers to start with lower initial payments which gradually rise to higher amounts as they anticipate their income will increase over the years.

The structure of graduated payments is particularly beneficial for first-time homebuyers or those expecting salary increases, as it enables them to manage their budget more effectively in the early years of the loan. As a result, while the loan's interest rate remains fixed throughout its term, the monthly payments specifically adjust at predetermined intervals, making the monthly payment option the one that fluctuates during the life of the loan.

Other aspects of the mortgage, such as the finance charge and the annual rate, typically remain constant, aligning with the terms set at the beginning of the loan. This consistency in other areas contrasts the variable nature of the monthly payments, emphasizing why they are the key feature that fluctuates in an FHA graduated payment mortgage.