Which of the following describes a loan that increases over time?

A graduated payment loan is a specific type of mortgage designed to accommodate borrowers whose incomes are expected to increase over time. This structure allows for lower initial payments that gradually increase at predetermined intervals, typically over five to ten years. This is particularly useful for individuals who anticipate salary growth or have a stable career path that will provide increasing income.

The early lower payments can make it easier to qualify for the loan, which is appealing to first-time homebuyers or those who are relatively new in their careers. As payments rise in accordance with the terms of the loan, the borrower can utilize their increased income to meet the demands of the growing loan payments.

Other types of loans, such as fixed rate mortgages or conventional loans, typically maintain consistent payment amounts throughout the life of the loan, while negative amortization loans can lead to a balance that grows due to insufficient payments that do not cover the interest accruing on the principal. Thus, the graduated payment loan stands out for its structured increase in payments, aligning with the borrower's financial growth expectations.