What type of mortgage allows the borrower to make smaller payments initially and larger payments later on?

A balloon mortgage is designed to have smaller payments in the early years of the loan term, with a lump sum payment due at the end of the term, which can significantly increase the final payment amount compared to the earlier payments. This structure provides the borrower with lower initial payments, allowing for greater cash flow during the early part of the mortgage period. As the borrower approaches the end of the term, they face a large final payment that can be considerably larger than the previous payments.

In contrast, a fixed-rate mortgage maintains consistent monthly payments throughout the loan term, making it easier for borrowers to plan their finances. An adjustable-rate mortgage has payments that can fluctuate based on changes in interest rates, but it doesn't inherently structure payments to start smaller and become larger later. An interest-only mortgage allows borrowers to pay only the interest for a specified period, but it does not require larger payments in the later stages.

Therefore, a balloon mortgage is specifically tailored to allow for smaller initial payments followed by larger payments later, which aligns with the characteristics described in the question.