Graduated Payment Mortgage(redirected from Graduated Payment Mortgages)
Graduated Payment Mortgage
graduated payment mortgage
A home loan structured to provide lower payments in the early years, growing as the homeowners' financial situation hopefully improves. The FHA-insured graduated payment mortgage plan is called a 245 loan.(Do not confuse with the FHA-insured 245(a) program,called a growing equity mortgage.)
Graduated Payment Mortgage (GPM)
A mortgage on which the payment rises by a constant percent for a specified number of periods, after which it becomes fully-amortizing.
As an example, the payment might increase by 7.5% every 12 months for 60 months, after which it is constant for the remaining term. GPMs had a brief flurry in the 1980s but then largely disappeared.