Graduated Payment Mortgages (GPM) Law and Legal Definition

A Graduated payment mortgage (GPM) begins with lower monthly payments and increase gradually to eventually reach a fixed level and remain for the life of the loan. These plans help the young who cannot afford large payments initially, but can realistically expect to do better financially in the future

GPM benefits first-time home buyers as they can afford high monthly home mortgage payments. It requires borrowers to predict their future earnings potential and their payment in the future. GPM are available in 30 year and 15 year amortization. The monthly payments increase every year according to a predetermined percentage over a period of time. The overall expense of a graduated payment mortgage loan is higher than that of conventional mortgages.