Definition of Graduated-Payment Mortgage (GPM)

mortgage featuring lower monthly payments at first, which steadily rise until they level off after a few years. GPMs, also known as "jeeps," are designed for young couples whose income is expected to grow as their careers advance. A graduated-payment mortgage allows such a family to buy a house that would be unaffordable if mortgage payments started out at a high level. Persons planning to take on such a mortgage must be confident that their income will be able to keep pace with the rising payments.

a mortgage requiring lower payments in early years than in later years. Payments increase in steps each year until the installments are sufficient to amortize the loan.