fixed rate mortgage with low payments in the early years, and higher payments later on, designed to meet the financing needs of young home owners with growing incomes. Also known in the trade as a "Jeep" mortgage. The most popular versions of the GPM are 30-year mortgages with payments that rise by a fixed amount each year for the first five to ten years and then level off. Lenders usually charge a slightly higher rate on a GPM than a conventional mortgage, because part of the interest due is deferred until the later years. Even though borrowers ultimately pay more for a GPM, the lower initial payments make this kind of mortgage more affordable to home buyers whose incomes could not support a conventional mortgage loan. A variation is the adjustable rate graduated payment mortgage, which has an interest rate that is adjusted every three to five years.
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. Most GPMs have been written under FHA Section 245.
