Graduated Payment Calculator
Calculate graduated payment mortgage (GPM) with payments that start low and increase annually.
Graduated Payment Mortgage Calculator
Enter your loan details to see how payments increase over the graduation period
Understanding Graduated Payment Mortgages
What is a Graduated Payment Mortgage?
A Graduated Payment Mortgage (GPM) is a type of loan where monthly payments start lower than a standard fixed-rate mortgage and gradually increase over time. Payments typically rise annually during a graduation period (usually 5-10 years), then remain constant for the remainder of the loan term.
How GPM Works
- Initial payments are below interest-only level
- Payments increase by a fixed percentage each year
- Graduation period typically lasts 5-10 years
- After graduation, payments stay fixed
- May result in negative amortization initially
Understanding Negative Amortization
- What it is: When payment is less than interest due
- Effect: Unpaid interest adds to loan balance
- Peak balance: Loan may exceed original amount
- Risk: You could owe more than property value
Who Should Consider GPM?
- Young professionals expecting income growth
- Recent graduates starting careers
- Borrowers needing lower initial payments
- Those confident about future earnings
- Not ideal for fixed-income borrowers