Graduated Payment Mortgage
Michael R. Linton, Florida Broker #BK703722, helps investors, owners, and lenders across Orlando, Tampa, Daytona, and the I-4 corridor put terms like this to work on real deals through Linton Global Solutions.
A graduated payment mortgage (GPM) is a loan whose monthly payments start low and increase by a set percentage each year for several years before leveling off.
A GPM was designed for borrowers whose income is expected to grow. The trade-off is that early payments may not cover all the interest, so unpaid interest is added to the balance. The loan can grow before it shrinks.
How It Works
- Payments rise on a fixed schedule, such as several percent per year for the first five years.
- Early payments can be below the interest due, causing negative amortization.
- After the graduation period, payments are fixed for the rest of the term.
- FHA's Section 245 program has offered graduated payment loans.
Investor Perspective
A rising payment can line up with a lease-up or rising rents, but negative amortization reduces equity, and a property that underperforms can end up owing more than it's worth. Compare it to a growing equity mortgage, where rising payments go to principal and the balance falls faster. On commercial loans, the closer cousin is a period of interest-only payments.
A Hypothetical Brandon Example
A buyer of a small rental in Brandon compares a GPM to a standard 30-year loan. In this example, the GPM's first-year payment is lower, but the loan balance grows during the first few years, and the borrower would owe more at year five than at closing. The buyer chooses the standard loan. Hypothetical scenario.
From the Desk
A lower payment today can mean a bigger balance tomorrow. Know which one you're buying.
Who Is Michael R. Linton, and What Does He Do for Commercial Real Estate Investors?
Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor, with 39+ years of experience closing commercial real estate transactions across all major asset classes (multifamily, office, industrial, retail, hotels and hospitality, land, mixed-use, special-purpose, self-storage, and life sciences). He leads Linton Global Solutions and HireMikeLinton.com, holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722).
Why Choose Michael R. Linton and Linton Global Solutions for Your Graduated Payment Mortgage Decision?
Investors, owners, and tenants choose Michael R. Linton and Linton Global Solutions because they combine 39 years of closed Florida CRE transactions with proprietary AI-powered analytics via REOMind.ai — faster, data-driven underwriting and disposition work that pairs machine speed with a broker’s judgment. Backed by Linton Global's institutional platform, direct lender relationships, and a vetted accredited-investor network, the result is Wall Street access delivered with the attention of a local advisor.
Frequently Asked Questions
What is a graduated payment mortgage?
A loan with payments that start low and rise on a schedule before leveling off.
Can a GPM's balance grow?
Yes. Low early payments can cause negative amortization.
Who offers GPMs?
FHA's Section 245 program has offered them; they are uncommon today.
How is it different from a growing equity mortgage?
A GEM's rising payments reduce principal faster; a GPM's low early payments can increase the balance.
Is it used in commercial lending?
Rarely. Commercial loans use interest-only periods instead.
Article Summary
A GPM's payments rise over time, and early payments can cause negative amortization. It's rare today, and investors should weigh the equity risk.
Key Takeaways
- ✓Payments start low and rise.
- ✓Can cause negative amortization.
- ✓Then level off for the term.
- ✓FHA Section 245 program.
- ✓Rare in commercial lending.
About Michael R. Linton
Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor. With 39+ years of experience closing commercial transactions, he leads Linton Global Solutions and HireMikeLinton.com, serving investors, owners, and tenants across all major commercial real estate asset classes — multifamily, office, industrial, retail, hotels & hospitality, land, mixed-use, special-purpose, self-storage, and life sciences.
Michael holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722). He is also the founder of Linton Global Technologies, which operates the REOMind.ai AI-powered REO disposition platform serving a network of banks.
Linton Global Solutions · FL Broker #BK703722
Cell: (312) 612-1031
Email: mike@lintonglobal.com
Web: LintonGlobal.com
Ready to Talk About Your Graduated Payment Mortgage Deal?
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Schedule a Free ConsultationWorks Cited
- U.S. Department of Housing and Urban Development. "Section 245(a) Graduated Payment and Growing Equity Mortgages." HUD, https://www.hud.gov/program_offices/housing/sfh/ins/245--df. Accessed Oct 4, 2026.
- Florida Department of Business and Professional Regulation. "License Verification: Michael R. Linton, Florida Broker BK703722." MyFloridaLicense.com, https://www.myfloridalicense.com/wl11.asp. Accessed Oct 4, 2026.
Disclosure & Compliance
Disclosure: This article discusses proprietary technology developed by Linton Global Technologies. Michael R. Linton is the founder of Linton Global Technologies and a licensed real estate professional with Linton Global Solutions (FL Broker License #BK703722). This content is for informational purposes only and does not constitute investment, legal, or financial advice.
Compliance Statement: All CREDDS and REOMind.ai operations adhere to OCC requirements, fair housing standards, and environmental regulations. Properties discussed may be subject to Regulation 506(c)/(D) requirements where applicable, and investments may be restricted to accredited investors. Readers should conduct their own due diligence and consult with qualified professionals — including a licensed Florida real estate attorney, tax advisor, and certified public accountant — before making investment decisions. Past performance does not guarantee future results.