Graduated Payment Loan Calculator

About this calculator

A graduated payment mortgage (GPM), historically formalized in the U.S. as FHA Section 245 loans, is designed for borrowers who expect their income to rise over time: instead of a level payment from day one, the monthly payment starts noticeably lower than a standard fully amortizing payment and then steps up each year during a graduation period, typically 5 to 10 years, before leveling off for the rest of the term.

This calculator approximates that initial payment at roughly 75% of the standard amortizing payment for the loan amount, rate, and term, then grows it by your chosen graduation rate each graduation year. Because early payments can be lower than the interest actually accruing, GPMs commonly involve negative amortization in the first years — the loan balance temporarily grows before the higher later payments pay it back down.