• Graduated payment mortgage

Graduated payment mortgages facilitate home ownership by allowing borrowers to make relatively smaller monthly payments at the beginning of the mortgage than if they were to obtain a level-payment mortgage.  Given that the monthly mortgage payments gradually increase over time, these types of mortgages are ideal for people who expect their income to increase in the coming years.

FHA offers five different graduated payment mortgage plans with varying terms and conditions.

  • Plan 1 – Annual payment increase of 2.5% for the first 5 years
  • Plan 2 – Annual payment increase of 5.0% for the first 5 years
  • Plan 3 – Annual payment increase of 7.5% for the first 5 years
  • Plan 4 – Annual payment increase of 2.0% for the first 10 years
  • Plan 5 – Annual payment increase of 3.0% for the first 10 years

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