When the lender and/or the home builder subsidized the mortgage by lowering the interest rate during the first few years of the loan. While the payments are initially low, they will increase when the subsidy expires. These are sometimes used to qualify borrowers for a loan amount that they would not otherwise qualify for but will be able to pay in subsequent years as their income increases.
|Federal Housing Administration (FHA)|
An agency of the U.S. Department of Housing and Urban Development (HUD). It insures residential mortgage loans made by private lenders. FHA also sets standards for underwriting mortgages.
|Graduated Payment Mortgage (GPM)|
A type of flexible-payment mortgage where the payments increase for a specified period of time and then level off. This type of mortgage has negative amortization built into it.
A mortgage made subsequent to another and subordinate to the first one.