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How to Get a Growing Equity Mortgage (GEM)

What it is

A growing equity mortgage, or GEM, is provided through the United States Department of Housing and Community Development and the Federal Housing Administration, or FHA. This loan enables a household with limited income that is expected to rise to buy a home sooner by making mortgage payments that start small and increase over time. The increased payments are applied to reduce the principal owed on the mortgage and thus shorten the mortgage term. FHA growing equity mortgage insurance encourages lenders to make loans to otherwise creditworthy borrowers and projects that might not be able to meet conventional underwriting requirements. This protects the lender against loan default on mortgages for properties that meet certain minimum requirements. This includes manufactured homes, single-family homes, multi-family properties, and some health-related facilities.

The growing equity mortgage allows young people to specially tailor their mortgage payments to their expanding incomes, allowing borrowers to buy homes much sooner than they could with regular financing.

Who it's for

A growing equity mortgage is for young families and people who expect their incomes to rise considerably in the next 30 years. It allows people to buy the homes they want right away, instead of waiting for additional financing capability.

What you need to do to apply

In order to obtain a growing equity mortgage, a borrower must contact several lenders or mortgage brokers and determine which ones originate FHA loans. Each lender sets its own rates and terms.

Apply for a Growing Equity Mortgage (GEM)

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