A growing equity mortgage (GEM) is a full term home loan with an interest rate usually comparable to prevailing rates, in which payments increase yearly with the additional payments going towards principal reduction.
The result of such loan structures is that a borrower would be able to fully repay the mortgage in a shorter period compared to the normal amortization schedule.
It also implies that one won’t have to worry about negative amortization.
This way, not only is the principal reduced in a growing equity mortgage, the tenure of the loan reduces as well.
The GEM program which is backed by FHA is also called the 245(a) mortgage.