Start with a lower rate and lower payments. ARMs are a smart choice when you have a timeline — whether you plan to move, refinance, or expect your income to grow.
An adjustable-rate mortgage (ARM) is a home loan that starts with a fixed interest rate for an initial period — typically 3, 5, 7, or 10 years — and then adjusts periodically based on market conditions. The initial rate is usually significantly lower than what you'd get with a comparable fixed-rate mortgage.
During the fixed period, your ARM works exactly like a fixed-rate mortgage: same rate, same payment, complete predictability. The difference comes after that initial period, when your rate can adjust up or down based on a market index plus a margin set by your lender.
ARMs include built-in protections called rate caps that limit how much your rate can change at each adjustment and over the life of the loan. When used strategically — particularly by buyers with a clear timeline — an ARM can save thousands compared to a fixed-rate mortgage.
Why an ARM might be the right choice for your situation
ARM rates start significantly lower than fixed-rate mortgages, saving you money during the initial fixed period.
Enjoy a fixed rate for 3, 5, 7, or 10 years before any adjustments begin. Choose the period that fits your plans.
Lower rates mean lower payments in the early years, freeing up cash for other investments or expenses.
Built-in caps limit how much your rate can increase at each adjustment and over the life of the loan.
Choose the initial fixed period that matches your plans
Most popular. Great if you plan to sell or refinance within 5-7 years.
Longer fixed period with lower rate than 30-year fixed. Good for medium-term plans.
Nearly as stable as a fixed-rate mortgage with a lower starting rate.
More frequent adjustments but often comes with lower initial rate and tighter caps.
Weigh the benefits and risks of an adjustable-rate mortgage
An ARM is a smart choice for borrowers who fit these profiles
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Estimated Monthly Payment
$1,918.56
Principal & interest only. Taxes and insurance not included.
See how your payments break down over the life of your 30-year loan. Click any year to see monthly detail.
Common questions about adjustable-rate mortgages
An ARM is a mortgage with an interest rate that starts fixed for an initial period (typically 3, 5, 7, or 10 years) and then adjusts periodically based on a market index. The initial rate is lower than comparable fixed-rate mortgages.
The first number (5) is how many years the rate stays fixed. The second number (1) is how often the rate adjusts after that. So a 5/1 ARM has a fixed rate for 5 years, then adjusts once per year. A 5/6 ARM adjusts every 6 months.
ARMs have three types of caps: an initial adjustment cap (typically 2%), a periodic adjustment cap (usually 2% per adjustment), and a lifetime cap (commonly 5-6% above your starting rate). These caps protect you from extreme rate jumps.
Absolutely, and many borrowers plan to do exactly that. If rates are favorable when your fixed period is ending, you can refinance into a fixed-rate mortgage. I'll help you monitor rates and plan your refinance strategy.
ARMs work well for buyers who expect to sell or refinance within the fixed period, those expecting significant income growth, military families with frequent relocations, and borrowers who want the lowest possible initial payment.
Let's discuss whether an ARM is the right strategy for your homebuying goals. Get a personalized rate quote today.