A home loan that can save on interest during the first few years
Low introductory interest rate
Most ARMs start with a lower introductory interest rate that stays the same during a fixed-rate period.
Lower monthly payments
Lower introductory rates typically mean lower monthly payments during the fixed-rate period.
More payments against principal
You can pay extra toward your mortgage’s principal balance to build equity faster.
Refinance options
With an ARM, you have the option to refinance to a fixed-rate mortgage.
Guidelines for this loan
The home
You can buy a home or refinance an existing mortgage.
Credit profile
You'll typically need a credit profile above 620.
Debt-to-income
Your debt-to-income ratio (DTI) should be less than 50%.
Closing costs
In addition to your down payment, you’ll need enough funds to cover closing costs.
Estimate and explore
Calculators are a great way to learn and see what’s possible.
Down payment calculator
Learn how much cash you need to buy the home you have in mind.
Home affordability calculator
Explore home prices affordable for you and see what you could prequalify for.
Get more in-depth details
Articles that give you more information about this loan and explain how mortgages work.
8-minute read
What is an adjustable-rate mortgage?
5-minute read
7/6 ARM: Definition and how it works
7-minute read
Compare adjustable-rate mortgage (ARM) vs. fixed-rate mortgage
8-minute read
What is an adjustable-rate mortgage?
5-minute read
7/6 ARM: Definition and how it works
7-minute read
Compare adjustable-rate mortgage (ARM) vs. fixed-rate mortgage
Frequently asked questions
Answers to questions about this loan we heard from people like you during research.
An ARM has a 30-year term with two periods: a fixed period and an adjustable period.
Fixed period: During the initial, fixed-rate period, typically the first 5, 7 or 10 years of the loan, your interest rate won’t change.
Adjustment period: This period comes after the fixed period. Your interest rate can go up or down.
For example: If you take out an ARM with a 5-year fixed period, the interest rate would be fixed for the first 5 years of the loan. After that, your rate would adjust up or down for the remaining 25 years of the loan.
Pros
- Lower rate for the first few years. You’ll typically have a lower rate for the first few years of the loan.
- Lower monthly payment for the first few years. Because your interest rate is typically lower, your payment could be lower too.
Cons
- Rates can go up. If your rate goes up, your monthly mortgage payments will go up, too.
- Less predictable payments. The possibility of future rate adjustments can be a concern for some home buyers.
An ARM can be a good option if you want to:
- Pay down your principal faster. Since you’ll typically have lower monthly payments the first few years, you could put the extra money you save toward your principal loan balance.
- Buy a starter home. The risks of an ARM are relatively minimal if you sell your home before the interest rate starts adjusting.
- Save and invest. You could put your monthly payment savings toward other financial goals.
5/1 And 5/6 ARMs: These loans offer a fixed interest rate for the first 5 years of the loan term. The second number represents the frequency of future rate adjustments after the first 5 years. With a 5/1 ARM, the rate adjusts once a year for the remaining loan term. With a 5/6 ARM, the rate adjusts every 6 months.
7/1 And 7/6 ARMs: These loans offer a fixed rate for 7 years. With a 30-year loan term, the initial fixed-rate period would last 7 years. Once the introductory period expires, you would make payments based on changing interest rates for the remaining 23 years on the loan.
10/1 And 10/6 ARMs: These loans have fixed rates for the first 10 years of the loan. After year 10, the interest rate will periodically fluctuate based on market conditions. A 30-year loan term means 20 years of changing payments.
Don't wonder what's best. Ask us!
We’ve been helping clients find their perfect home loan for almost 40 years.