ARM Mortgage Overview
An ARM, or Adjustable Rate Mortgage, is a variable rate mortgage. Unlike a fixed rate mortgage, the interest rate on an ARM loan adjusts to the market after a set period. For example, a 7 Year ARM will adjust after the first 7 years of the loan. Since the initial interest rates and payments are lower than Fixed Rate Mortgages, many borrowers choose an ARM option as they offer savings up front.
When the fixed period is over and your rate adjusts, interest rates changes are capped.
ARM Mortgage Benefits
Many borrowers choose ARM loans because of the upfront savings they offer. With initial interest rate and payments that are lower than fixed rate loans, ARM loans offer what many borrowers need:
- Upfront savings: With the lower rate and payment in the initial period, you’re free to reach your financial goals with the money you would be using on a fixed rate loan
- Initial fixed period: Enjoy the fixed, lower rate for the initial period
- Cap on the amount you could pay: You won’t be taken by surprise because there are limits on the adjustment
Adjustable Rate Mortgages benefit borrowers who:
- Prefer a low initial interest rate and payment
- Move frequently
- Expect to earn more in a few years
- Purchase, renovate, and resell properties
- Plan to refinance before the loan adjusts
- Have growing families and need a larger home in the future
ARM Loan Requirements
- As with any mortgage, your credit history will be considered before you can get qualified. A good place to get started is with a credit preapproval.
- The loan amount for a conforming ARM loan is typically $453,100 but that limit may be higher in different regions.
- Down payments for ARMs are usually the same as traditional loans, but there are loan types that allow for lower down payments, and there down payment assistance resources available.
ARM Loan Options
ARM Loans can be used for:
FHA ARM, Jumbo ARM, and VA ARM loans feature an initial fixed rate period, after which the rate adjusts. All ARMs can only adjust to predetermined rules.
We offer a variety of terms:
- 5 Year ARM - offers an initial fixed period of 5 years, then the rate adjusts. The 5 Year ARM is an option for FHA, VA, Conventional, and Jumbo loans.
- 7 Year ARM - offers an initial fixed period of 7 years, then the rate adjusts. The 7 Year ARM is an option for Conventional and Jumbo loans.
- 10 Year ARM - offers an initial fixed period of 10 years, then the rate adjusts. The 10 Year ARM is an option for Conventional and Jumbo loans.
Don’t forget to ask about our I CAN mortgage, so you can customize the terms of your loan.