Adjustable-rate mortgage benefits & guidelines 

Adjustable-rate mortgages (ARMs) could help you save on interest payments for the first five to 10 years of your loan. The main difference between an adjustable-rate mortgage and a fixed-rate mortgage is the risk involved, so it’s important to understand how an ARM works.

 

 

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Why choose an adjustable-rate mortgage?

With ARMs, you benefit from a low, fixed interest rate for an introductory period. While ARMs carry risk during the adjustable period as rates change in response to market conditions, the savings during the initial fixed-rate phase can outweigh increases for some borrowers.

Adjustable-rate mortgage guidelines 

To qualify for an ARM, you will need: 

  • Credit score verification 
  • Income verification 
  • Cash on hand for a down payment

Since ARM rates could make the first decade of homeownership more affordable, this type of loan can unlock more housing options for you. While the adjustable period comes with some level of unpredictability, understanding when and how adjustments are calculated can help you decide if this loan fits your goals. 

ARM loan type

Types of adjustable-rate mortgages

ARMs come with a variety of fixed-rate periods, allowing you to choose the option that best fits your goals.

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10-year ARM

A 10-year ARM provides a decade of rate stability before switching to an adjustable rate, making it the least risky ARM option.  

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5-year ARM

Rates for the five-year ARM adjust for the remaining 25 years, a good option if you plan to sell or refinance before the adjustable period begins.

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7-year ARM

A seven-year ARM offers fixed rates for seven years. After that, it moves to a 23-year adjustable phase.  

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What are the current ARM rates?

Your personalized mortgage rate will depend on several factors, including credit history, down payment and debt-to-income ratio. Apply for pre-approval today to get ARM rates and start the homebuying process.

 

How to apply for an adjustable-rate mortgage 

Applying for an adjustable-rate mortgage is simple with Rate’s Digital Mortgage. Follow these steps. 

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1. Review your finances

Check your credit score, income, and cash on hand for a down payment.

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2. Gather key documents

You’ll need to provide income verification, tax returns, asset statements and personal identification.

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3. Apply online

Once you submit your application, your Loan Officer will help you from there. 

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Whether you’re buying a home or refinancing, there’s never been a better time to lock in a lower rate.

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Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply. 


Savings, if any, vary based on the consumer’s credit profile, interest rate availability and other factors. Contact Rate for current rates. Restrictions apply.