Adjustable-Rate Mortgage Product Page
Enjoy a more affordable rate and lower monthly payment at the start of your loan term.
What To Know About Adjustable-Rate Mortgages
Who Are ARMs Best For?
An ARM is a good option if you:
- Prefer a lower monthly payment at the beginning of your loan term
- Plan to move or refinance before your interest rate adjusts
- Expect your income to increase in the coming years
How Do ARMs Work?
- You start with a lower interest rate for a fixed period, usually five, seven or 10 years. After that, your interest rate will change at regular intervals.
- Adjustments to your interest rate will increase or decrease your monthly payment.
- Rate caps limit how much your rate can go up.
- Use our mortgage calculator to check how changes in your interest rate could affect the monthly payment.
ARM Requirements
- Minimum 5% down payment
- Minimum credit score of 580 to 620, depending on loan type
- A debt-to-income ratio no higher than 45% to 50%
- Pay closing costs, typically 2% to 5% of the purchase price
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ARM Benefits
- The introductory interest rate on an ARM is typically lower than on a fixed-rate mortgage, making your initial monthly payments more affordable.
- Rate caps limit how much your interest rate can increase.
- The lower introductory rate on ARMs is advantageous for buyers who plan to sell before their rate adjusts.
- Your monthly payment could go down if interest rates decrease.
- You could refinance to a fixed-rate mortgage to avoid changes to your interest rate.
Mortgage Insurance Requirements
Mortgage insurance protects the lender if you can’t repay your loan. You’ll have to pay for mortgage insurance if:
- You take out a conventional loan with a down payment of less than 20%. You can stop paying for mortgage insurance once you have 20% equity.
- You take out an FHA loan. With this type of mortgage, you pay upfront and annual mortgage insurance premiums. If your down payment is at least 10%, you’ll stop paying for mortgage insurance after 11 years.
Effective Nov. 16, 2025, both Fannie Mae and Freddie Mac no longer require a specific minimum credit score for conventional loan approval. Instead, loan decisions will be based on an analysis of overall credit risk factors.
Frequently Asked Questions
Here are answers to common questions about ARMs.
How long does the introductory rate last?
The fixed-rate introductory period depends on the type of loan you choose. For example, with a 5/1 ARM, your interest rate is fixed for five years and then adjusts every year. With a 7/6 ARM, your interest rate remains fixed for seven years and then changes every six months.
How often will the interest rate adjust?
Most ARMs adjust every six or 12 months.
What are rate caps?
Rate caps limit how much your interest rate can change during each adjustment and in total over the course of your mortgage.
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