Adjustable Rate Mortgage
A Adjustable Rate Mortgage (ARM) offers a lower initial interest rate than most fixed-rate loans, which can mean lower payments during the first years of your loan. After that introductory period, the rate may adjust based on market conditions within the program’s caps. For many buyers, it’s a smart short-term strategy to maximize savings while keeping flexibility. Review ARM options with our team.
How an Adjustable Rate Mortgage Works
ARMs typically have two phases: an initial fixed-rate period (commonly 3, 5, 7, or 10 years) followed by periodic adjustments. For example, a 5/6 ARM is fixed for five years and then adjusts every six months. The adjusted rate is tied to an index (like SOFR) plus a set margin, and capped so it cannot rise beyond certain limits. See how we explain terms during the Mortgage Process.
Benefits of an Adjustable Rate Mortgage
– Lower initial monthly payments compared to a 30-year fixed
– Opportunity to save if you sell, refinance, or relocate before the adjustment period
– May allow you to qualify for a higher loan amount due to reduced starting payments
– Flexibility for short-term or transitional ownership plans
Compare ARM vs. fixed payments with our Calculator.
Who an ARM Fits Best
ARMs can be ideal for buyers who:
– Expect to move or refinance within 3–10 years
– Anticipate income growth that can offset future payment changes
– Want lower initial housing costs to free up cash for other goals
Explore more Loan Options that fit different timelines.
ARM vs. Fixed-Rate Mortgages
A fixed-rate loan keeps the same interest rate for the full term, while an ARM starts lower but adjusts later. If you plan to stay long-term and value stability, a fixed may be better. If you expect shorter-term ownership, ARMs often save significantly upfront. See our 30 Year Fixed overview for comparison.
ARM Caps and Protections
Every ARM program includes caps: limits on how much the rate can increase at the first adjustment, each subsequent adjustment, and over the life of the loan. These protections give you predictability even as markets change. Learn more about ARMs at the CFPB.
Using ARMs for Purchase or Refinance
ARMs are available for purchase, rate/term refinance, and cash-out refinance scenarios. They are common across conventional, jumbo, and even certain government programs. We’ll compare lifetime costs, potential savings, and breakeven points. Review refinance strategies.
ARM Options by Program
– Conventional ARMs: Common for primary homes and second homes
– Jumbo ARMs: Often structured with competitive initial rates
– FHA/VA ARMs: Program-specific, with government oversight
– Non-QM ARMs: Tailored to unique borrower profiles
Explore our Non-QM overview.
Why Work With the JD.Mortgage Team at PRMG
As a hybrid direct lender and broker, the JD.Mortgage team offers in-house efficiency plus expanded investor options for specialty ARM programs. Lending in 49 states (excluding NY), we align mortgage structure with your time horizon and cash flow. Learn more about the JD.Mortgage team at PRMG.
Frequently Asked Questions: Adjustable Rate Mortgage
Here are common questions we receive about ARMs. Jump to the FAQ section now.
Next Steps
If you’re considering an ARM, we’ll outline payment comparisons, explain adjustment scenarios, and confirm whether it aligns with your timeline and budget. Start a quick conversation with our team.
All Loan Programs We Offer (Link-Out Hub)
In addition to Adjustable Rate Mortgages, we offer:
Conventional,
Loan Options,
FHA,
Purchase,
Main,
Jumbo,
Calculator,
Mortgage Process,
VA,
Refinance,
USDA,
Construction Loans,
Contact,
HELOC,
Non-QM,
Second.
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Adjustable Rate Mortgage FAQs
What does “5/6 ARM” mean?
It means the rate is fixed for the first 5 years, then adjusts every 6 months after that. Ask us about other ARM types.
Are ARMs risky?
They carry more uncertainty than fixed rates but also offer lower initial costs. Caps limit how much the rate can change. Learn more at the CFPB.
Can I refinance out of an ARM?
Yes. Many borrowers refinance into a fixed-rate loan before adjustments increase their payments. Review refinance options.
Do ARMs qualify for government programs?
Certain FHA and VA products include ARM versions, subject to guidelines. See FHA details.
Is an ARM good for investors?
Often yes, because lower initial payments improve cash flow. Suitability depends on property type, reserves, and strategy. Explore Jumbo and investor options.