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Adjustable Rate Mortgages

An adjustable rate mortgage, or ARM, is a type of home loan in which the interest rate is not fixed but rather adjusts periodically over the life of the loan. The interest rate on an ARM is tied to a financial index, such as the prime rate or the London Interbank Offered Rate (LIBOR), and it can go up or down depending on changes in the index. Continue Reading Below

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Industry Studies

2026 Mortgage Industry Study Thumbnail

2026 Mortgage Industry Study

Andrew Latham

Encyclopedia Articles

Discover the definition of financial terms related to adjustable rate mortgages.

What is a 5/1 ARM? Pros and Cons Explained Thumbnail

What is a 5/1 ARM? Pros and Cons Explained

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2/28 ARM: Definition, Risks, and Real-Life Scenarios Thumbnail

2/28 ARM: Definition, Risks, and Real-Life Scenarios

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What is an Adjustable-Rate Mortgage? Thumbnail

What is an Adjustable-Rate Mortgage?

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Mortgage Points: Cost, Tax Deduction & Break-Even Analysis Thumbnail

Mortgage Points: Cost, Tax Deduction & Break-Even Analysis

Andrew Latham

Fixed-Rate Mortgage: How It Works, Terms, and When to Choose One Thumbnail

Fixed-Rate Mortgage: How It Works, Terms, and When to Choose One

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Variable Interest Rates Explained: How They Work, Types, and Examples Thumbnail

Variable Interest Rates Explained: How They Work, Types, and Examples

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Nontraditional Mortgages: Flexibility Explored with Examples Thumbnail

Nontraditional Mortgages: Flexibility Explored with Examples

Silas Bamigbola

Interest-only Mortgage Explained: How It Works, Types, and Examples Thumbnail

Interest-only Mortgage Explained: How It Works, Types, and Examples

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Floating Rate Explained: How It Works, Types, and Examples Thumbnail

Floating Rate Explained: How It Works, Types, and Examples

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Amortized Loan: Definition, how it works, and Examples Thumbnail

Amortized Loan: Definition, how it works, and Examples

Silas Bamigbola

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Learn About Adjustable Rate Mortgages

Thumbnail for Blog Article: ARMs Hit 11% of Mortgage Locks at 7.3% Rates. When a 7/1 Saves Money and When It Bites

ARMs Hit 11% of Mortgage Locks at 7.3% Rates. When a 7/1 Saves Money and When It Bites

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Thumbnail for Blog Article: Adjustable-Rate Mortgages Are Back at 10.3% of Applications. Is a 6.43% ARM Worth the Risk Over a 7.40% Fixed Rate?

Adjustable-Rate Mortgages Are Back at 10.3% of Applications. Is a 6.43% ARM Worth the Risk Over a 7.40% Fixed Rate?

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Thumbnail for Blog Article: AimLoan vs AmeriSave: Which Online Mortgage Lender Is Right for You?

AimLoan vs AmeriSave: Which Online Mortgage Lender Is Right for You?

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Thumbnail for Blog Article: AmeriSave vs Quicken Loans: Which Mortgage Lender Fits You Best in 2026?

AmeriSave vs Quicken Loans: Which Mortgage Lender Fits You Best in 2026?

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Thumbnail for Blog Article: Rocket Mortgage vs Freedom Mortgage: Which Lender Is Best for Your Home Loan?

Rocket Mortgage vs Freedom Mortgage: Which Lender Is Best for Your Home Loan?

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Thumbnail for Blog Article: Rocket Mortgage vs Guaranteed Rate: Which Online Mortgage Lender Is Better?

Rocket Mortgage vs Guaranteed Rate: Which Online Mortgage Lender Is Better?

Andrew Latham

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About Adjustable Rate Mortgages

An adjustable rate mortgage, or ARM, is a type of home loan in which the interest rate is not fixed but rather adjusts periodically over the life of the loan. The interest rate on an ARM is tied to a financial index, such as the prime rate or the London Interbank Offered Rate (LIBOR), and it can go up or down depending on changes in the index. This means that the monthly payments on an ARM can change over time, which can be both a benefit and a risk. On the one hand, an ARM may start with a lower interest rate than a fixed-rate mortgage, which can make it more affordable in the short term. On the other hand, if interest rates go up, the monthly payments on an ARM could become unaffordable for the borrower. For this reason, ARMs are generally best suited for people who plan to sell or refinance their home before the interest rate adjusts.