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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

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2026 Mortgage Industry Study

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Encyclopedia Articles

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

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Discretionary ARM: Mechanics and Market Trends

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Standing Mortgage: Meaning, Types and Benefits Thumbnail

Standing Mortgage: Meaning, Types and Benefits

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Custom Adjustable Rate Debt Structure (CARDS) Thumbnail

Custom Adjustable Rate Debt Structure (CARDS)

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Adjustment Frequency in ARMs: Understanding, Impact, and Examples Thumbnail

Adjustment Frequency in ARMs: Understanding, Impact, and Examples

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Recast Triggers: Understanding, Examples, and Considerations Thumbnail

Recast Triggers: Understanding, Examples, and Considerations

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Scheduled Recast: Definition, Benefits, and Examples Thumbnail

Scheduled Recast: Definition, Benefits, and Examples

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Navigating Alternative Mortgage Instruments: Understanding AMIs, Examples, and Considerations Thumbnail

Navigating Alternative Mortgage Instruments: Understanding AMIs, Examples, and Considerations

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5/6 Hybrid ARM: How It Works, Pros, and Real-Life Examples Thumbnail

5/6 Hybrid ARM: How It Works, Pros, and Real-Life Examples

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Reset Margins: Definition, Impact and Examples Thumbnail

Reset Margins: Definition, Impact and Examples

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Learn About Adjustable Rate Mortgages

Thumbnail for Blog Article: How Soon Can You Refinance a Mortgage?

How Soon Can You Refinance a Mortgage?

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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?

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Confused About Different Mortgage Types? Here's How to Choose the Right One For You

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Thumbnail for Blog Article: Jumbo ARM vs Fixed-Rate Mortgage: Which Is Right for You?

Jumbo ARM vs Fixed-Rate Mortgage: Which Is Right for You?

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Thumbnail for Blog Article: Adjustable-Rate vs Fixed-Rate Conventional Loans: Which Is Better for You?

Adjustable-Rate vs Fixed-Rate Conventional Loans: Which Is Better for You?

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How Much Mortgage Can I Qualify For?

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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.