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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.

Interest Rate Caps: What They Are, How They Work, and Examples Thumbnail

Interest Rate Caps: What They Are, How They Work, and Examples

Abi Bus

5/1 ARM: Meaning and How it Works Thumbnail

5/1 ARM: Meaning and How it Works

SuperMoney Team

Capped Rates: What They Are, How They Work, and Examples Thumbnail

Capped Rates: What They Are, How They Work, and Examples

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Interest Rate Ceilings: Definition, Application, and Examples Thumbnail

Interest Rate Ceilings: Definition, Application, and Examples

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Navigating Initial Rate Periods: What They Are, How They Work, and Considerations for Borrowers Thumbnail

Navigating Initial Rate Periods: What They Are, How They Work, and Considerations for Borrowers

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Exotic Mortgages: Definition, Type, Risks, and Real-Life Examples Thumbnail

Exotic Mortgages: Definition, Type, Risks, and Real-Life Examples

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What Is a 10/1 ARM Mortgage? Thumbnail

What Is a 10/1 ARM Mortgage?

David Hodges

Payment Shock: Its Impact, Prevention, and Real-life Scenarios Thumbnail

Payment Shock: Its Impact, Prevention, and Real-life Scenarios

Silas Bamigbola

ARM Index: Definition, Examples, and Considerations Thumbnail

ARM Index: Definition, Examples, and Considerations

SuperMoney Team

Reference Rates: Definition, Dynamics, and Real-world Scenarios Thumbnail

Reference Rates: Definition, Dynamics, and Real-world Scenarios

SuperMoney Team

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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?

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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.