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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

Abi Bus

Interest Rate Ceilings: Definition, Application, and Examples Thumbnail

Interest Rate Ceilings: Definition, Application, and Examples

SuperMoney Team

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

Abi Bus

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

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

SuperMoney Team

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: How Soon Can You Refinance a Mortgage?

How Soon Can You Refinance a Mortgage?

Camilla Smoot

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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Thumbnail for Blog Article: Confused About Different Mortgage Types? Here's How to Choose the Right One For You

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?

Andrew Latham

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?

Andrew Latham

Thumbnail for Blog Article: How Much Mortgage Can I Qualify For?

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.