Current ARM Loan Rates

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LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
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Current ARM loan trends

According to real estate data provider Corelogic, by April 2023, the ARM share of conventional loan volume had quadrupled from the lows of January 2021. Adjustable-rate mortgages are more common for borrowers that need large loan amounts between $400,001 and $1 million.

The Mortgage Bankers Association’s weekly mortgage applications survey for the week ending Sept. 29, 2023, reflected an 8% increase in the share of ARM applications from the week before. The recent spike in 30-year fixed mortgage rates to more than 7% may motivate borrowers to choose the temporary payment savings offered by initial ARM rates.

 Read more about if rates are predicted to drop in our mortgage interest rates forecast.

What is an adjustable-rate mortgage (ARM)?

An adjustable-rate mortgage is a home loan that features an interest rate that changes over time. Most lenders offer ARMs with low initial or “teaser” rates that are fixed for three, five or seven years.

When the teaser-rate period ends, the adjustable-rate repayment period begins. The ARM rate can rise, fall or stay the same based on the margin and index of the ARM program you choose.

Top ARM lenders

LenderARM loan types offeredWhere it lendsLender Review
Fairway Independent Mortgage

 5-year ARMs

 7-year ARMs

 10-year ARMs

All 50 states & D.C.Read our review
Guaranteed Rate Mortgage

 5-year ARMs

 7-year ARMs

 10-year ARMs

All 50 states & D.C.Read our review
Rocket Mortgage

 7-year ARMs

 10-year ARMs

All 50 states & D.C.Read our review
Wells Fargo

 5-year ARMs

 7-year ARMs

 10-year ARMs

All 50 states & D.C.Read our review

 5-year ARMs

 7-year ARMs

 10-year ARMs

49 states & D.C.

New York excluded

Read our review

To determine our top ARM lenders, we reviewed data collected from 35 lender reviews completed by the LendingTree editorial staff for 2023. In order to appear on our list, lenders had to be licensed to lend in nearly all states, offer multiple ARM loan products and earn a star rating of 3 or higher on LendingTree’s mortgage rating system.

How do ARM loans work?

Unlike a conventional mortgage, ARMs have two distinct phases:

  1. Initial phase with a fixed, low interest rate
  2. Adjustable phase where your mortgage rate (and payment) will fluctuate based on market conditions.

Lenders are required to provide ARM borrowers with a Consumer Handbook on Adjustable-Rate Mortgages (CHARM). The booklet provides 13 detailed pages explaining how ARMs work. We’ve condensed the basics below:

ARM featureWhat it is and how it works
Initial or teaser rate
  • A temporary low rate you pay during a set time called the “fixed period”
  • It usually lasts three, five or seven years without changing
  • A banking rate that fluctuates with financial markets
  • The index is added to your margin to determine your interest rate once the fixed-rate period ends
  • A set percentage added to the index to calculate your rate during the adjustment period
  • This number doesn't change during the entire loan term
First adjustment cap
  • The percentage your rate can rise after your teaser-rate period ends
  • The lender uses this to limit your first interest rate adjustment
Subsequent adjustment cap
  • The percentage your rate can rise after your first adjustment cap
  • The lender must notify you of each change weeks or months before they occur
Lifetime cap
  • The maximum percentage your rate can rise above the initial rate
  • Limits the amount a lender can charge regardless of how high the index rises
Adjustment period
  • The number of years or months in between rate adjustments
  • Most ARMs set the period at every six months or annually

  What those ARM numbers mean

When looking up ARM rates and terms, the phases of the loan will always be represented with numbers. Let’s look at a 5/1 ARM as an example:

  • The 5 represents the number of years you’ll have the low teaser rate
  • The 1 tells you how often your rate will adjust (every year)

ARM adjustment periods are typically one year (5/1 ARM) or six months (5/6 ARM). The teaser period can last three, five, seven or even 10 years.

ARM caps are also disclosed with a set of three numbers. For example, a loan with caps of 3/2/5 breaks down as follows:

  • The “3” indicates that your interest rate can only increase up to 3 percentage points after the initial teaser period ends
  • The “2” represents the maximum number of percentage points the interest rate can increase during each adjustment period
  • The “5” is the lifetime cap, or the maximum amount your rate can increase over the entire life of the loan
Ready to estimate your monthly payment? Try using our mortgage calculator.


Pros and cons of ARMs

 Lower initial rates. The teaser rate for an ARM is typically lower than fixed-rate loans.  The rate could spike after the teaser-rate period ends. If you still have the ARM loan when the adjustment period begins, your rate could increase.
 Lower monthly payments at first. Low teaser rates translate to lower monthly payments during the first few years of your mortgage.  The payment could become unaffordable. If your income has dropped or you’ve racked up other debt, an ARM payment increase could make it harder to make ends meet.
 Extra monthly cash can be used to pay down your loan balance. You can use the savings to pay off your loan faster and build equity in your home. Alternatively, you can use the funds for other financial goals, like saving for college or retirement.  The qualifying standards may be more stringent. ARM lenders may require a higher credit score, larger down payment or restrict the amount of equity you can tap.

When should you choose an adjustable mortgage rate?

An ARM loan makes sense if you need to save money over a short period of time. You should choose an adjustable-rate mortgage if:

 You have savings goals you can accomplish before the initial fixed-rate period ends
 You plan to sell your home or refinance before the first rate adjustment
 You can afford the lifetime maximum payment

When to avoid an ARM

It’s best to opt out of an ARM if:

 You receive variable income such as commission or self-employment earnings
 You live in your “forever” home or don’t plan to sell before the fixed-rate period ends
 You can only afford the monthly payment at the teaser rate

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Types of ARMs

Conventional, FHA and VA ARMs

Adjustable-rate mortgage options are available for conventional loans, loans backed by the Federal Housing Administration (FHA) and loans guaranteed by the U.S. Department of Veterans Affairs (VA).

A few things worth noting about ARMs with each type of loan program:

 Conventional ARMs require a higher minimum down payment. You’ll need at least 5% down for an ARM loan compared to only 3% for fixed-rate conventional loan programs.
 FHA ARMs allow lower minimum credit scores and down payments. Borrowers with scores as low as 580 may qualify for an FHA ARM with a 3.5% down payment.
 VA ARMs come with extra protections. To prevent unaffordable rate increases for VA borrowers, the VA sets the initial and subsequent caps to 1% yearly on any hybrid ARM that adjusts within five years.


Interest-only ARM

An interest-only ARM allows borrowers to only pay the interest due on the loan for a set time, usually between three and 10 years. During that time the loan principal isn’t paid down at all, but your monthly payment is lower.

Payment-option ARM

Payment-option ARMs are rare since they were all but outlawed after the 2008 housing crash. An option ARM allows you to choose different monthly payment “options.” The three choices typically include a principal and interest payment, an interest-only payment and a minimum or “limited” payment.

With the limited payment option, you can opt to pay less than the interest accruing on the principal, and add the unpaid interest to the loan balance. In other words: Your loan balance increases instead of shrinking like it does with a regular mortgage.

Should you refinance your ARM?

There are some specific scenarios when it makes sense to refinance your current ARM to a new ARM loan.

  • You can get a lower ARM rate than you’re paying now. ARM rates typically drop when fixed-rates drop. If you’ve noticed lower advertised ARM rates, it may be time to trade your old ARM loan in for one with a lower ARM rate.
  • You want a lower payment on a cash-out refinance. A cash-out refinance involves borrowing more than you owe and pocketing the difference. If fixed interest rates are higher than what you pay now, consider an ARM cash-out refinance to reduce the impact of taking out a larger loan.

 Can I refinance from an ARM to a fixed-rate mortgage?

Yes, as long as you qualify based on your credit, income, debt and equity. You may want to consider refinancing into a fixed-rate mortgage when your teaser period ends to keep a stable interest rate and payment over the life of the loan.

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Frequently asked questions

A 5/1 ARM rate gives you an initial rate that’s fixed for five years, and then adjusts every year for the rest of the loan’s term.

A hybrid ARM is just another name for an ARM loan. It’s considered “hybrid” because it has two payment schedules during the term: A fixed-rate schedule at first, followed by an adjustable payment schedule for the loan’s remaining life.

An ARM loan is best for borrowers that need short-term savings and have a plan to pay off the loan before the teaser-rate period ends. A fixed-rate loan is the best option for a stable monthly payment that remains consistent for the entire loan term.

A teaser rate is just another name for an initial ARM rate.

The interest rate increases could make it difficult for you to make payments. If you can’t afford the higher payments, you could go into mortgage default and the lender could foreclose on your home.