Adjustable-Rate Mortgages Guide | 3–10 Year ARMs

Overview

ARMs start with a fixed rate for a period, then adjust periodically. They can save money if interest rates remain stable but carry adjustment risk.

Step 1: What is an ARM?

• Initial fixed rate for 3, 5, 7, or 10 years
• Rate adjusts afterward, often annually

Step 2: Pros and Cons

Pros:

• Lower initial rates
• Potential savings if rates stay low

Cons:

• Rate increases can raise payments
• Harder to budget long-term

Step 3: Choosing the Right ARM

• Match fixed period to your plans
• Compare caps, margins, and initial rates
• Use calculators to forecast future payments

Step 4: Risks and Mitigation

• Rate caps limit maximum increases
• Consider refinancing before adjustment
• Have a buffer for higher payments

FAQs

Q1: What does the number in a 5-year ARM mean?

It’s the fixed-rate period before adjustments begin.

Q2: Are ARMs risky for first-time buyers?

Potentially — payment increases can be challenging.

Q3: Can I refinance an ARM?

Yes, many borrowers refinance to lock in a fixed rate.

Q4: Do ARM rates ever decrease?

Yes, if market rates drop, though caps can limit the decrease.

Tools and Resources

3-Year ARM

Estimate your 3-year adjustable-rate mortgage payments.
👉 ARM 3 Calculator

5-Year ARM

Estimate your 5-year adjustable-rate mortgage payments.
👉 ARM 5 Calculator

7-Year ARM

Estimate your 7-year adjustable-rate mortgage payments.
👉 ARM 7 Calculator

10-Year ARM

Estimate your 10-year adjustable-rate mortgage payments.
👉 ARM 10 Calculator