Current 10/1 ARM rates

What is a 10/1 ARM loan?

A 10/1 ARM is a type of adjustable-rate mortgage (ARM). The number before the slash is the period that your interest rate is fixed, and the number after the slash is how often the interest rate changes after that. So, 10/1 means your rate is fixed for the first 10 years, and then adjusts once every year after that.  If you’re considering a 10/1 ARM loan, here are the key things to know.

How does a 10/1 ARM work?

Adjustable-rate mortgages usually start with lower interest rates than their fixed-rate counterparts, so they help some homeowners qualify for a bigger loan because the payments are lower, at least in the beginning. Because a 10/1 ARM will begin to see annual adjustments to the interest rate after 10 years, you’ll want to make sure you understand the changes that are coming after the first decade. When the adjustments start, you might see a jump in how much interest accrues, how much you owe and how much you have to pay every month.

The variable rate on an ARM is based on a benchmark, typically the Secured Overnight Financing Rate (SOFR). This rate fluctuates based on such factors as what’s happening in the global economy and how the Federal Reserve and other central banks are responding to those trends.

You’re protected from steep year-to-year increases, however, because the loan has rate caps limiting the changes in both rates and payments:

• A periodic rate cap limits how much the interest rate can change from one year to the next.
• A lifetime rate cap limits how much the interest rate can rise over the life of the loan (for example, 30 years).
• A payment cap limits the amount the monthly payment can rise over the life of the loan in dollars, rather than how much the rate can change in percentage points.

How to compare 10/1 ARM rates

When shopping around for a mortgage, compare mortgage rates and closing costs. Bankrate can help you shop for mortgage quotes through our mortgage rate tables, which allow you to plug in general information about your finances and location to receive tailored offers.

When comparing offers, consider the interest rate and annual percentage rate (APR). The APR includes the interest rate and fees incurred when borrowing. Be sure to compare a 10/1 ARM to other ARM terms, as well. 3/1, 5/1 and 7/1 ARMs, for example, tend to have lower rates, but the tradeoff is a shorter fixed-rate period. 

When should you consider a 10/1 ARM?

Adjustable-rate mortgages are usually best for those who are only planning to hold them for the initial term. So, if you’re looking to move within 10 years, or know you’ll be able to refinance to lock in your interest rate in that time, a 10/1 ARM could be the right mortgage for you.

Use Bankrate's ARM vs. fixed-rate mortgage calculator to see which type of mortgage works best for you.