ARM loan rates

Written by Zach Wichter

On , the national average 5/1 ARM APR is 5.660%. The average 10/1 ARM APR is 4.940%, according to Bankrate’s latest survey of the nation’s largest mortgage lenders.

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Today's ARM loan rates

Lenders nationwide provide weekday mortgage rates to our comprehensive national survey to bring you the most current rates available. Here you can see the latest marketplace average rates for a wide variety of purchase loans. The interest rate table below is updated daily to give you the most current purchase rates when choosing a home loan. APRs and rates are based on no existing relationship or automatic payments. For these averages, the customer profile includes a 740 FICO score and a single-family residence. To learn more, see understanding Bankrate rate averages.

Product Interest Rate APR
5/1 ARM 4.260% 5.660%
7/1 ARM 4.780% 4.950%
10/1 ARM 4.850% 4.940%

What is an ARM loan?

Adjustable-rate mortgages, or ARMs, are home loans that come with a floating interest rate. As opposed to fixed-rate mortgages, the interest rate on an ARM changes periodically throughout the life of the loan. Since the rate on ARMs can change, your monthly payment may increase or decrease. ARMs are structured with a fixed-rate period and a floating-rate period. During the first few years your rate is fixed, but after that period ends, your rate becomes adjustable. These are typically 5/1 or 7/1 ARMs, which signify that the first five or seven years of the loan will have a fixed rate.

The time between rate changes — called the adjustment period — is in the fine print, so you’ll know exactly when it might go up or down. In most cases, ARM interest rates adjust on a yearly basis after the initial fixed period, but some ARMs are structured with six-month adjustments. You might see these advertised as a 5/6 ARM or 7/6 ARM, for example.

How do adjustable-rate mortgages work?

Adjustable-rate mortgages are loans with an interest rate that changes after an initial fixed period. The most common adjustable-rate mortgage, the 5/1 ARM, has a fixed period of five years at the start of the loan, which usually has a lower interest rate relative to market conditions. After that initial period ends, the /1 represents that the rate will adjust based on the prevailing market rate annually.

30-year fixed-rate mortgage 5/1 ARM
Loan principal $312,900 $312,900
Interest rate 5.78% 4.27%
Initial monthly payment $1,831 $1,543
Total interest $346,606 $364,222
Total payments $659,506 $677,122

*Notes: Interest rates as of June 15, 2022; monthly payments do not include insurance or taxes.

To see what the monthly payments would look like for your loan, check out Bankrate’s ARM or fixed-rate calculator.

Pros and cons of an ARM loan

As with most financial products, ARMs have their benefits and drawbacks. Here are the key things to know:

Pros

  • It has lower rates and payments early in the loan term.
  • Borrowers may be able to qualify for a larger mortgage thanks to lower initial payments.
  • Borrowers may be able to invest their monthly savings.
  • It offers a lower-cost option for borrowers who plan to move out of the house before the fixed period ends.

Cons

  • Rates and payments can rise significantly over the life of the loan.
  • Some annual caps don’t apply to the initial loan adjustment, so it may be difficult to swallow that first reset.
  • These loans are more complex, so borrowers need to be more active and savvy in managing their accounts.

ARM loan FAQs

Refinancing into an ARM

If you want to refinance, you might consider refinancing into an ARM under the following circumstances:

  • You’re going to sell your home in the next few years. Choose an ARM term strategically so that the adjustment period starts around your target sale date.
  • You expect your income is going to rise. If so, you can take advantage of the lower rate during the initial period without the risk of being unable to afford the higher payment when the rate resets.
  • Your top priority is getting a low interest rate today. An ARM might be worth it if you want the lowest rate possible during your first few years of the loan, but you should be comfortable with the likelihood that your payments will rise when the rate resets.

Refinancing into an ARM might not be a good move if any of the following apply to you:

  • Your income isn’t stable. If you’re self-employed, for example, or your income fluctuates for another reason, you risk not being able to afford higher payments.
  • You don’t expect to bring in more income. Before committing to an ARM, consider whether your income is likely to increase sufficiently by the time the rate resets.
  • You won’t break even on refinance closing costs. Just like when you closed on your original mortgage, closing on your new loan will cost you in fees. The savings from a lower payment during the initial period might not outweigh the upfront cost, which can be as high as 5 percent of the amount that you’re refinancing.

Learn more about adjustable-rate mortgages

Written by: Zach Wichter, mortgage reporter for Bankrate

Zach Wichter is a mortgage reporter at Bankrate. He previously worked on the Business desk at The New York Times where he won a Loeb Award for breaking news, and covered aviation for The Points Guy.

Read more from Zach Wichter

Learn more about specific loan type rates
Loan Type Purchase Rates Refinance Rates
The table above links out to loan-specific content to help you learn more about rates by loan type.
30-Year Loan 30-Year Mortgage Rates 30-Year Refinance Rates
20-Year Loan 20-Year Mortgage Rates 20-Year Refinance Rates
15-Year Loan 15-Year Mortgage Rates 15-Year Refinance Rates
10-Year Loan 10-Year Mortgage Rates 10-Year Refinance Rates
FHA Loan FHA Mortgage Rates FHA Refinance Rates
30-Year FHA Loan 30-Year FHA Loan Rates 30-Year FHA Refinance Rates
VA Loan VA Mortgage Rates VA Refinance Rates
ARM Loan ARM Mortgage Rates ARM Refinance Rates
3/1 ARM 3/1 ARM Rates 3/1 Refinance Rates
5/1 ARM 5/1 ARM Rates 5/1 Refinance Rates
7/1 ARM 7/1 ARM Rates 7/1 Refinance Rates
10/1 ARM 10/1 ARM Rates 10/1 Refinance Rates
Jumbo Loan Jumbo Mortgage Rates Jumbo Refinance Rates
30-Year Jumbo Loan 30-Year Jumbo Loan Rates 30-Year Jumbo Refinance Rates