What is an adjustable-rate mortgage and how does it work?

An adjustable-rate mortgage is a type of home loan that has a variable interest rate. It’s also called a variable-rate mortgage. ARM interest rates are fixed for the first few years of the loan (called the introductory period), and adjust periodically for the remainder of the loan. ARM rates are based on market factors, like inflation and employment rates, rather than your personal financial situation.

Should I choose an ARM or fixed-rate mortgage?

It all comes down to your personal financial goals. Compared to 30-year fixed-rate mortgages, ARMs typically have lower introductory rates. If you plan to sell your home, pay off the loan or refinance before the fixed-portion of the ARM expires, you might save significantly with an ARM. If you’re comparing ARM rates to shorter-term fixed-rate options, you might find that those rates are about the same. The difference is that with ARMs you can spread the payment over 30 years, so you can get a low rate (on par with a 10-year fixed-rate mortgage) without the high monthly costs. In this scenario, an ARM might be a smart move if you don’t plan to stay in the house long-term or plan to refinance before the fixed period ends.

Do ARM loans have a rate cap?

Yes, ARM loans have rate caps that limit how much your interest rate can change. Here are some cap examples: An initial rate cap: Limits how much the interest rate can change after the introductory period 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

Current ARM Mortgage Rates

Weekly national mortgage interest rate trends

Current mortgage rates

	30 year fixed	6.89%
	5/1 ARM	6.18%
	3/1 ARM	5.93%
	7/1 ARM	6.69%
	10/1 ARM	6.95%

Today's ARM mortgage rates

As of Friday, May 23, 2025, the national average 5/1 ARM interest rate is 6.13%, down compared to last week’s of 6.25%. The national average 5/1 ARM refinance interest rate is 6.28%, down compared to last week’s of 6.37%.

Similar to fixed-rate mortgages, the rates on adjustable-rate loans have increased in recent years. However, the introductory rates today are still lower than rates on fixed loans, and they are more directly influenced by Federal Reserve decisions. The Fed hasn't changed its benchmark rate so far in 2025, but could shift to cutting rates again later this year.

Compare current ARM rates versus other loan types

Product	Interest Rate	APR
3/1 ARM Rate	5.79%	6.60%
5/1 ARM Rate	6.13%	6.58%
7/1 ARM Rate	6.32%	6.50%
10/1 ARM Rate	6.71%	6.65%
30-Year Fixed Rate	6.96%	7.03%
15-Year Fixed Rate	6.12%	6.23%
30-Year Fixed Rate FHA	6.70%	6.75%
30-Year Fixed Rate VA	6.72%	6.75%
30-Year Fixed Rate Jumbo	6.98%	7.04%

Rates as of Friday, May 23, 2025 at 6:30 AM

Product	Interest Rate	APR
3/1 ARM Rate	6.03%	6.63%
5/1 ARM Rate	6.28%	6.52%
7/1 ARM Rate	6.46%	6.64%
10/1 ARM Rate	6.76%	6.74%
30-Year Fixed Rate	6.87%	6.93%
15-Year Fixed Rate	6.17%	6.26%
30-Year Fixed Rate FHA	6.86%	6.91%
30-Year Fixed Rate VA	6.82%	6.85%
30-Year Fixed Rate Jumbo	6.88%	6.92%

Rates as of Friday, May 23, 2025 at 6:30 AM

Bankrate’s mortgage rates include national rate and APR averages; Bankrate Monitor (BRM) National Index rate averages; and “top offers”:
- National rate and APR averages: Displayed as daily and weekly averages, these rates and APRs are primarily collected from the 5 largest banks and thrifts across hundreds of markets in the U.S.
- Bankrate Monitor (BRM) National Index rate averages: Reported weekly, this long-standing survey collects rates from banks and thrifts across hundreds of markets in the U.S.
- “Top offers”: Displayed daily and weekly, these are an average of the rates listed first on our rate tables as advertised by our partners. The averages shown are based on the loan type and term selected.
You can compare national average mortgage rates to top offers to see how much you could save when shopping on Bankrate.

Learn more about how we collect, display and report mortgage rates.

When is it a good idea to get an adjustable-rate mortgage?

Consider your current financial situation and goals. Here are some scenarios where an ARM might be a good idea:

You can get a significantly lower APR on the ARM than with a fixed-rate mortgage
You plan to move or refinance before the initial rate period ends

There are positives and negatives when it comes to ARMs, however. Let’s break down the pros and cons further:

Pros of ARM loans

Lower payments in the beginning: The lower introductory rate on an ARM makes the loan more affordable, at least initially, which frees up room in your budget month to month.
Investment opportunity: You could take those monthly savings and invest, or put the funds toward another financial goal.
Significant savings if you plan to move: If you’re certain you’ll offload the mortgage before the fixed-rate period ends, you could save a bundle on interest.

Cons of ARM loans

Risk of higher rate: No one can predict how interest rates will move. Even with caps in place, your rate and payment could rise considerably over the life of the ARM.
More challenging to budget for: With a fixed-rate mortgage, you’ll have one set payment. With an ARM, you’ll only have a set payment just for the introductory period. After that, your payment could fluctuate. This can make future budgeting or financial planning difficult.

How to get the best ARM rate

Step 1: Strengthen your finances: Before applying for an ARM, give your finances a checkup. See if you can improve your credit score, ideally to be “very good” at least. A better credit score, lower debt-to-income (DTI) ratio and higher down payment will result in a more favorable interest rate.
Step 2: Determine your budget: You’ll need a good handle on how much house you can afford before shopping for an ARM. Using an adjustable-rate calculator can help you estimate how your mortgage payment could swing once the rate adjusts.
Step 3: Compare ARMs: Compare a variety of ARMs — like 5/1 or 5/6 ARMs, 7/1 ARMs and 10/1 ARMs — to determine which fits you best. The introductory rates are higher on longer-term ARMs, but the tradeoff is that the fixed-rate period lasts longer.
Step 4: Compare rates and terms from several lenders: Rate-shop with at least three different banks or mortgage companies to find the best ARM offer. Keep an eye on the fine print, understanding the interest rate, fees and rate cap structure for the ARM.

Types of ARM loans

There are several different types of ARM loans. The most common types are known as hybrid ARMs, which have an initial fixed-rate period followed by a floating rate for the remainder of the loan. You might see these listed as 5/6 ARM or a 7/1 ARM, where the first number indicates how long the fixed rate lasts and the second number indicates how often the rate adjusts — “6” for every six months, “1” for annually. Here’s a rundown of the most popular types:

3/1 ARM or 3/6 ARM: The first three years have a fixed rate followed by an adjustable rate for the remainder of the loan.
5/1 ARM or 5/6 ARM: The first five years have a fixed rate followed by an adjustable rate for the remainder of the loan.
7/1 ARM or 7/6 ARM: The first seven years have a fixed rate followed by an adjustable rate for the remainder of the loan.
10/1 ARM or 10/6 ARM: The first 10 years have a fixed rate followed by an adjustable rate for the remainder of the loan.

Usually, 5/1 ARMs carry the lowest rates.

ARM loan requirements

When compared to other types of mortgages, ARMs typically have stricter requirements. That’s because lenders need to consider your ability to repay the loan if your rate moves higher.

Loan amount: In 2025, the limit for a conforming ARM is $806,500 in most areas. You can take on a jumbo ARM which exceeds the conforming loan limit, though both these types of loans might be harder to secure.
Credit and income: With a higher credit score, you’re more likely to get a competitive interest rate. Lenders will also look at other factors such as other debt and income.
Down payment: Most conventional ARM loans require as little as 5 percent down.

Learn more: ARM loan requirements

BANKRATE EXPERT FAQ

I’m a first-time homebuyer. Should I get an ARM?

Dr. Anthony O. Kellum

President & CEO, Kellum Mortgage

"I think [ARMs] can be a smart option for some first-time homebuyers, depending on their financial goals and how long they plan to stay in the home. The initial lower rate can help reduce monthly payments early on, which is especially helpful in today’s high-cost environment. But ARMs aren’t for everyone. If you’re planning to stay in the home long-term or you’re not comfortable with the possibility of rising payments down the line, a fixed-rate mortgage might offer more peace of mind. It really comes down to knowing your timeline and being honest about your risk tolerance."

ARM loan FAQ

An adjustable-rate mortgage is a type of home loan that has a variable interest rate. It’s also called a variable-rate mortgage. ARM interest rates are fixed for the first few years of the loan (called the introductory period), and adjust periodically for the remainder of the loan. ARM rates are based on market factors, like inflation and employment rates, rather than your personal financial situation.
It all comes down to your personal financial goals. Compared to 30-year fixed-rate mortgages, ARMs typically have lower introductory rates. If you plan to sell your home, pay off the loan or refinance before the fixed-portion of the ARM expires, you might save significantly with an ARM.

If you’re comparing ARM rates to shorter-term fixed-rate options, you might find that those rates are about the same. The difference is that with ARMs you can spread the payment over 30 years, so you can get a low rate (on par with a 10-year fixed-rate mortgage) without the high monthly costs. In this scenario, an ARM might be a smart move if you don’t plan to stay in the house long-term or plan to refinance before the fixed period ends.
Yes, ARM loans have rate caps that limit how much your interest rate can change. Here are some cap examples:
- An initial rate cap: Limits how much the interest rate can change after the introductory period
- 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

Additional ARM loan resources

Meet our Bankrate experts

Written by: Andrew Dehan, Senior Writer, Home Lending

I’ve covered mortgages, real estate and personal finance since 2020. At Bankrate, I’m focused on all of the factors that affect mortgage rates and home equity. I enjoy distilling data and expert advice into takeaways borrowers can use. Prior to Bankrate, I wrote and edited for Rocket Mortgage/Quicken Loans. My work has been published by Business Insider, Forbes Advisor, SmartAsset, Crain’s Business and more.

Current ARM mortgage rates