Mortgage basics
Adjustable-rate mortgage (ARM)
Also called: ARM
In short
An ARM starts with a fixed rate for a set number of years, then adjusts periodically against an index. The early rate can be lower, but later payments can rise.
An adjustable-rate mortgage carries a fixed rate for an initial period — a handful of years — and then adjusts on a schedule, moving up or down with a published index plus a set margin, within caps that limit each change.
The appeal is a lower starting rate than a comparable fixed loan. The risk is that once the fixed period ends, the rate and payment can climb, so an ARM suits a borrower whose plans or expectations fit the fixed window.
Reading an ARM means reading its caps and its index: how much the rate can move at the first adjustment, at each one after, and over the life of the loan.
Related
Current as of August 2026.