Adjustable-Rate Loans
Lower now. Flexible later.
An ARM starts with a fixed, usually lower rate for 5, 7, or 10 years, then adjusts with the market. For buyers with a plan, it's a deliberate, money-saving tool. For everyone else, we'll say so.
Who this is for
Is this your loan?
Buyers who expect to sell, refinance, or pay down substantially within the intro period, and want the lower rate while they're there.
Not sure? That's what we're here for. We price every eligible program against this one, so the comparison is done for you.
How an ARM actually works
A "7/6 ARM" means seven years at a fixed intro rate, then adjustments every six months after, tied to a published index plus a fixed margin. Modern ARMs carry strict caps: how much the rate can move at the first adjustment, at each adjustment after, and over the loan's lifetime. You'll know all three caps, and the worst-case payment, before you sign anything.
The appeal is simple: the intro rate is usually meaningfully below 30-year fixed pricing. If your plan resolves the loan within the intro window, a sale, a refinance, a relocation, the ARM's discount is money you simply keep.
Who ARMs genuinely fit
- The 5-to-7-year homeowner. Starter condo now, family house later. If you'll realistically sell within the window, you may never meet your adjustable rate.
- Career movers. Relocations on a known clock make the intro period an easy match.
- High-cash-flow borrowers. Some clients take the lower rate and aggressively pay principal during the intro years, shrinking the balance before any adjustment can matter.
- Jumbo borrowers. On large Southern California loans, the intro-rate discount compounds into serious monthly savings. ARMs pair naturally with jumbo financing.
The honest caveat
If there's a real chance you'll still hold this loan in year eight with rates elevated, the ARM's savings can reverse. That's not a reason to fear the product; it's a reason to buy it deliberately, with an exit plan and with the caps understood. That conversation is exactly what we're for. If a fixed rate fits your life better, we'll tell you before you ever see paperwork.
Adjustable-Rate Loans FAQs
Asked constantly. Answered honestly.
What do the numbers in "5/6 ARM" or "7/6 ARM" mean?
The first number is how many years the intro rate stays fixed; the second is how often the rate adjusts afterward, in months. A 7/6 ARM is fixed for seven years, then adjusts every six months within its caps.
How high can my ARM rate go?
Every ARM has caps written into the note: a first-adjustment cap, a per-adjustment cap, and a lifetime cap. We calculate your absolute worst-case payment before you commit, so the downside is a known number rather than a fear.
Can I refinance an ARM before it adjusts?
Yes. Refinancing into a fixed-rate loan before the intro period ends is one of the most common exits, and we will flag the timeline for you well in advance. Approaching adjustment with equity built is a strong refinancing position.
Is an ARM riskier than a fixed-rate loan?
It carries rate risk after the intro period, capped by the note. Whether that risk matters depends entirely on your timeline: sell or refinance within the window and you likely never pay an adjusted rate. Hold long-term with no plan, and a fixed rate is usually the better instrument.
What down payment does an ARM need?
Purchases start around 5% down, and refinances can reach 95% of value. Jumbo ARMs have their own tiers. Ask us to price your exact scenario.
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