Adjustable-Rate Mortgages
Lower now.
Flexible later.
An ARM starts with a fixed rate for 3, 5, 7, or 10 years, typically below today's 30-year fixed, then adjusts on a schedule you choose. Six structures, every cap disclosed in writing before you close, and one of our most popular options, the 5/5 ARM, adjusts just once every five years.
Who this is for
Is this your loan?
Buyers who expect to sell or refinance within 5 to 7 years, borrowers with a known relocation timeline, and anyone paying principal down fast.
- Five to seven year homeowners. Buyers who expect to sell or move again within 5 to 7 years and do not need 30 years of rate certainty.
- Career movers. Borrowers with a known relocation timeline: military, corporate transfers, or a defined next chapter.
- High cash flow borrowers. Buyers who pay down principal aggressively and want a lower rate now while their balance shrinks.
- Jumbo borrowers. Buyers financing above the conforming limit who want a meaningful rate discount on a large loan amount.
Not sure? That's what we're here for. We price every eligible program against this one, so the comparison is done for you.
What is an adjustable-rate mortgage?
An adjustable-rate mortgage (ARM) holds a fixed interest rate for an initial period, 3, 5, 7, or 10 years, then adjusts on a set schedule for the rest of the 30-year term. We offer six structures. The 3/6, 5/6, 7/6, and 10/6 ARMs adjust every six months after the fixed period using a 30-day average SOFR index, while the 3/5 and 5/5 ARMs adjust only once every five years using the 5-year Treasury Constant Maturity (CMT) index. The 5/5 ARM is one of our most requested options for borrowers who want an ARM's lower starting rate without frequent rate changes.
Every structure carries three disclosed caps, an initial adjustment cap, a periodic cap, and a lifetime cap, so the most your rate can ever move is set in writing before you close. Down payment starts around 5%, ARMs are available on conforming and jumbo loan amounts, and full income documentation applies throughout.
This page is a general guide to how ARM financing typically works, not a quote, a pre-qualification, or the final word on what you qualify for. The structure that fits you best depends on how long you plan to keep the loan, how much payment stability you want, and your loan amount.
What are the index, the margin, and the caps?
Every adjustable-rate mortgage comes down to three things. The index is a published benchmark rate the lender does not control. The margin is a fixed number of percentage points the lender adds on top. The caps set hard limits on how much your rate can move at the first adjustment, at each adjustment after that, and over the life of the loan. Add the index and margin together and round to get your new rate at each adjustment. The caps just make sure that number cannot move further than agreed.
- Initial adjustment cap. How much your rate can move the first time it adjusts, up or down. This is often the largest single cap on the loan. With a 2% cap, a 6% start rate cannot exceed 8% at the first adjustment.
- Periodic cap. How much your rate can move at every adjustment after the first one, usually smaller than the initial cap. With a 1% cap, your rate moves at most 1 point at each later adjustment.
- Lifetime cap. The absolute ceiling on your rate for as long as you hold the loan, measured from your original start rate. With a 5% lifetime cap, a 6% start rate can never exceed 11%.
The federal Consumer Handbook on Adjustable-Rate Mortgages covers the same mechanics in more detail, and you can model your own worst case on the ARM calculator.
Which ARM structures are available?
The first number is how many years your rate is fixed. The second is how often it adjusts after that, every 6 months, or just once every 5 years. Shorter fixed periods and more frequent adjustments generally mean a lower starting rate. Longer fixed periods and less frequent adjustments mean more predictability.
| Structure | Fixed period | Adjusts every | Typical index | Typical margin | Caps (initial / periodic / life) |
|---|---|---|---|---|---|
| 3/6 ARM | 3 years | 6 months | 30-day avg. SOFR | About 2.75% | 2% / 1% / 5% |
| 5/6 ARM | 5 years | 6 months | 30-day avg. SOFR | About 2.75% | 2% / 1% / 5% |
| 7/6 ARM | 7 years | 6 months | 30-day avg. SOFR | About 2.75% | 5% / 1% / 5% |
| 10/6 ARM | 10 years | 6 months | 30-day avg. SOFR | About 2.75% | 5% / 1% / 5% |
| 5/5 ARM | 5 years | 5 years | 5-yr Treasury (CMT) | 2.50% to 3.00% | 2% / 2% / 5% |
| 3/5 ARM | 3 years | 5 years | 5-yr Treasury (CMT) | 2.50% to 3.00% | 2% / 2% / 5% |
Scroll the table sideways to see the index, margin and caps for each structure.
Figures above are representative of current market guidelines for each structure and vary by investor, loan amount, and credit profile. Your Loan Estimate will show the exact index, margin, and caps for your loan. If you have seen these structures called 5/1, 7/1, or 10/1 ARMs, that is the older, annual-adjusting version of the same idea. The conforming and jumbo market has largely moved to the 6-month SOFR structures shown above, though annual-adjusting ARMs still exist on some programs. SOFR ARMs use the 30-day average of the Secured Overnight Financing Rate, and 5/5 and 3/5 ARMs use the weekly average yield on 5-year Constant Maturity Treasury securities. Both are published, independent benchmarks, not set by any single lender.
The 5/5 ARM: an ARM that barely feels like one
Most ARMs adjust every six months once the fixed period ends, up to 50 rate changes over a 30-year term. A 5/5 ARM adjusts once every five years, for a maximum of five adjustments over the life of the loan. It is the structure credit unions have built a reputation on, and it has become one of ours too: a lower starting rate than a 30-year fixed, without the semi-annual rate anxiety of a 5/6.
- Fixed for 5 years, then adjusts just once every 5 years for the rest of the term, as few as 5 total adjustments over 30 years.
- Tied to the 5-year Treasury (CMT) index plus a modest margin, a stable, widely published government benchmark.
- Capped at 2% per adjustment and 5% over the life of the loan, so the ceiling is known before you close.
- Available on conforming and jumbo loan amounts, for purchase and refinance.
How does an ARM come together?
- Pick your fixed period. 3, 5, 7, or 10 years, based on how long you are likely to keep this loan or this rate. Shorter fixed periods typically price lower.
- Choose your adjustment rhythm. Six-month adjustments on the 3/6, 5/6, 7/6 and 10/6 for the lowest starting rate, or five-year adjustments on the 5/5 and 3/5 for far fewer rate changes over time.
- Know your caps going in. Every ARM we offer discloses an initial, periodic, and lifetime cap before you close, so the most your rate can ever move is set in writing.
- Refinance, sell, or ride it out. Most ARM borrowers sell, refinance, or pay down principal well before the fixed period ends. If you do not, your rate simply adjusts within its caps.
What are the qualifying requirements?
- Down payment as low as 5% on qualifying conforming loans
- Six structures available: 3/6, 5/6, 7/6, 10/6, 5/5, and 3/5
- Conforming and jumbo loan amounts
- Initial, periodic, and lifetime rate caps disclosed before closing
- Available for primary residences, second homes, and investment properties
- Purchase and rate-and-term or cash-out refinance eligible
- Full income documentation underwriting
- Fully amortizing, with no negative amortization or interest-only requirement
- Index is a published, independent benchmark, SOFR or Treasury CMT, not set by us
- No prepayment penalty on most programs
What are the advantages of an ARM?
- Lower starting rate than a comparable 30-year fixed in most rate environments
- Six structures to match your timeline, from 3-year fixed periods to a 5/5 ARM that adjusts just once every 5 years
- Every cap disclosed in writing before you close, with no surprise ceiling
- A strong fit if you plan to sell, refinance, or aggressively pay down principal before the fixed period ends
What are the trade-offs?
- Your rate, and payment, can rise after the fixed period, up to the caps disclosed at closing
- Harder to budget years out compared to a fixed-rate loan
- Refinancing later depends on future rates and your qualification at that time, and is not guaranteed
- Less ideal if you plan to hold the loan for the full 30-year term without refinancing
About these figures: the structures, indexes, margins, and caps on this page describe our ARM programs as of September 2026 and vary by investor, loan amount, and credit profile. They are not quotes, offers, or commitments to lend. Your Loan Estimate shows the exact index, margin, caps, and worst-case payment for your loan. Equal Housing Opportunity.
ARM Loan FAQs
Asked constantly. Answered honestly.
What do the two numbers in "5/6 ARM" or "5/5 ARM" mean?
The first number is how many years your rate is fixed. The second is how often it adjusts after that: "6" means every 6 months, "5" means every 5 years. So a 5/6 ARM is fixed for 5 years then adjusts every 6 months, while a 5/5 ARM is fixed for 5 years then adjusts every 5 years.
What is the difference between a 5/6 ARM and a 5/5 ARM?
Both are fixed for the first 5 years. After that, a 5/6 ARM can adjust up to twice a year for the rest of the term, as many as 50 adjustments over 30 years. A 5/5 ARM adjusts only once every 5 years, as few as 5 adjustments total. The 5/6 typically starts with a somewhat lower rate, and the 5/5 trades a bit of that for far more payment stability after the fixed period.
What are rate caps, and what is my worst case?
Every ARM has three caps: an initial adjustment cap, a periodic cap for each adjustment after that, and a lifetime cap measured from your starting rate. With 2% / 1% / 5% caps and a 6% start rate, your rate could reach at most 8% at the first adjustment, move at most 1 point at any adjustment after that, and can never exceed 11% for the life of the loan. Your Loan Estimate shows the exact caps and worst-case payment for your loan.
What index and margin do you use?
Six-month adjusting ARMs (3/6, 5/6, 7/6, 10/6) use the 30-day average of SOFR, the Secured Overnight Financing Rate, plus a margin around 2.75%. Five-year adjusting ARMs (5/5, 3/5) use the 5-year Treasury Constant Maturity index plus a margin typically between 2.50% and 3.00%. Both indexes are published, independent benchmarks that no single lender controls. Your new rate at each adjustment is the index plus your margin, rounded and subject to your caps.
Can I refinance before my rate adjusts?
Yes, and most ARM borrowers do, either refinancing into a new rate, selling the home, or paying the loan off before the fixed period ends. There is no requirement to keep the loan through an adjustment, though refinancing later depends on rates and your qualification at that time.
Is an ARM riskier than a fixed-rate loan?
An ARM carries rate uncertainty a fixed-rate loan does not. Your payment can rise after the fixed period, up to your disclosed caps. That is a real trade-off, not a hidden one: the caps set your worst case in writing before you close. For borrowers who plan to sell, refinance, or pay down the loan within the fixed period, that trade-off often comes with a meaningfully lower starting rate.
What is the minimum down payment on an ARM?
As little as roughly 5% on qualifying conforming ARM loans. Down payment requirements increase for jumbo loan amounts, second homes, investment properties, and lower credit scores.
What happens if rates fall instead of rise?
Your rate adjusts to the index plus your margin at each adjustment date, whichever direction rates have moved, subject to the same caps. If rates are lower at your adjustment date, your rate and payment can go down too.
Is there a prepayment penalty on an ARM?
Not on most of our ARM programs. You can pay down principal, refinance, or sell without a prepayment penalty in the vast majority of scenarios, and we will confirm for your specific program.
Are ARMs available on jumbo loans?
Yes. The 5/6, 7/6, and 10/6 ARM structures are available on jumbo loan amounts above the conforming limit, often at a meaningful rate discount to a jumbo fixed-rate loan.
What property types qualify?
Primary residences, second homes, and investment properties are all eligible, though down payment, credit score, and reserve requirements are more conservative for second homes and investment properties.
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