Adjustable- Rate Loans
Get a more affordable interest rate and lower monthly payments at the start of your mortgage.
Adjustable-rate mortgages are shown as two numbers with a slash in between. The first number shows how many years the interest rate is fixed. The number after the slash shows how many months the adjustment period is. For example, our 5/6 ARM offers a fixed rate for five years, and then the rate adjusts every six months.
What's An Adjustable-Rate Mortgage (ARM)?
With our adjustable-rate mortgages, your interest rate is fixed for a specific time period – usually five, seven, or ten years. After that, your interest rate may change every six months, depending on the market. That means your monthly mortgage payment could go up or down twice a year. Your rate won’t increase more than 5% of the original rate throughout the life of the loan, though.
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What’s The Difference Between ARMs And Conventional Mortgages?
Conventional mortgages, or fixed-rate mortgages, keep the same interest rate over the life of the loan.
Adjustable-rate mortgages, on the other hand, start with a low fixed interest rate for five, seven, or ten years and then adjust the rate periodically after that. The initial fixed interest rate on our ARMs is usually lower than the corresponding 30-year fixed interest rate.
Conventional Adjustable-Rate Mortgages
7/6 Adjustable-Rate Mortgage
The interest rate is fixed on the 7/6 ARM for the first seven years. Then the interest rate can adjust every 6 months for the remaining 23 years.
10/6 Adjustable-Rate Mortgage
A 10/6 ARM offers a fixed interest rate for ten years. Then the interest rate adjusts every 6 months for the remaining 20 years.
5/6 Adjustable-Rate Mortgage
We’re not offering these right now, but we will again in the future.
A 5/6 ARM has a fixed interest rate for the first five years. Then the interest rate can adjust every 6 months for the remaining 25 years.
What You’ll Need To Qualify For An ARM
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A minimum 5% down payment.
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A minimum FICO® Score of 620.
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A debt-to-income ratio (DTI) of no more than 50%. Estimate your DTI by adding your monthly debt payments (such as credit card and car payments) and dividing the total by your monthly income before taxes.
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A maximum loan-to-value ratio (LTV) of 95%.
Adjustable-Rate Mortgage Benefits
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A key benefit of an ARM is that the initial rate is typically lower than a fixed-rate mortgage, which makes monthly payments more affordable.
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Caps limit how much interest rates, and your payment, can rise over the life of the ARM loan.
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An ARM can be a wise choice if you’re planning to pay off the loan in full or sell your home before the adjustment period kicks in.
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For many people, the initial fixed-rate period matches how long they’ll be in their home before they move or refinance.
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There’s a possibility your payment could go down if interest rates fall.
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