Loan Types

Adjustable-Rate Mortgage (ARM)

An adjustable-rate mortgage, or ARM, starts with a fixed rate for a set number of years, then adjusts up or down on a schedule based on the market. A 7/6 ARM, for example, is fixed for seven years, then can change every six months. The early rate is often lower, but the payment can rise later.

The numbers in an ARM name tell the story. The first is how many years the rate stays fixed, and the second is how often it can change after that. ARMs also come with caps that limit how much the rate can move at each adjustment and over the life of the loan.

An ARM can make sense if you expect to sell or refinance before the fixed period ends, since the starting rate is often lower than a fixed loan. The risk is staying in the loan past that point, when the payment can climb. I’ll only point you here if the math genuinely fits your plans.

Related terms

Fixed-Rate Mortgage

A fixed-rate mortgage keeps the same interest rate for the entire loan term, so your principal and interest payment never changes. Your taxes and insurance can still move, but the loan part stays put. It's the most popular choice because it's predictable: the payment you start with is the payment you'll have years from now.

Rate Lock

A rate lock is a lender's commitment to hold a quoted interest rate for a set period, often 30 to 60 days, while you finish your loan. It protects you if rates rise before closing. The trade-off is that if rates fall after you lock, you usually don't get the lower rate automatically.

Loan Term

Your loan term is how long you have to pay back the mortgage, written in years. Thirty years and fifteen years are the most common. A longer term means a lower monthly payment but more interest paid over time. A shorter term costs more each month but builds equity faster and saves on total interest.

Last updated: June 13, 2026

This definition is educational and isn't an offer to lend or financial advice. Rates, programs, and guidelines may change without notice. All loans are subject to credit and property approval.

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