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How ARM loans work

An adjustable-rate mortgage (ARM) has a fixed-interest rate for the first 5, 7 or 10 years depending on your loan. After the initial period, the rate may adjust every 6 months for the remainder of the loan. 

These examples are based on a 760 credit score, 30-year, $350,000 loan for a single-family home, primary residence with 20% down in Florida. 

Keep in mind, the ARM loan examples used in the rate table are also based on a 30-year loan term.

5 year /6 month 30 year ARM

This table shows adjustments for a 5 year/ 6 month 30 year adjustable-rate mortgage.
Payments Estimated Interest Rate Estimated Monthly Payment
1 - 60 8.000% $2,568.18
61 - 66 9.500% $2,907.18
67 - 360 10.000% $3,022.43

Initial Interest Rate / APR : 8.000% / 8.211%

First Adjusted Interest Rate : 1.500%

Subsequent Adjusted Interest Rate : 0.500%

Maximum Lifetime Rate : 13.000%

Estimated Maximum Monthly Payment : $3,739.11

 

Current Index Rate : 5.319%

Margin : 2.750%

First Adjusted Interest Rate Cap : 2.000%

Subsequent Adjusted Interest Rate Cap : 1.000%

Lifetime Cap : 5.000%

7 year /6 month 30 year ARM

This table shows adjustments for a 7 year/ 6 month 30 year adjustable-rate mortgage.
Payments Estimated Interest Rate Estimated Monthly Payment
1 - 84 7.875% $2,537.74
85 - 90 10.875% $3,193.03
91 - 360 11.475% $3,329.22

Initial Interest Rate /  APR : 7.875% / 8.212%

First Adjusted Interest Rate : 3.000%

Subsequent Adjusted Interest Rate : 0.600%

Maximum Lifetime Rate : 12.875%

Estimated Maximum Monthly Payment : $3,659.22 

 

Current Index Rate : 5.319%

Margin : 2.750%

First Adjusted Interest Rate Cap : 5.000%

Subsequent Adjusted Interest Rate Cap : 1.000%

Lifetime Cap : 5.000%

10 year /6 month 30 year ARM

This table shows adjustments for a 10 year/ 6 month 30 year adjustable-rate mortgage.
Payments Estimated Interest Rate Estimated Monthly Payment
1 - 120 7.875% $2,537.74
121 - 126 10.875% $3,134.96
127 - 360 11.475% $3,258.78

Initial Interest Rate / APR : 7.875% / 8.149%

First Adjusted Interest Rate : 3.000%

Subsequent Adjusted Interest Rate : 0.600%

Maximum Lifetime Rate : 12.875%

Estimated Maximum Monthly Payment : $3,560.60

 

Current Index Rate : 5.319%

Margin : 2.750%

First Adjusted Interest Rate Cap : 5.000%

Subsequent Adjusted Interest Rate Cap : 1.000%

Lifetime Cap : 5.000%

Last Updated: 3/11/2024