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Chico's housing market sits at a crossroads. The Chico Area Recreation and Park District just opened summer camp registration, signaling families are settling in.
ARMs appeal to buyers planning to move or refinance within five to seven years. The initial rate period locks in lower than a 30-year fixed, freeing up monthly cash flow for other priorities.
0.5% lower starting rate
ARM vs. Fixed
3/1, 5/1, 7/1, 10/1
Fixed Period Options
$832,750
2026 Conforming Limit
640–660
Typical FICO Floor
Usually 2% per year
Annual Rate Cap
Adjustable Rate Mortgages (ARMs) in Chico
ARM lenders in California typically require a 640 FICO minimum, though 660+ gets better pricing. Down payment ranges from 5% to 20% depending on the lender and loan amount.
At Butte County's median household income of $68,574, a buyer qualifies for roughly $350,000 to $420,000 in total loan amount. That translates to a $400,000 to $500,000 purchase with 10% to 15% down.
Local decision guide
Use this guide to connect adjustable rate mortgages (arms) eligibility, lender expectations, and local market factors before comparing payment options in Chico.
Chico's housing market sits at a crossroads. The Chico Area Recreation and Park District just opened summer camp registration, signaling families are settling in.
ARMs appeal to buyers planning to move or refinance within five to seven years. The initial rate period locks in lower than a 30-year fixed, freeing up monthly cash flow for other priorities.
ARM lenders in California typically require a 640 FICO minimum, though 660+ gets better pricing. Down payment ranges from 5% to 20% depending on the lender and loan amount.
California's ARM market splits between retail banks, credit unions, and mortgage brokers. Retail lenders (Wells Fargo, Bank of America) offer ARMs but often with stricter overlays and longer timelines.
ARM underwriting typically closes in 30 to 45 days. The initial rate period (3/1, 5/1, 7/1, or 10/1) is fixed; after that, the rate adjusts annually. Most ARMs cap annual increases at 2% and lifetime increases at 6%, protecting you from runaway payments.
ARMs make sense in Chico if you plan to sell or refinance within the fixed period. A 5/1 ARM starting 0.5% below a 30-year fixed saves meaningful money in years one through five.
The real risk: rates could jump 2% annually after year five or seven. On a $450,000 loan, a 2% jump adds roughly $9,000 per year in interest cost. That's manageable if you've built equity and can refinance, but painful if you're stuck.
A 30-year fixed-rate mortgage locks in one payment for 360 months. You pay more per month than an ARM's initial rate, but you never worry about rate increases. Fixed rates suit buyers staying 10+ years or those who value payment certainty over monthly savings.
ARMs trade that certainty for a lower starting rate. You save money in years one through five, then the rate adjusts. The choice depends on your timeline: short-term buyer or long-term owner? ARM or fixed? Call to compare today's rates for both.
Chico High School's Mock Trial team just advanced to California state finals in Oakland. That kind of academic achievement signals strong schools and engaged families — both factors that support long-term home values.
The Arbor Day Festival in nearby Oroville drew crowds celebrating trees and plants. Butte County's outdoor recreation culture — parks, trails, gardens — appeals to buyers who value lifestyle over pure investment.
A 5/1 ARM has a fixed rate for five years, then adjusts annually. A 7/1 ARM locks in for seven years before adjusting. The 7/1 starts slightly higher but gives you two extra years of payment stability. Choose based on your timeline.
No. Most ARMs cap annual increases at 2% and lifetime increases at 6%. On a $450,000 loan, a 6% lifetime cap means your rate can't jump more than 6 percentage points total. Verify the caps with your lender before closing.
Not required, but smart planning. If rates rise, refinancing locks in a new fixed rate before adjustment. If you stay, your payment adjusts with the market. Plan ahead — don't wait until the adjustment date to decide.
Yes, if you're confident you'll move or refinance within five to seven years. The lower starting rate frees up monthly cash. If you're unsure about your timeline, a fixed rate removes the risk and simplifies planning.
You pay off the loan in full at closing. The ARM never adjusts because the loan ends. This is why ARMs work well for buyers planning to sell within the fixed period — you capture the rate savings and exit before adjustment.