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ARMs start with a fixed rate for 5, 7, or 10 years — then adjust annually based on market indexes.
Bankrate flagged rates climbing to 6.19% this week on geopolitical pressure. That spread between fixed and ARM rates is exactly where ARMs earn their place.
620
Min Credit Score
5, 7, or 10 Years
Fixed Period Options
Typically 2%
Annual Rate Cap
Typically 5%
Lifetime Rate Cap
Conv, Jumbo, Portfolio
Loan Types
Most ARM loans require a 620 minimum credit score. Stronger scores — 700 and above — unlock better initial rates.
Lenders qualify you at the fully indexed rate, not the teaser rate. Your debt-to-income ratio still needs to hold up under the adjusted payment.
Not every lender prices ARMs competitively. Banks often push their own ARM products with weaker terms than what wholesale lenders offer.
We shop ARM pricing across 200+ wholesale lenders. That means better margins and more program options than a single bank can match.
ARMs make the most sense when you plan to sell or refinance before the fixed period ends. A 7/1 ARM on a 5-year hold is a strong play.
Watch the caps. Most ARMs have a 2% annual cap and a 5% lifetime cap. Know your worst-case payment before you sign.
A 30-year fixed gives you certainty. An ARM gives you a lower payment now — and that difference adds up fast over 7 years.
Jumbo borrowers especially benefit from ARMs. The rate spread on jumbo ARMs versus fixed is often wider, meaning more savings per month.
Lemon Grove sits inside San Diego County, where home prices keep monthly payments high. A lower ARM start rate reduces that pressure meaningfully.
Buyers here often move up within 5-7 years as families grow. That timeline fits a 5/1 or 7/1 ARM better than a 30-year fixed rate.
The spread varies by market conditions. Rates vary by borrower profile and market conditions — ask us to run a side-by-side comparison.
Your rate changes annually based on a market index plus a margin. Caps limit how much it can move each year and over the loan's life.
Yes. Many borrowers refinance into a new fixed rate before the adjustment hits. That strategy depends on rates at refinance time.
Yes. Investors with shorter hold periods often prefer ARMs. Portfolio ARM products may offer more flexibility for investment deals.
Most lenders require at least 620. Better rates come with scores above 700, especially on jumbo ARM amounts.
Depends on your planned hold period. If you expect to move or refinance in 5 years, the 5/1 usually offers a lower start rate.
Adjustable Rate Mortgages (ARMs) in Lemon Grove