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Adjustable Rate Mortgages (ARMs) in Davis
What's the difference between a 5/1 ARM and a 7/1 ARM?
A 5/1 ARM fixes the rate for 5 years, then adjusts annually. A 7/1 ARM locks the rate for 7 years before adjusting. The longer initial period usually costs slightly more upfront but gives you more time before payments change.
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Davis voters approved Measure V in June 2026, opening Village Farms to new housing. That development signals real growth for a city facing a shortage of homes for younger families.
ARM rates start lower than 30-year fixed mortgages. The rate adjusts after the initial period, so plan for payment changes down the road.
$832,750
Conforming Limit (2026)
620
Minimum FICO
5% to 20%
Down Payment Range
$88,818
Yolo County Median Income
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ARMs typically require 620+ FICO and 5% to 20% down. Lenders pull your debt-to-income ratio and verify income through tax returns and pay stubs.
Yolo County's median household income of $88,818 supports homes in the $400,000 to $550,000 range with standard lending. Your actual buying power depends on savings, debts, and credit history.
Local decision guide
Use this guide to connect adjustable rate mortgages (arms) eligibility, lender expectations, and local market factors before comparing payment options in Davis.
Davis voters approved Measure V in June 2026, opening Village Farms to new housing. That development signals real growth for a city facing a shortage of homes for younger families.
ARM rates start lower than 30-year fixed mortgages. The rate adjusts after the initial period, so plan for payment changes down the road.
ARMs typically require 620+ FICO and 5% to 20% down. Lenders pull your debt-to-income ratio and verify income through tax returns and pay stubs.
Rate check
Tell us the price range, down payment and credit range you are working with. We compare every lender we work with and show you the options side by side.
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California lenders compete hard on ARM pricing because the initial rate is the main selling point. Brokers shop multiple wholesale lenders to find the best starting rate for your scenario.
Most ARMs lock the initial rate for 5, 7, or 10 years. After that, the rate adjusts annually or semi-annually based on the index plus the lender's margin.
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ARMs make sense for Davis buyers planning to sell or refinance within 7 to 10 years. If you're staying longer, the rate reset risk outweighs the initial savings.
The conforming limit of $832,750 in 2026 covers most Davis purchases. Above that, jumbo rates run higher and require stronger credit and reserves.
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A 30-year fixed mortgage costs more per month from day one but the payment never changes. An ARM starts lower but rises after the initial period—the tradeoff is certainty versus savings.
If you plan to stay in Davis long-term, fixed-rate stability wins. If you're building equity to move up or out, the ARM's lower initial payment frees up cash now.
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The California Honey Festival expanded to two days in nearby Woodland, reflecting the region's agricultural roots and community investment. That kind of local activity signals a stable, engaged neighborhood.
Village Farms Davis development will add hundreds of homes over the next decade. New construction typically attracts younger families and supports long-term property values.
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ARM lending in California remains steady because buyers understand the rate-adjustment mechanics and plan accordingly. Brokers actively compete on initial rates to win ARM business.
Davis sits in a conforming market where most purchases stay under $832,750. That means ARM pricing is tight and lenders offer consistent terms across the board.
FAQ
A 5/1 ARM fixes the rate for 5 years, then adjusts annually. A 7/1 ARM locks the rate for 7 years before adjusting. The longer initial period usually costs slightly more upfront but gives you more time before payments change.
Yes. If rates drop or you want to lock in a fixed rate, you can refinance anytime. Refinancing costs closing fees, so compare the savings against those costs before moving forward.
Your payment recalculates based on the new rate, the remaining loan balance, and the remaining term. Most ARMs have annual caps (usually 2%) and lifetime caps (usually 6%) that limit how much the rate can jump.
ARMs work best for buyers planning to move or refinance within 7 to 10 years. If you're staying 15+ years, a fixed-rate mortgage offers payment certainty and simpler planning.
Most lenders require 620 FICO or higher for ARM approval. Stronger credit (680+) qualifies for better rates and terms. Your debt-to-income ratio and savings also matter.
Programs for first-time buyers that allow lower down payments and more forgiving credit and income rules.
Explore refinancing options to lower your rate, tap equity, or switch loan terms.
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Our team of licensed mortgage brokers works Yolo County every week. Tell us where you are in the process and we will map out the loan, the timeline and the money you need at closing, with no obligation.
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17-21 day typical close
Most purchase loans close in 17-21 days once your paperwork is in.
Every county in California
We work across the state, including Yolo County, so local limits and rules are already familiar.
Financing solutions for rental properties, fix-and-flip projects, and real estate portfolios.
Mortgage programs with alternative income documentation for business owners and freelancers.
Federally insured or guaranteed programs (FHA, VA, USDA) that let lenders accept lower credit scores and smaller down payments.
Traditional mortgage options meeting standard lending guidelines with various term structures.
Alternative lending programs for borrowers who need flexible documentation or unique loan structures.
This page is for educational purposes only and does not constitute financial, legal, or tax advice. Mortgage rates, terms, and program availability can change and vary by borrower and property. Consult a licensed mortgage professional for guidance on your scenario.