An adjustable rate mortgage (ARM) is a mortgage loan that may vary in monthly payment and interest rate depending on a change in an index. Typically, the initial rate is lower compared to a fixed rate mortgage, so for many borrowers, it could make homeownership more affordable. The risk of fluctuating monthly payments may be reduced with annual interest and lifetime interest cap ceilings.
Eligibility for an adjustable rate mortgage depends on the exact loan product you’ve selected as well as a number of parameters, including your debt-to-income ratio, credit score, income, employment status, and more.
Adjustable rate mortgages may be a viable option if you: