Compare Today's FHA Adjustable-Rate Mortgage Rates
Access free, detailed loan estimates from multiple lenders in one search. Compare and find the best offer — no obligations.
Unlock My Loan EstimatesPowered by SecureRights
FHA Adjustable-Rate Mortgage
The FHA Adjustable-Rate Mortgage (ARM) provides borrowers with an initial fixed interest rate for a specific period, followed by adjustable rates. This option is suited for those who anticipate changes in their financial situation or plan to move before the adjustment period.
Multi-Family Home (up to 4 units)
Condominium
Townhouse
Manufactured home
Benefit from a lower initial interest rate compared to fixed-rate mortgages.
Experience lower initial monthly payments during the fixed-rate period.
Prepare for potential rate adjustments after the initial fixed-rate period.
Qualify with competitive credit requirements and flexible income criteria.
Offers potential savings initially, but monthly payments could increase if rates rise during the adjustable period.
An FHA Adjustable-Rate Mortgage (ARM) is a home loan with an interest rate that adjusts periodically after an initial fixed-rate period. It can result in lower initial payments but may increase later based on market conditions.
The adjustment period is the length of time between interest rate adjustments. For FHA ARMs, typical adjustment periods are one year, three years, five years, or seven years, depending on the loan terms.
The initial fixed-rate period is the period when the interest rate remains constant before the first adjustment. FHA ARMs often have initial fixed-rate periods of three, five, seven, or ten years.
Yes, FHA ARMs usually have rate caps that limit how much the interest rate can increase or decrease at each adjustment and over the life of the loan. These caps provide borrower protection against extreme rate fluctuations.
Yes, you can refinance your FHA ARM to a fixed-rate mortgage if you prefer a more stable interest rate. Refinancing allows you to lock in a fixed rate and potentially avoid future rate increases.
The index is a benchmark interest rate that reflects general market conditions. Common indexes used for FHA ARMs include the Constant Maturity Treasury (CMT) index and the London Interbank Offered Rate (LIBOR).
Yes, many FHA ARMs offer conversion options that allow borrowers to convert to a fixed-rate mortgage after a specified period. Conversion terms and conditions may vary by lender and loan type.
The margin is a fixed percentage added to the index to determine the new interest rate. It remains constant throughout the life of the loan and is set by the lender. The sum of the index and margin equals the fully indexed rate.
Borrowers should carefully review the loan agreement and disclosure documents to understand how adjustments work. Planning for potential payment changes can help you budget effectively and avoid surprises when rates change.
A payment cap limits how much the monthly payment can increase or decrease at each adjustment. While the interest rate cap limits the change in the interest rate, the payment cap provides additional payment stability.
If the index decreases, your interest rate and monthly payment may also decrease during the adjustment period, potentially providing you with lower mortgage payments.
Yes, many FHA ARM loans do not have prepayment penalties. You can make extra payments or pay off the loan early to reduce the outstanding balance and potentially save on interest costs.
The frequency of interest rate adjustments varies depending on the loan terms. Common adjustment periods for FHA ARMs include one year, three years, five years, and seven years. Review your loan agreement for specific details.
The initial fixed period is the period during which your interest rate remains fixed before it begins to adjust. For example, a 5/1 FHA ARM has an initial fixed period of 5 years, followed by annual adjustments.
Yes, FHA ARMs typically have annual and lifetime interest rate caps. These caps limit the amount by which your interest rate can increase at each adjustment and over the life of the loan.