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Adjustable-Rate Mortgages (ARMs)

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Monthly payments that may change periodically

Adjustable-rate mortgages (ARMs) have an interest rate that may change periodically depending on changes in a corresponding financial index that's associated with the loan. Generally speaking, your monthly payment will increase or decrease if the index rate goes up or down.

ARM loans are usually named by the length of time the interest rate remains fixed and how often the interest rate is subject to adjustment thereafter. For example, in a 5/1 ARM, the 5 stands for an initial 5-year period during which the interest rate remains fixed while the 1 shows that the interest rate is subject to adjustment once per year thereafter.

Adjustable-rate mortgages are a good choice if you:

  • Plan to move before the end of the introductory fixed-rate period, so you aren't concerned about possible rate increases
  • Want an initial monthly payment lower than a fixed-rate mortgage usually offers
  • Think interest rates may go down in the future

 

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Today's low ratesToday's low rates for adjustable-rate mortgages

Rates based on a $200,000 loan in ZIP code 92821

$60,000 - $2.5 million

5% or more of purchase price

10/1 ARM layer variable

Rate 3.875%

APR 4.267%

Points 0.488

Monthly Payment $940

7/1 ARM layer variable

Rate 3.000%

APR 3.369%

Points 0.873

Monthly Payment $1,381

5/1 ARM layer variable

Rate 3.625%

APR 3.181%

Points 0.338

Monthly Payment $830

Mortgage rates valid as of and assume borrower has excellent credit (including a credit score of 740 or higher). Estimated monthly payments shown include principle and interest only. 5/1 ARM interest rate and payment subject to increase after 5 years. Select the About ARM rates link for important information, including estimated payments and rate adjustments.

Rates based on a $200,000 loan in ZIP code 92821

$60,000 - $2.5 million

5% or more of purchase price

 

10/1 ARM layer variable

7/1 ARM layer variable

5/1 ARM layer variable

10/1 ARM Variable 3.875%

7/1 ARM Variable 3.000%

5/1 ARM Variable 3.625%

10/1 ARM Variable 4.267%

7/1 ARM Variable 3.369%

5/1 ARM Variable 3.181%

10/1 ARM Variable 0.488

7/1 ARM Variable 0.873

5/1 ARM Variable 0.338

10/1 ARM Variable $940

7/1 ARM Variable $1,381

5/1 ARM Variable $830

Mortgage rates valid as of and assume borrower has excellent credit (including a credit score of 740 or higher). Estimated monthly payments shown include principle and interest only. 5/1 ARM interest rate and payment subject to increase after 5 years. Select the About ARM rates link for important information, including estimated payments and rate adjustments.

Rate

The rate of interest on a loan, expressed as a percentage.

Annual percentage yield (APR)

The annual cost of a loan to a borrower. Like an interest rate, an APR is expressed as a percentage. Unlike an interest rate, however, it includes other charges or fees (such as mortgage insurance, most closing costs, points and loan origination fees) to reflect the total cost of the loan.

Points

An amount paid to the lender, typically at closing, in order to lower the interest rate. Also known as mortgage points or discount points. One point equals one percent of the loan amount (for example, 2 points on a $100,000 mortgage would equal $2,000).

Monthly Payment (estimated)

The estimated monthly payment includes principal, interest and any required mortgage insurance (for borrowers with less than a 20% down payment). The payment displayed does not include amounts for hazard insurance or property taxes which will result in a higher actual monthly payment. If you have an adjustable-rate loan, your monthly payment may change annually (after the initial period) based on any increase or decrease in the London Interbank Offered Rate (LIBOR) index.

Fixed-rate mortgage

A home loan with an interest rate that remains the same for the entire term of the loan.

Adjustable-rate mortgage (ARM)

Also called a variable-rate mortgage, an adjustable-rate mortgage (or home equity loan) has an interest rate that may change periodically during the life of the loan in accordance with changes in an index such as the U.S. Prime Rate or the London Interbank Offered Rate (LIBOR). Bank of America ARMs use LIBOR as the basis for ARM interest rate adjustments.

Your monthly payment may fluctuate as the result of any interest rate changes, and a lender may charge a lower interest rate for an initial portion of the loan term. Most ARMs have a rate cap that limits the amount of interest rate change allowed during both the adjustment period (the time between interest rate recalculations) and the life of the loan.

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Our experienced mortgage specialists are ready to help you with your financing needs:

Other types of mortgages

Fixed-rate mortgages

  • Your interest rate remains the same for the entire loan term

  • Your monthly payment of principal and interest does not change during the loan term

Jumbo loans

  • For anyone needing to borrow more than $417,000

  • Available for primary residences, second or vacation homes and investment properties

FHA & VA loans

  • Government loans from the Federal Housing Administration and the U.S. Department of Veterans Affairs

  • Low down payment options with flexible credit and income guidelines

Affordable Loan Solutions mortgage

  • Down payments as low as 3%

  • For low- and moderate-income borrowers (homebuyer education may be required)

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