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Adjustable-rate mortgage

Lower introductory rates

With an adjustable-rate mortgage (ARM), your rate and payment may change periodically.

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How does an adjustable-rate mortgage work

Adjustable-rate mortgage basics

  • With an adjustable-rate mortgage (ARM), your interest rate is fixed for an introductory period, then adjusts periodically. The interest rate and APR may increase at the end of the initial fixed-rate period. Rate adjustments are tied to a market index used for the loan.
  • Your monthly payment may increase or decrease depending on whether the index goes up or down.
  • ARM product names tell you how long the introductory period is, and how often the interest rate adjusts after that. For example, a 7/6-month ARM has a fixed rate for the first seven years, then adjusts every six months.
  • Adjustable-rate mortgages are available in conforming or jumbo loan amounts

Adjustable-rate mortgage benefits

  • Your monthly payment during the introductory period may be lower than a fixed-rate mortgage would offer.
  • An ARM may be a good choice if you plan to sell your home before the introductory period ends.
  • You may be able to refinance your ARM with a fixed-rate mortgage if you want to avoid the uncertainty of fluctuating rates in the future.
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Adjustable-rate mortgage terms

5/6-month ARM

Also called a 5-year ARM, this option has a fixed interest rate for the first five years, then adjusts every six months.

7/6-month ARM

Also called a 7-year ARM, this option has a fixed interest rate for the first seven years, then adjusts every six months.

10/6-month ARM

Also called a 10-year ARM, this option has a fixed interest rate for the first ten years, then adjusts every six months.

Other mortgage loan types to consider

Fixed-rate mortgage

Predictable payments for the life of your loan

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Jumbo loan

Larger loan amounts for buying or refinancing

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FHA loan

Flexible credit and income guidelines with down payments as low as 3.5%

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VA loan

Financing for service members through the Department of Veterans Affairs

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FHA loans have the benefit of a low down payment, but consider all costs involved, including up-front and long-term mortgage insurance and all fees. Ask your home mortgage consultant to help you compare the overall costs of all your home financing options.

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If you extend your loan term, you may pay more interest over the life of your loan.

If you are a service member on active duty, an eligible spouse, partner, or dependent, or currently receiving SCRA benefits, please consult with your legal advisor prior to seeking a refinance of your existing mortgage loan. In some cases, a refinance may impact your eligibility for benefits under the Servicemembers Civil Relief Act or applicable state law.

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Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A.

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