Adjustable-Rate Mortgage (ARM)

An Adjustable-Rate Mortgage (ARM) is a loan product that begins with a predetermined, lower introductory fixed interest rate for an initial timeframe—most commonly 5, 7, or 10 years. After this introductory period expires, the interest rate resets at scheduled intervals (typically every six months or once a year) by adding a set lender margin to a benchmark financial index like SOFR. ARMs feature lifetime and periodic rate caps that limit how much the rate can increase or decrease over time.