An adjustable-rate mortgage has a low starting rate, so your initial monthly payments on an ARM will be lower than on a fixed-rate loan for the same amount. And because the amount you can borrow is based partly on how much you can pay each month, your maximum loan amount will probably be higher with an ARM.

In General:

• The interest rate starts out lower than the rate on a fixed-rate mortgage, then adjusts regularly based on market indicators.
• The starting rate stays fixed for between one months and 10 years, depending on the ARM product. See Product Types below.
• Most ARMs adjust annually, but some adjust on a semi-annual or monthly basis.
• Individual adjustments are capped at a certain amount, and the rate can never exceed the lifetime cap.
• Keep in mind that the interest rate and monthly payments can increase during the loan term. You may get the most value from an ARM if you plan to move before the end of the fixed-rate period, or if you’re buying at a time when rates are relatively high.
• Most of these ARM products include the option of the Interest Only payment for the initial fixed ARM period.  The Interest Only products usually have higher rates than the amortized loan products.  See Interest Only programs for more details.

Product Types:

• 1 Month Adjustable - 1 Month ARM
• 6 Month Adjustable - 6 Month ARM
• 1 Year Adjustable - 1/29 ARM.
• 2 Year Adjustable - 2/28 ARM.
• 3 Year Adjustable - 3/1 ARM.
• 5 Year Adjustable - 5/1 ARM.
• 7 Year Adjustable - 7/1 ARM.
• 10 Year Adjustable - 10/1 ARM