Compare Current 5/1 ARM Rates
Quick Answer
The national average interest rate for a 5/1 ARM is 7.56 % as of June 26, 2025. Rates have been moving downward, though they’re still high compared to historically low mortgage rates in 2020 and 2021.

The average five-year adjustable-rate mortgage (ARM) rate nationally is 7.56 % as of June 26, 2025, according to Zillow.
An ARM has an interest rate that stays the same for an initial number of years (the "5" in a 5/1 ARM). After that, the rate changes on a specific schedule, such as once every year (the "1" in a 5/1 ARM) for the duration of the loan.
That means that even if your rate starts out comparatively low, there's a possibility it will increase in the future, increasing your monthly payment along with it. Here's what to know about current 5/1 ARM rates.
Current Mortgage Rate Trends
For 30-year fixed-rate mortgages, the average mortgage rate was 7.23% as of June 6, 2025.
Mortgage rates are set by lenders and can be affected by many factors, including Federal Reserve monetary policy. The overall condition of the economy also plays a major role in where lenders will set their mortgage rates.
The rate borrowers receive on ARMs are typically lower during the initial fixed-rate period, but these rates can potentially rise to levels higher than those offered by comparable fixed-rate mortgages thereafter. Annual percentage rate (APR) includes the interest rate plus any fees or additional costs the lender charges.
Mortgage | Rate | APR | Monthly Payment |
---|---|---|---|
30-year fixed, conventional | 7.23%* | 7.45% | $2,256.56 |
15-year fixed, conventional | 6.26%* | 6.47% | $2,072.60 |
5-year/6-month ARM | 6.66%* | 6.87% | $2,146.80 |
30-year fixed, jumbo | 7.12%** | 7.34% | $2,235.55 |
30-year fixed, FHA | 6.62%** | 6.83% | $2,139.32 |
30-year fixed, VA | 6.51%** | 6.72% | $2,118.83 |
*Source: Curinos LLC, June 6, 2025; assumes a 720 FICO® ScoreΘ, $350,000 mortgage
**Source: Optimal Blue via FRED, June 6, 2025
Notes: Rates can vary by data source; monthly payment calculation uses APR and assumes a $350,000 mortgage and 20% down; APR calculation assumes 5% in fees
Mortgage Rate Trends for the Last 5 Years
Mortgage rates are significantly higher than they were during the pandemic era. The average interest rate on a 30-year fixed-rate mortgage was just 3.16% in June 2020, according to Freddie Mac. That means rates have more than doubled in recent years.
30-Year Mortgage Rate Trends 2020 to 2025
What Affects ARM Rates?
The key factors that impact ARM rates include:
- The index: On an ARM, your rate is connected to a market index, or a baseline interest rate such as the U.S. prime rate that takes into account current economic trends.
- The margin: The lender then adds a certain fixed percentage to the index, called the margin, to determine your interest rate. For example, with an index rate of 4.5% and a margin of 2%, your mortgage rate would be 6.5%. You can compare offers from multiple lenders to find the lowest possible rate you qualify for.
- ARM type: Some types of ARMs have higher interest rates on average, such as cash-out refinance ARMs. With a cash-out refinance loan, you borrow more than you currently owe on your mortgage, which means more risk to the lender and thus a higher interest rate.
- Your credit score and debt-to-income ratio (DTI): Your personal financial situation influences the initial interest rate you qualify for, but not your adjusted rate after the introductory period ends. The higher your credit score and the lower your DTI, or the proportion of your income that goes toward debt payments, the lower the initial rate you'll likely receive.
- Loan amount and term length: Typically, you'll also find lower introductory interest rates on ARMs the less you borrow and the shorter your loan term. That's because in both cases, the lender takes on less risk that you'll have a hard time making mortgage payments.
- Market trends: ARM interest rates are tied to an index, which in turn reflects what's currently happening in the economy. The federal funds rate, inflation, the bond market and other factors can all lead to lower or higher rates for borrowers.
- Rate caps: Lenders typically set limits on how high your rate can go. Depending on your loan agreement, you may find that your ARM rate has a cap on how much your rate can rise the first time it adjusts, how much it can increase over the following adjustments and the total amount it can go up over the whole loan period.
How Does a 5/1 ARM Work?
Unlike a fixed-rate loan, a 5/1 ARM is a mortgage with an introductory interest rate for the first five years, followed by rate adjustments once per year thereafter.
Your interest rate will be a combination of the index used by the lender, such as the U.S. prime rate, and the margin, an extra amount added on top. Your index rate may be 5% to start, for example, and your margin may be 2%, giving you an interest rate of 7%.
The lender adds the margin once the initial five-year period has ended, and the margin remains the same throughout your loan term. Since the index may either rise or fall by the time your rate adjusts for the first time, and for the ensuing years, your interest rate may also change substantially each year it adjusts. Say the index rate rises to 7.5%, for example, at the end of your introductory period. With a 2% margin, your 5/1 ARM rate would adjust from 7% to 9% and result in a significantly higher monthly payment.
Adjustable-Rate Mortgage Requirements
To get an ARM, you'll generally need to meet requirements for the following factors, which can vary by lender:
- Credit score: For a conventional 5/1 ARM, you'll need at least a 620 credit score on average. A government-backed 5/1 ARM loan offered through the Federal Housing Administration (FHA) requires a 500 credit score.
- Down payment: Conventional loans require a down payment of at least 5%. FHA loans require a down payment of 3.5% if your credit score is 580 or above, and 10% if your credit score is 500 to 579.
- DTI: Conventional lenders often look for a DTI of less than 45%, and FHA lenders may require a DTI of less than 43%. But some lenders of both types of loans may allow a DTI of up to 50%.
Types of ARMs
5/1 ARMs are just one type of ARM. You may find that another type better fits your circumstances, or comes with a more favorable interest rate. Here are the most common types of ARMs:
- 5/1 ARM: Introductory fixed-rate period of five years, then rate adjusts once a year
- 5/6 ARM: Introductory fixed-rate period of five years, then rate adjusts every six months
- 7/1 ARM: Introductory fixed-rate period of seven years, then rate adjusts once a year
- 7/6 ARM: Introductory fixed-rate period of seven years, then rate adjusts every six months
- 10/1 ARM: Introductory fixed-rate period of 10 years, then rate adjusts once a year
- 10/6 ARM: Introductory fixed-rate period of 10 years, then rate adjusts every six months
Pros and Cons of a 5/1 ARM
5/1 ARMs come with both benefits and drawbacks, and the uncertainty of interest rate fluctuations can make it hard to know whether they're the right choice. Here are the top pros and cons to consider.
Pros
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More affordable initially: A lower introductory interest rate than what you might find with a conventional mortgage, and lower monthly payments as a result, can ease your pathway into homeownership. You can redirect cash towards replenishing your emergency fund or making any necessary repairs to your new home.
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Potential for interest rate dips: You could benefit from continued lower interest rates if the index rate drops when your introductory period ends.
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Savings if you sell your home quickly: You could save substantially on interest by selling before the initial five-year fixed-rate timeframe ends. In that case, you would pay less than if you'd chosen a fixed-rate conventional loan, and you'd avoid potential rate jumps over the rest of the loan term.
Cons
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Higher costs later on: It's hard to predict how interest rates will behave in five years and beyond. You could benefit from a drop in rates, but you could also experience a sudden jump in your rate that leads to higher monthly payments. If that stretches your budget, it could be more likely you'll fall behind or default on your mortgage.
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Lack of predictability: Fixed-rate mortgages are likely easier to understand and budget for. They are also more popular, as 92% of outstanding mortgages carry fixed rates, according to the Federal Reserve Bank of St. Louis. Before choosing an ARM, make sure your lender clearly communicates to you the index, the margin and the interplay between them. That ensures you understand the rate and adjustments you're signing up for.
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Higher down payment requirements: While some lenders allow borrowers to make a 5% down payment on an ARM, you may have to put more down, such as 10%, 20% or more. By contrast, there are conventional fixed-rate mortgages available that require just 3% down.
Should You Get a 5/1 ARM?
A 5/1 ARM isn't for everyone. You may benefit from an ARM in the following circumstances:
- You'll move within the fixed-rate period. If you move within the first five years of the mortgage's repayment term, you could benefit from an ARM's low-rate introductory period and skip potential rate increases.
- You want more flexibility in your budget. Buying a home is an enormous financial commitment. In addition to your mortgage, there are additional costs of homeownership such as maintenance, repairs and appliances. An ARM may be a good option if you foresee the need for a lower monthly payment in the first five years of homeownership, and your budget can handle a possible jump in your monthly payment thereafter. On the other hand, an ARM could make sense during a period when interest rates are already very high, and it's likely they won't increase further in the future.
- You're willing—and can afford—to refinance. You could also consider refinancing to a fixed-rate loan at the end of the introductory period. This would be best if your finances and the interest rate environment allow for you to refinance to a comparable or lower rate. Don't forget about closing costs, which can range from 2% to 6% of the loan amount when you refinance. Make sure your potential savings from refinancing justify the closing costs.
How to Get the Best 5/1 ARM Rate
You can take steps before or while applying for a mortgage to ensure you get the best interest rate possible. Try these strategies:
- Work on your credit score. If your score isn't already in the good to excellent range, focus on improving your credit by paying down credit card balances, keeping your oldest account open and avoiding applying for new credit. You can check your Experian credit report and FICO® Score for free to see where you stand.
- Compare quotes from various lenders. Apply to get prequalified or preapproved for a mortgage with multiple lenders so that you can compare interest rates and how their ARMs are structured.
- Use a cosigner. When someone cosigns your mortgage, you benefit from their credit history, income and low DTI. This could help you get a better rate if you're on the edge of qualifying for the most favorable interest rates.
Alternatives to a 5/1 ARM
If a 5/1 ARM isn't right for you, consider these loan types:
- 30-year fixed-rate mortgage: A traditional fixed-rate mortgage has an interest rate that won't change throughout the loan term. This can be a strong option in low-rate environments, but it's also possible to choose a fixed-rate mortgage even when rates are high and then refinance when rates drop. Just be aware that you'll incur closing costs when you refinance.
- 10/1 ARM: A 10/1 ARM lies somewhere between a 5/1 ARM and a fixed-rate mortgage. A 10/1 ARM has a longer, 10-year fixed-rate period, and then the rate adjusts annually. It generally comes with a 30-year loan term. The initial rate on a 10/1 ARM is often lower than what you'll find on a fixed-rate mortgage, but there is a risk that your rate will increase. If there's a possibility your earnings will also increase by the time the fixed-rate period is over, however, a 10/1 ARM may end up being more affordable than a 5/1 ARM.
The Bottom Line
Current 5/1 ARM rates have been trending downward, though they have increased overall in the past five years. Choosing a 5/1 ARM means opting for a lower interest rate initially and accepting you may not know which direction interest rates will go in the future. But under the right circumstances, an ARM can be a wise decision—as long as you understand how your interest rate is calculated, and what it could mean for your budget.
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Learn moreAbout the author
Brianna McGurran is a freelance journalist and writing teacher based in Brooklyn, New York. Most recently, she was a staff writer and spokesperson at the personal finance website NerdWallet, where she wrote "Ask Brianna," a financial advice column syndicated by the Associated Press.
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