Compare Current ARM Rates

Current Mortgage Rate Trends

Since late 2023, ARM loan rates have generally hovered between 6% and 7%. These rates tend to track with the yield on the 10-year Treasury note, which shifts based on investor expectations around monetary policy and broader economic signals.

Right now, lingering uncertainty around inflation and U.S. tariff policy is keeping rates elevated. When markets feel unstable, investors demand higher bond yields, driving mortgage rates up. Until there's more economic clarity, significant rate drops are unlikely.

^*Source: Curinos LLC, June 6, 2025; assumes a 720 FICO^® Score^Θ, $350,000 mortgage
^**Source: FRED via Optimal Blue, 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 interest rates plunged to historic lows during the pandemic as the Federal Reserve took aggressive steps to support the housing market. But that trend reversed in 2022 when the Fed began raising the federal funds rate to fight surging inflation.

While mortgage rates aren't directly tied to the Fed's rate, they're heavily influenced by expectations around Fed policy, which impacts the 10-year Treasury yield. After reaching a peak in October 2023, rates have largely plateaued amid persistent economic uncertainty.

30-Year Mortgage Rate Trends 2020 to 2025

What Affects ARM Rates?

ARMs work a little differently than fixed-rate mortgages (FRMs). Rather than offering a set rate for the life of the loan, ARMs provide an initial fixed rate for a set period of time—usually three to 10 years. Once this initial fixed period elapses, the loan's rate can fluctuate based on market conditions and affect the cost of the homeowner's monthly mortgage payment.

The initial rate is typically lower compared to a fixed-rate mortgage and is based on the following factors:

• Market conditions: As previously mentioned, the state of the economy, investor sentiment and Federal Reserve policies can all have an impact on the rates lenders offer to all of their borrowers.
• Credit score: Lenders use your credit score to assess how reliably you manage debt. A higher score—typically the result of consistent, on-time payments and low credit utilization—can help you qualify for a more favorable introductory rate on an ARM.
• Debt-to-income ratio: Your debt-to-income ratio (DTI) shows how much of your income is already committed to debt. A higher DTI can signal financial strain and may lead to a higher starting rate or even make it harder to qualify for an ARM.
• Loan amount: Borrowing a larger sum increases the lender's exposure to losses, especially with rate adjustments down the line. As a result, higher loan amounts may come with slightly higher initial rates or stricter underwriting requirements.
• Repayment terms: Longer repayment terms often result in higher interest rates because they expose the lender to more risk over time, including the chance of missed payments or changing market conditions.
• Loan type: Not all ARMs are created equal. Some offer varying initial fixed-rate periods and different caps on how much your rate can increase over time. Others include interest-only or negative amortization features. Finally, cash-out refinance ARMs may charge higher rates because you're increasing your loan's balance. The structure of your specific ARM can significantly affect both your initial and future rates.

After your initial fixed period ends, your rate may change based on market conditions and your loan's caps on interest rate adjustments.

Adjustable-Rate Mortgage Requirements

To qualify for an ARM, you'll need to meet certain financial and credit criteria set by the lender. While requirements can vary by lender and loan type, here are some common qualifications you'll need to satisfy:

• Credit score: Most conventional lenders require a minimum credit score of 620, though some lenders may have more stringent requirements. ARMs backed by the Federal Housing Administration (FHA) may offer lower minimums. A higher score can improve your chances of approval and help you qualify for a more favorable initial rate.
• DTI: Lenders typically prefer a DTI below 43%, but some may allow ratios of up to 50%, depending on your credit and assets.
• Income and employment: Lenders often want to see at least two years of consistent income, typically verified through W-2s, tax returns and pay stubs. Self-employed borrowers may need to provide additional documentation to verify income.
• Down payment: The minimum down payment for an ARM can range from 3% to 5%, depending on the loan program and your financial profile.

Types of ARMs

There are many different types of ARMs from which you can choose. However, we'll only cover the most common options, which differ based on the length of the initial fixed period and how often the interest rate adjusts:

• 5/1 ARM: Fixed interest for five years, then the interest will adjust once every year.
• 5/6 ARM: Fixed interest for five years, then the interest will adjust every six months.
• 7/1 ARM: Fixed interest for seven years, then the interest will adjust once every year.
• 7/6 ARM: Fixed interest for seven years, then the interest will adjust every six months.
• 10/1 ARM: Fixed interest for 10 years, then the interest will adjust once every year.
• 10/6 ARM: Fixed interest for 10 years, then the interest will adjust every six months.

Learn more: Common Types of Adjustable-Rate Mortgages

Pros and Cons of an ARM

Before you apply for an ARM—or any type of loan for that matter—it's important to carefully consider the product's benefits and drawbacks, particularly how they apply to your situation. Here's what to keep in mind.

Learn more: What's the Difference Between Fixed-Rate and Adjustable-Rate Mortgages?

Should You Get an ARM?

ARMs aren't nearly as popular as fixed-rate mortgages, but there are some scenarios where it could make sense to apply for one:

• You plan to sell or refinance your loan before the loan's first rate adjustment.
• You want lower initial payments.
• You want to increase your buying power.
• You're comfortable with fluctuating payments, and that your budget can handle it.
• Interest rates are expected to drop from their current levels.

On the flip side, here are some situations where it might not make sense to get an ARM:

• You plan to stay in the home for more than five years and don't want to refinance just to switch the rate type.
• Your budget is tight with your initial mortgage payment.
• Interest rates are expected to rise over time.
• You're having trouble understanding the terms.
• You're generally risk-averse.

Learn more: 10/1 ARM vs. 30-Year Fixed Mortgage: What's the Difference?

How to Get the Best ARM Rate

While some factors that affect ARM rates are beyond your control, there are several ways to improve your chances of securing the lowest possible rate:

• Improve your credit score. A higher credit score shows lenders that you're a reliable borrower, which can help you qualify for better initial rates. Check your FICO^® Score and credit report to spot issues and identify ways to improve your credit.
• Compare offers from multiple lenders. ARM terms and rates vary widely, so it's worth shopping around to find the most competitive starting rate and adjustment terms.
• Choose a shorter adjustment period. ARMs with longer fixed-rate periods (like 10/6 ARMs) often come with slightly higher initial rates. If you're confident you'll move or refinance soon, a shorter period might offer better savings.
• Make a larger down payment. The more equity you bring to the table, the less of a risk you pose to the lender, potentially earning you a more favorable rate.
• Lock in your rate. If market volatility is high, consider locking in your ARM's initial rate before it rises. Many lenders offer short lock-in windows to help you secure favorable terms.
• Maintain steady income and employment. Lenders want to see consistency. A stable job and reliable income stream can make you a stronger borrower in their eyes.
• Keep your DTI low. A lower debt-to-income ratio signals you're not overextended, which can result in better interest rates and more flexible loan terms.

Alternatives to an ARM

While ARMs can offer low initial rates, they're not the right fit for everyone. Here are some alternatives to consider:

• Fixed-rate mortgage: With a fixed-rate loan, your interest rate stays the same for the life of the loan. This option offers predictable payments, making it a smart choice if you want long-term stability and plan to stay in your home for many years.
• FHA loan: Backed by the Federal Housing Administration, FHA loans are ideal for borrowers with lower credit scores or smaller down payments. While the rates for a fixed-rate FHA loan may be higher than an ARM's initial rate, they come with fixed terms and more flexible qualifying criteria.
• VA loan: Loans backed by the Department of Veterans Affairs (VA) are available to qualified members of the military community. VA loans offer competitive fixed rates, no down payment and no private mortgage insurance. They're a solid option if you're eligible and want long-term savings with less risk.
• USDA loan: USDA loans backed by the U.S. Department of Agriculture (USDA) are designed to help low- and moderate-income borrowers purchase homes in eligible rural areas. They offer fixed interest rates, zero down payment and reduced mortgage insurance costs, making them a great alternative if you meet the requirements.

The Bottom Line

An adjustable-rate mortgage can be a valuable tool for the right borrower—especially if you're looking for a lower initial payment and don't plan to stay in your home for long. However, it also comes with uncertainty, and it's essential to understand how your rate could change in the future.

Before applying, take time to assess your financial situation, long-term plans and risk tolerance. If you're unsure whether an ARM is right for you, consider speaking with a mortgage professional or financial advisor to explore your options.

As you begin your homebuying or refinancing journey, make sure to monitor your credit regularly. With Experian's free credit monitoring service, you can track your financial health and catch potential issues before they become obstacles.