Today’s 5/1 ARM Rates

Adjustable mortgage rates are typically lower than fixed mortgage rates. However, certain market conditions can cause ARM rates to spike above fixed rates. So make sure you explore all your loan options and find out which one offers the best deal for you.

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5/1 ARM rates today, March 19, 2024

ProgramMortgage RateAPR*Change
5/1 ARM Conventional
5/1 ARM Conventional 6.28% 7.38% Unchanged
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
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What is a 5/1 ARM mortgage?

The term “5/1 ARM” might sound like industry jargon. But this type of home loan is easy to understand when you break it down.

The acronym ARM (pronounced “arm”) stands for ‘adjustable-rate mortgage.’ It means your mortgage rate can go up and down in line with other interest rates.

This is the opposite of a fixed-rate mortgage loan, which has an interest rate and monthly payment locked in for the life of the loan.

Nowadays, nearly all ARMs are hybrid, meaning they’re not ‘pure’ adjustable-rate loans. Instead, they have a fixed interest rate for the first few years. And it’s only after that initial fixed-rate period ends that the rate can float up and down.

ARM interest rate adjustments

The “5” in 5/1 ARM means the rate on these loans is fixed for five years (the ‘introductory period’).

Likewise, a 7/1 ARM has a fixed rate for seven years and a 10/1 ARM is fixed for the first 10 years. There are other, shorter versions, including 1/1 and 3/1 ARMs, but these are far less common.

The “/1” refers to the frequency with which the lender can adjust the rate. In this case, it means your mortgage rate can go up or down once per year.

The amount your 5/1 ARM rate will change each year depends on how the broader interest rate market is trending.

But even if rates skyrocket, your lender cannot increase your rate indefinitely — nor can it fall too much. That’s because ARM interest rates are subject to ‘caps’ and ‘floors,’ which limit the amount your rate and payment amount can change.

5/1 ARM loan terms

Most ARMs are actually 30-year mortgages.

If a 5/1 ARM lasted only five years, the monthly payments would be incredibly high because you’d have to pay off the entire loan amount in that short time frame.

Instead, a 5/1 ARM has a 30-year loan term. Its interest rate is fixed for the first 5 years, and subject to change each year for the 25 remaining years of the loan term. Note that when your interest rate changes, your monthly payment will change, too.

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Types of 5 year ARM rates

Most loan programs offer ARMs as well as FRMs. The main exception is USDA loans, which are available only as 30-year, fixed-rate mortgages (FRMs).

Although fixed-rate loans are more popular by far, ARM versions are also available for these major loan options:

  • Conventional loans — Home loans not guaranteed by the federal government
  • Conforming loans — Mortgages that conform to rules created by Fannie Mae and Freddie Mac, as well as those actually owned by Fannie and Freddie
  • Jumbo loans — Mortgages above the conforming loan limit, which can have loan amounts in the millions
  • FHA loans — Low-down-payment and low-credit loans backed by the Federal Housing Administration (FHA)
  • VA loans — Zero-down-payment loans for veterans and service members, backed by the Department of Veterans Affairs (VA)
  • Shorter-term loans — You might choose a 10- or 15-year mortgage (or sometimes a customized term) instead of the usual 30-year one. ARMs are often available for those

Not all lenders offer all flavors of mortgages. And some may decide not to provide ARM versions of all the loans they offer.

But, as long as you qualify for the mortgage you want, you should be able to find it as an ARM. You just might have to shop around a little more than someone looking for a fixed-rate home loan.

How do 5/1 ARM rates compare?

The initial interest rates on ARMs are generally lower than those for fixed-rate loans. Often, adjustable rates are about 0.5% lower.

For example, if you were in line for a 3.0% fixed-rate mortgage, you could likely get a 2.5% adjustable rate. That lower rate might mean you could afford a bigger mortgage and a better, more costly home.

But the relationship between fixed rates and adjustable rates is not an iron rule. Sometimes, the gap is a bit wider. And sometimes it’s a little narrower. There are also periods when ARM rates are actually higher than fixed rates.

So it’s up to you to check where ARM rates stand in comparison to FRMs at the time when you are deciding which to choose.

You also need to shop around between different lenders for your best possible rate.

The ARM rate lenders can offer you depends on your credit score, credit report, down payment, and home value, among other factors. And you won’t know which mortgage lender can offer the lowest rate until you’ve compared personalized rates from a few of them.

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Compare today’s 5/1 ARM rates

ProgramMortgage RateAPR*Change
Conventional 30-year fixed
Conventional 30-year fixed 7.12% 7.13% +0.02
Conventional 15-year fixed
Conventional 15-year fixed 6.62% 6.65% +0.03
Conventional 20-year fixed
Conventional 20-year fixed 7.15% 7.17% +0.04
Conventional 10-year fixed
Conventional 10-year fixed 6.64% 6.66% Unchanged
30-year fixed FHA
30-year fixed FHA 6.49% 7.17% +0.01
30-year fixed VA
30-year fixed VA 6.61% 6.72% +0.02
5/1 ARM Conventional
5/1 ARM Conventional 6.28% 7.38% Unchanged
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.

What you should know about adjustable-rate mortgages

Adjustable-rate mortgage loans are inherently riskier than fixed-rate mortgages. Although your introductory rate may be ultra-low, there’s a good chance rates could rise at some point in your loan term.

A higher interest rate means a bigger monthly mortgage payment. And if rates rise enough, a homeowner could get priced out of their home — which is a dangerous position to be in.

The risk of rising rates is the main reason most home buyers choose a fixed-rate mortgage over an ARM. However, if you know you’ll move or refinance before the introductory period ends, an ARM may offer a lower interest rate and savings on your mortgage payment.

If you’re considering an ARM for its money-saving benefits, here are a few things you should know about this type of mortgage before opting in.

ARM rate caps make these loans less risky than you think

Today, most adjustable-rate mortgages come with rate caps. These reduce your exposure to risk by limiting the amount your rate can rise — in any given year and over the life of the loan.

Rate caps are usually expressed like this: ‘2/2/5’.

Following is the meaning for each, in order:

  1. Initial adjustment cap — Limits the first rise after your initial fixed-rate period ends
  2. Subsequent adjustment cap — Limits the amount by which your rate can rise each time your rate is subsequently due for adjustment (annual changes, if you have an x/1 ARM)
  3. Lifetime adjustment cap — Limits the amount by which your rate can rise across the entire term of your mortgage

So let’s say you receive a 5/1 ARM at 2.5% and it has 2/2/5 caps.

  • The rate would be fixed at 2.5% for the first 5 years
  • The most the rate could rise the first year after the fixed period is 4.5%
  • The most it could rise the next year is 6.5%
  • And the highest the rate could ever get would be 7.5%

In this way, ARMs are not quite as risky as many people think. You won’t be paying a 20% interest rate on your mortgage even if market rates skyrocket. Furthermore, due to caps, you wouldn’t hit the maximum allowable rate for at least 8 years after the start of the loan (initial 5 year period, then 3 years of small rate increases).

Some ARMs will never hit their lifetime maximum at all, or even close to it. In fact, most ARMs over the past two decades have seen falling rates after the initial fixed period, not rising ones.

Still, caps are there to protect you.

Most ARMs on the market today have similar caps. But it’s worth checking before you agree to one of these loans.

Financial regulator the Consumer Financial Protection Bureau urges all ARM borrowers to “Compare rate caps when comparing ARMs,” and to “Ask the lender to calculate the highest payment you may ever have to pay on the loan you are considering.”

Watch out for prepayment penalties

There’s another thing to look out for when you receive ARM quotes (known as “Loan Estimates”) from lenders. Some may include prepayment penalties, which are now very rare with FRMs.

Be very aware of any prepayment penalty on an adjustable-rate loan. It means you could pay a fee if you want to refinance or end your mortgage early — which you’ll likely want to do if you have an ARM.

ARM rate differences: 5/1 vs. 7/1, 10/1 and others

As a rule of thumb, the shorter the initial period during which your rate is fixed, the lower your rate will be. That’s because you’re reducing the risk a lender carries if rates suddenly rise.

So the lowest rates of all are often found for 1/1 ARMs, where you’re fixing your rate for only one year. And, typically, the rate increases as you look at 3/1 ARMs, 5/1 ARMs, 7/1 ARMs and finally (and most expensively) 10/1 ARMs.

Most homeowners prefer the security and predictability of a fixed-rate mortgage. And they’re prepared to pay a slightly higher rate in exchange for knowing their first monthly payment will be the same as their last, perhaps 30 years later.

Especially if you’re buying your forever home, that’s valuable.

But suppose you’re as certain as you can be that you’ll be moving within five, seven, or 10 years. Why pay for the privilege of 30 years of security when you’re not going to use it?

In that case, a 5/1, 7/1, or 10/1 ARM will deliver you all the protection you need — typically at a lower mortgage rate.

Adjustable interest rates — past, present, and future

You may by now be thinking: “Hang on! If I’d bought a home in 2008 with a 1/1 ARM, I’d have been paying a consistently lower mortgage rate since Day 1. And I wouldn’t have had the expense of refinancing to access my lower rates, because they’d have just floated downward automatically.”

And you’d be right. Indeed, mortgage rates have been trending downward — with a number of peaks along the way — since 1981, when they stood at 18.1%, according to Freddie Mac.

But it’s worth putting that into context. First, 18.1%! Seriously, there’s nothing stopping mortgage rates being six-plus times higher than they were in 2021. If you don’t find that sobering, you should.

And there are a couple of other points:

  • Some of those peaks have been painful. Average mortgage rates jumped from 6.97% to 9.23% in less than a year back in 1995-96. Many with ARMs would have struggled with higher payment amounts during that period — and at other times of rising rates, too, even though those were usually brief
  • When it comes to economics, freaky things happen. There’s no guarantee we won’t encounter high inflation (and therefore high FRM and ARM rates) within the three decades of a 30-year mortgage term. And some economists think higher rates are likely within a few years

Indeed, the only reason ARM rates tend to be lower is that lenders are pushing some of the risk of higher rates onto your shoulders. For well over a decade, ARM borrowers have done well out of this.

But if lenders weren’t worried about the prospect of higher rates, they wouldn’t give ARM borrowers lower ones.

How your initial 5/1 ARM rate is set

Just like fixed mortgage rates, adjustable rates depend on your qualities as a borrower. You’ll get the lowest rate if you have a:

  • High credit score (720+)
  • Clean credit history
  • Big down payment (or at least 20% home equity when refinancing)
  • Low debt-to-income ratio (DTI)

And like fixed rates, your initial ARM rate and its fixed period is determined by market factors like supply and demand for mortgage-backed securities. But how is your rate determined after the initial fixed period?

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How your ARM rate is set after the introductory fixed period

When an ARM loan enters its variable period, it is directly tied to a particular index like LIBOR or SOFR. Indices are measures of the current interest rate environment in an economy.

Your adjustable-period rate is determined by an index plus a ‘margin’, or a certain interest rate the lender charges above the index for its profit.

For instance, let’s say your ARM is tied to the SOFR index which is 2.0% when the loan starts adjusting. The margin, set by the lender at loan origination, is 2.25%.

Your rate upon the first adjustment would be 4.25%, which is the index plus margin.

The margin never changes, but the index does. If the SOFR goes up to 5.0%, your rate would be 7.25%, limited by the caps discussed above.

So the variability of your rate is tied to the current market after your initial fixed period. This is why so many people avoid ARMs — the future is highly unpredictable and most home buyers assume the worst, even if ARM holders have enjoyed dropping rates over the past few decades.

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5/1 ARM FAQ

Is a 5/1 ARM a good idea?

It can be, especially if you’re planning to move again in less than 10 years. If that’s the case, you can fully protect yourself from future rate rises, usually while paying a lower mortgage rate. And that could mean you can afford a bigger mortgage and a nicer home.

When is an ARM a bad idea?

An ARM may be a bad idea when you’re buying your forever home — or at least, one where you’re likely to remain for more than a decade or so. Of course, you might get lucky and benefit from low rates throughout your mortgage term. But that’s a big risk to take with very high stakes.

What’s better, a 5/1 ARM or a 7- or 10-year ARM?

The shorter your initial fixed-rate period, the lower your rate typically is. So of the three options, a 5/1 ARM would likely have the lowest rates. But cautious borrowers usually want to limit their exposure to higher rates. It’s often a good idea to match the initial fixed-rate period with the time you expect to own the home you’re buying.

Can you pay off a 5/1 ARM early?

Yes. But prepayment penalties are more common with ARMs than fixed-rate mortgages. And one of those will see you having to buy your way out of your loan if you pay it down early. Check your Loan Estimate and mortgage agreement carefully for prepayment penalties before committing to a particular mortgage.

Can you refinance an ARM loan?

Yes. But make sure there are no prepayment penalties (previous FAQ) or you’ll have to pay for the privilege. You won’t need to refinance to get a lower rate because your rate should float down automatically. But some choose to refinance to a new ARM or an FRM when their initial fixed-rate period expires.

How soon can you refinance a 5/1 ARM?

Some types of mortgages have limits on the speed with which you can refinance after you bought your home or last did a refinance. But it’s rarely more than nine months. And conventional mortgages have no restrictions.

Can ARM rates go down?

You bet! But they don’t normally move at all during your initial fixed-rate period. And any caps that limit your rate rises may also apply to falls.

Do you pay principal on an ARM?

Yes. Interest-only ARMs do exist but they’re rare. Nearly all ARMs are “fully amortizing mortgages,” just like fixed-rate loans, meaning each monthly mortgage payment goes partially toward interest and partially toward principal repayment. And if you stay for the full mortgage term, you’ll owe nothing when it ends. (ARM loan terms are typically 30 years, but can be shorter.)

What happens at the end of a 5/1 ARM?

At the end of your initial five-year fixed-rate period, your rate can move up or down in line with other interest rates. These movements will be subject to any caps in your mortgage agreement. At the end of your full 30-year mortgage term, the loan should be paid off.

Should I get an ARM or a fixed-rate mortgage?

That depends entirely on your personal plans and appetite for risk. If your plans mean you’ll be moving home when or before your fixed-rate period ends, then an ARM could save you money or allow you to buy a better home than you could otherwise afford. But, if you’re buying a long-term home, an ARM will expose you to the risk of rising rates at some point in the future. And that’s a high-stakes gamble.

Time to make a move? Let us find the right mortgage for you


By refinancing an existing loan, the total finance charges incurred may be higher over the life of the loan.