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Adjustable-rate mortgage (ARM): what it means

An adjustable-rate mortgage (ARM) is a loan whose interest rate can change, usually in step with a market index. It often starts with a fixed rate for an initial period (for example, the first few years) and then adjusts at set intervals, so your payment can go up or down.

In Spanish it is

Hipoteca de tasa ajustable (ARM)

Also written as: ARM · variable-rate mortgage

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Verified on October 16, 2026

1 official source

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The full explanation

The contract sets caps on how much the rate can rise at each adjustment and in total. Before accepting one, check on the Loan Estimate how high your payment could reach and whether you could afford it.

An example

Jorge is offered an ARM with an initial rate lower than the fixed one. Before deciding, he checks the highest possible payment after the first adjustment on the Loan Estimate.

You will see it in…

The Loan Estimate, page 1 (“Can this amount increase after closing? YES”)
The Loan Estimate's “Adjustable Interest Rate (AIR) Table”
Ads for “5/1” or “7/6” rates (fixed years / adjustment frequency)

Words that go with it

You will rarely see this word alone. These are the ones that show up with it on the same papers.

More guides that use “adjustable-rate mortgage (ARM)”

Still confused by a paper?

A HUD-approved housing counselor can walk you through it. Agencies usually charge little or nothing, many work in Spanish, and they do not sell you anything.

What a housing counselor does See free help

Official sources

We sum up what these official sources say, in plain words. We add no rules they do not state; when a rule changes, the definition and its date change.

1. CFPB · Mortgages key terms: adjustable rate mortgage (ARM) (external site) · in English · Verified on October 16, 2026