Adjustable-Rate Mortgages (ARM)

What is an Adjustable Rate Mortgage?

Most adjustable-rate mortgage (ARM) loans feature an initial rate period, during which the interest rate and principal and interest payments remain the same.

Once the initial rate period expires, the interest rate will adjust once every six months for the remainder of the loan term. The adjustments are based on a fluctuating index plus a margin. When the interest rate adjusts, your monthly payment will usually increase if interest rates go up or decrease if interest rates fall.

Sometimes, an ARM loan may have a lower starting principal and interest payment than a fixed-rate mortgage. But at the end of the ARM loan’s initial rate period, the interest rate and monthly principal and interest payment could go up. If that happens, you will need to be prepared to make bigger payments even to the maximum amount. To help avoid significant fluctuations, interest rate caps limit how much the interest rate can go up or down at each interest rate adjustment and over the life of the loan.

ARM loans are named by the duration of the initial rate period and how often the rate will adjust thereafter.

One example is the 5/6m Adjustable-Rate Mortgage:

  • The “5” stands for the 5-year initial rate period during which the interest rate remains the same.
  • The “6m” shows that the interest rate can adjust every six months after the initial rate period expires. An ARM loan may be a good option if you plan to move or refinance within a few years or if you expect your income to grow in the future.

BBVA offers ARMs with initial fixed-rate period options of 5, 7, and 10 years. Contact us to discuss whether an adjustable-rate mortgage is right for you.

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Looking for another option?

Choose from these other mortgage types that might work for you.

Fixed-Rate Mortgages

Looking for stable monthly payments? With a Fixed-Rate Mortgage, the interest rate on your mortgage loan remains the same for its entire term.

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Jumbo Loans

If you’re buying a home with a higher property value and can manage larger monthly mortgage payments, a jumbo loan may be a good choice for you.

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Professional Loans

If you are a medical resident, practicing physician, attorney, oral surgeon, dentist or CPA, a Professional mortgage loan can help you achieve financial flexibility.

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Government Loan Programs

If you are looking to apply for a mortgage or to refinance, you may be eligible for a FHA, VA, or USDA loan.

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Home Ownership Made Easier (HOME)

Through our Home Ownership Made Easier (HOME) mortgages, BBVA is building stronger communities and helping people achieve the dream of home ownership.  

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Construction Permanent Loans

A Construction Permanent Loan makes new home financing simple. There's just one loan application and one closing. 

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Lot Loans

Building your dream home starts with finding the perfect location. With so many considerations to make in preparing to build, let us take care of the lot financing. 

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Renovation Permanent Loans

Kitchen remodel, attic conversion, basement finishing, or bedroom add-on—major renovations can add serious value to your home.

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Foreign National Mortgage

BBVA welcomes the opportunity to provide mortgage services to Foreign Nationals who want to purchase, refinance, build, or renovate a home in the United States.  

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Home Equity Loans and Lines of Credit

Your home is often your largest asset — make your home’s equity work for you with a BBVA Home Equity Loan or Line of Credit. 

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