To qualify for a 5/1 Adjustable-Rate Mortgage, you’ll need to make a down payment of at least five percent of the total loan amount. A credit score of at least 620 and a debt-to-income (DTI) ratio below 45 percent (or 50 percent, for select borrowers**) is also required.
These requirements are subject to change depending on the property type, loan purpose, and more. Work with a dedicated loan expert to learn more.
5/1 Adjustable-Rate
Mortgage Loan
finance your for-now home and save in the short term
Ideal for movers and short-term residents, a 5/1 Adjustable-Rate Mortgage (ARM) offers an initial period of fixed loan payments before varying year by year. If you plan on selling or refinancing your home within the next five years, this one’s for you.
The Benefits
An affordable introduction
ARMs offer low and fixed interest rates during the initial years of the loan.
Loan flexibility
With an ARM, you can sell or refinance to another loan option before the adjustment period begins.
Adjustment limitations
Even if your ARM interest rate adjusts, the amount changed will have reasonable limits.
Short-term savings
Save more during the fixed period of your ARM and apply your funds to whatever comes next.
Close on your 5/1 Adjustable-Rate Mortgage in 21 days or less*
*Terms and conditions apply. View full details here.
mortgage FAQs
Everything you need to know about 5/1 Adjustable-Rate Mortgage Loans
What are the requirements of a 5/1 Adjustable-Rate Mortgage?
What’s the difference between a 5/1 Adjustable-Rate Mortgage and other ARM types?
ARM loans are defined by two main factors:
- The length of the initial period
- The adjustment rate of the loan after the initial period
In the case of a 5/1 ARM, the loan has an initial period of five (5) years followed by an adjustment rate of once (1) per year. In other words, the loan begins with a fixed interest rate for five years; after this, however, the rate of the loan will adjust once per year in accordance with economic changes.
Other popular ARM types include 7/1, 7/6, 10/1, and Jumbo options. Speak with a licensed expert to determine which would work best for you.
Is a 5/1 Adjustable-Rate Mortgage right for me?
If you’re looking for a short-term residence with the opportunity to save, a 5/1 Adjustable-Rate Mortgage could be a great option for you. You’ll have five years of low, fixed payments plus the flexibility to refinance or move before the adjustment period begins. With this in mind, a 5/1 ARM is a great choice for homebuyers who plan on moving again within five years of purchasing a home. Check your loan eligibility for free today.
How much can my rate change during the adjustment period?
ARM loans often include caps (or limits) on how much your interest rate can adjust. These are typically broken down into three categories:
- Initial Adjustment Cap: the limit on how much your ARM loan can adjust during the initial adjustment period (the first time the rate adjusts).
- Subsequent Adjustment Cap: the limit on how much your ARM loan can adjust during every adjustment period after the initial adjustment.
- Lifetime Adjustment Cap: the limit on how much your ARM loan can adjust over the lifetime of the loan. This is often around five percent but can vary by lender.
Find a local loan expert to learn more and determine the best loan option for you.
What's the difference between a fixed rate and an adjustable rate?
A fixed-rate mortgage has the same interest rate during the entire loan term and is unaffected by economic changes. An adjustable-rate mortgage, on the other hand, has an interest rate that can change over time. This can be a good or bad thing for homeowners who have this type of mortgage.
Wondering which option is better for you? Check your loan eligibility and get a dedicated loan officer to find your perfect match.
Jump Into Homeownership with a 5/1 Adjustable-Rate Mortgage Loan.
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