---
title: "ARM (Adjustable-Rate Mortgage) — What It Means | Ondo RE"
canonical: https://www.ondorealestate.com/glossary/arm/
---

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Mortgage & lending[All terms starting with A](/glossary/#letter-A)

# ARM (Adjustable-Rate Mortgage)

Also called: adjustable rate mortgage, 5/1 arm, 7/6 arm, variable rate mortgage

A mortgage whose interest rate is fixed for an initial period and then adjusts on a set schedule against an index.

An ARM is quoted as two numbers: an initial fixed period and an adjustment frequency after it. Once the fixed period ends, the rate resets periodically to an index plus a margin, within limits set by the note’s caps.

The caps are the part worth reading closely: there is normally a limit on the first adjustment, a limit on each later adjustment, and a lifetime ceiling. Those three numbers, not the teaser rate, define your actual worst case.

## Why it matters

An ARM can make sense when the fixed period comfortably outlasts how long you expect to hold the loan. It is a bet on your own timeline, so price the worst case before taking one.

## Related terms

- [Fixed-rate mortgageA mortgage whose interest rate never changes, so principal and interest stay the same for the full term.](/glossary/fixed-rate-mortgage/)
- [Interest rate (note rate)The percentage charged on your loan balance, the number your principal and interest payment is calculated from.](/glossary/interest-rate/)
- [RefinanceReplacing an existing mortgage with a new one to change the rate, the term, or both.](/glossary/refinance/)

## Go deeper

- [ARM caps in plain English](/blog/arm-caps-in-plain-english/)

## More in Mortgage & lending

- [Amortization](/glossary/amortization/)
- [APR (Annual Percentage Rate)](/glossary/apr/)
- [Cash-out refinance](/glossary/cash-out-refinance/)
- [Closing costs](/glossary/closing-costs/)
- [Conforming loan](/glossary/conforming-loan/)
- [Conventional loan](/glossary/conventional-loan/)

## Have a question about your own situation?

Ondo handles brokerage, lending, property management and notary under one roof, so the answer does not change depending on who you ask.

[Talk to Ondo](/contact/)[Browse all terms](/glossary/)

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