Adjustable Rate Mortgage (ARM) Rates Today: May 06, 2025

Are you thinking about buying a home or refinancing your existing mortgage? You've probably heard about Adjustable Rate Mortgages (ARMs). But what are the ARM rates looking like today, May 06, 2025? The national average for a 5/1 ARM APR is 6.45%, while the 10/1 ARM APR stands at 6.59%.

Adjustable Rate Mortgage (ARM) Rates Today – May 06, 2025

What's Happening with Mortgage Rates Right Now?

Before diving into the specifics of ARMs, let’s take a quick look at the overall mortgage interest rate trends. The market is always changing, and what's true today might not be true tomorrow. Below are the current mortgage rates from Bankrate:

• 30 year fixed: 6.89%
• 5/1 ARM: 6.11%
• 3/1 ARM: 5.98%
• 7/1 ARM: 6.15%
• 10/1 ARM: 6.86%

These numbers give you a snapshot of where things stand. But remember, these are averages. Your personal rate will depend on factors like your credit score, down payment, and the specific lender you choose.

Today's ARM Mortgage Rates: A Closer Look

As of today, May 06, 2025, here's how the ARM rates break down, compared to other loan types:

Product	Interest Rate	APR
3/1 ARM Rate	5.92%	6.52%
5/1 ARM Rate	6.24%	6.45%
7/1 ARM Rate	6.34%	6.54%
10/1 ARM Rate	6.75%	6.59%
30-Year Fixed Rate	6.83%	6.88%
15-Year Fixed Rate	6.01%	6.10%
30-Year Fixed Rate FHA	6.75%	6.81%
30-Year Fixed Rate VA	6.93%	6.98%
30-Year Fixed Rate Jumbo	6.91%	6.95%

Rates as of Tuesday, May 06, 2025, from Bankrate

Notice that the initial interest rates on ARMs are generally lower than those on 30-year fixed-rate mortgages. This is the main draw for many people considering an ARM.

Why Are ARM Rates Important?

The interest rate on your mortgage is a big deal. It affects your monthly payment, how much interest you'll pay over the life of the loan, and ultimately, how much house you can afford. When rates are low, you can often afford more house for the same monthly payment.

How to Snag the Best ARM Rate: My Top Tips

Getting a great rate on an ARM, or any mortgage for that matter, requires a little bit of preparation. Here's what I recommend:

• Step 1: Get your financial house in order. Lenders want to see that you're a responsible borrower. Check your credit score. A score in the “very good” range (740+) is ideal. Lower your debt-to-income (DTI) ratio by paying down some of your existing debts. Save up for a larger down payment. These steps will show lenders you're a low-risk borrower and help you get a better interest rate.
• Step 2: Figure out your budget. Don't just focus on the initial low rate of an ARM. Consider how your payment could change when the rate adjusts. Use an adjustable-rate mortgage calculator to estimate potential payment swings. It's better to be prepared for the worst-case scenario.
• Step 3: Shop around for different ARMs. Not all ARMs are created equal. Consider different types, like 5/1, 5/6, 7/1, or 10/1 ARMs. Longer fixed-rate periods usually come with higher initial rates, but they offer more stability.
• Step 4: Compare rates and terms from multiple lenders. Don't settle for the first offer you receive. Shop around with at least three different banks or mortgage companies. Pay close attention to the fine print, including the interest rate, fees, and rate cap structure.

Understanding the Different Flavors of ARMs

When you start looking at ARMs, you'll quickly encounter terms like “5/1 ARM” or “7/6 ARM.” What do these numbers mean?

These are hybrid ARMs, meaning they have an initial fixed-rate period, followed by a period where the interest rate can adjust.

• 3/1 ARM or 3/6 ARM: Fixed rate for the first three years, then the rate adjusts every year (3/1) or every six months (3/6).
• 5/1 ARM or 5/6 ARM: Fixed rate for the first five years, then the rate adjusts every year (5/1) or every six months (5/6).
• 7/1 ARM or 7/6 ARM: Fixed rate for the first seven years, then the rate adjusts every year (7/1) or every six months (7/6).
• 10/1 ARM or 10/6 ARM: Fixed rate for the first 10 years, then the rate adjusts every year (10/1) or every six months (10/6).

Generally, 5/1 ARMs often have the lowest initial interest rate. However, the best option depends on your individual circumstances and how long you plan to stay in the home.

What Do Lenders Look For? ARM Loan Requirements

Lenders typically have stricter requirements for ARMs than for fixed-rate mortgages. This is because they need to assess your ability to repay the loan if the interest rate goes up.

• Loan amount: For a conforming ARM in 2025, the loan limit is generally \$806,500. If you need a larger loan, you'll need to consider a jumbo ARM, which can be harder to qualify for.
• Credit and Income: A high credit score is crucial for getting a competitive interest rate. Lenders will also scrutinize your income and other debts.
• Down payment: Most conventional ARM loans require at least a 5 percent down payment.

Is an ARM Right for You? Weighing the Pros and Cons

Deciding whether to go with an ARM is a personal decision. Here are some scenarios where an ARM might make sense:

• You can get a significantly lower APR compared to a fixed-rate mortgage. This is the most common reason people choose ARMs.
• You plan to move or refinance before the initial rate period ends. If you know you won't be in the home for more than a few years, you can take advantage of the lower rate without worrying about future adjustments.

However, there are also potential downsides to consider:

• The risk of a higher interest rate. Interest rates can go up, and even with caps, your payment could increase substantially over the life of the loan.
• It's harder to budget for. With a fixed-rate mortgage, you know exactly what your payment will be for the next 15 or 30 years. With an ARM, your payment could fluctuate after the initial fixed-rate period.

The Bottom Line: Do Your Homework!

Adjustable Rate Mortgages (ARMs) can be a great option for some homebuyers, especially when ARM rates are lower than fixed rates. However, it's important to understand the risks involved and carefully consider your own financial situation and goals. Don't be afraid to ask questions, shop around, and get professional advice before making a decision.