If you’ve been shopping for a home lately, you’ve probably felt the impact of higher mortgage rates. To help manage monthly costs, some buyers are exploring adjustable-rate mortgages (ARMs) — and usage is on the rise.

But what exactly are ARMs? And are they safe?

Let’s break it down.

Why ARMs Are Making a Comeback

High interest rates and rising home prices are prompting some buyers to consider creative financing solutions. One of the most popular alternatives right now is the ARM — and the data proves it.

According to the Mortgage Bankers Association, the share of mortgage applications for ARMs has recently spiked to its highest level in over a year.

But if you’re concerned ARMs might bring back 2008 flashbacks, here’s what you need to know: today’s ARMs are very different.

How Adjustable-Rate Mortgages Work

As Business Insider explains:

“With a fixed-rate mortgage, your interest rate stays the same for the life of the loan. But with an ARM, you lock in a lower initial rate for a few years — after that, your rate can adjust periodically based on market conditions.”

In short:

• Fixed-rate = stable payments over time

• ARM = lower starting rate, but can increase later

Pros of an ARM

Why are some buyers choosing an ARM over a traditional fixed loan?

• Lower initial rate → Lower monthly payment

• Afford more house for the same budget

• Sell or refinance before rate adjusts

As Business Insider says:

“Because ARM rates are typically lower than fixed mortgage rates, they can help buyers find affordability when rates are high.”

Cons of an ARM

The flip side? You have to be ready for rate changes.

As Barron’s explains:

“Adjustable-rate loans offer a lower initial rate, but recalibrate later. That’s great if rates fall — not so great if they rise.”

If you stay in your home past the fixed period and rates go up, your payment could jump significantly.

Should You Consider One?

ARMs aren’t for everyone — but they can be a smart tool for the right buyer. Especially if:

• You plan to sell or refinance in a few years

• You want a lower monthly payment now

• You’re comfortable with a bit more financial risk

The key is to have a clear plan — and to talk with a trusted lender and financial advisor to see if an ARM aligns with your long-term goals.

Bottom Line

If you’re house hunting in today’s high-rate environment, an ARM might help you unlock more affordability — but only if it fits your strategy.

Want help reviewing your mortgage options?
Let’s connect with a lender who can walk you through the numbers and help you decide what’s best for your goals, budget, and future.