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When Is an Adjustable-Rate Mortgage a Good Option?

Adjustable-Rate Mortgages (ARMs) begin with a fixed interest rate and then adjust up or down after the initial term. ARMs are a good option for buyers who plan to stay in their home for only a short period of time and want to keep their monthly payment low.

ARM products contain 2 numbers:

  • The first refers to the number of years the interest rate will remain fixed.
  • The second is the number of years between interest rate changes after the initial fixed term expires.

For example, a 5/5 ARM would have the same interest rate for the first 5 years, and then the rate would adjust every 5 years after that.

Navy Federal ARMs

  • Low Initial Fixed Rate

    During the initial term of your loan, your interest rate will be lower, making your payments more affordable. During the remaining term, the interest rate will change according to an index.

  • No Private Mortgage Insurance Required for Most Loans

    Most lenders require the borrower to purchase PMI unless they're able to make a down payment of 20%. Most of our Adjustable-Rate Mortgages don’t require PMI, which saves you money each month.

  • Refinance Options Available

    If you have a mortgage already and want to refinance for a different interest rate or shorter term, this loan may also be a good fit.

Rates1 2

Rates Table
Loan Type Interest Rates As Low As Discount Points APR As Low As
3/5 Conforming ARM 5.125% 0.250 6.360%
3/5 Jumbo ARM 5.125% 0.250 6.370%
5/5 Conforming ARM 5.375% 0.250 6.262%
5/5 Jumbo ARM 5.375% 0.250 6.262%

Rates as of Oct 04, 2023 ET.

Rates subject to change. Rates are based on an evaluation of credit history, so your rate may differ. For primary residences and second homes. Adjustable-rate mortgages are variable, and your annual percentage rate may increase or decrease after the original fixed rate period. All rates quoted above require a 1.00% loan origination fee, which may be waived for a 0.25% increase in the interest rate. 

3/5 and 5/5 ARM Loans: Mortgage insurance is not required. The minimum down payment for a two-unit property is 10%. Rates displayed are the "as low as" rates for purchase loans and refinances.

The interest rate above shows the option of purchasing discount points to lower a loan's interest rate and monthly payment. One point amounts to 1% of the loan amount and is paid at closing. Points don't always have to be round numbers. Purchasing 1.5 points would cost $4,500 on a $300,000 mortgage.

Contact us at 1-888-842-6328 to learn more about our ARM loan options.

5/5 Conforming ARM Payment Example2

Loan Amount: $300,000 Term: 30 years

Year Interest Rate APR Monthly Payment
Taxes and insurance not included; therefore, the actual payment obligation will be greater.
Payments on all ARMs are based on a 30-year amortization.

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Still have questions? Call us at 1-888-842-6328.

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Adjustable-Rate Mortgage FAQs

  • There's no down payment required if it's for a primary residence.5 
  • An ARM currently has lower rates and discount points than a fixed-rate loan, which means it's perfect for using those discount points to bring down the interest rate.
  • A conforming ARM loan allows non-occupant co-borrowers if the loan-to-value (LTV) ratio is 90% or less.
  • It's ideal for buyers looking to own a home for a short amount of time.

This loan is great for members who may have unique circumstances, such as if they don’t have long-term plans to reside in their current home. For example, if you own a home and want to refinance your loan, knowing you'll be transferred in 5 years, a 5/5 ARM loan might be a great option. You'll make a lower payment for the first 5 years of a 5/5 ARM loan than if you refinance with a fixed-rate loan.

Plus, just like all of Navy Federal's mortgage programs, there's no penalty for prepayment and no private mortgage insurance (PMI) requirement. None of Navy Federal's mortgage programs have prepayment penalties or require PMI. 

Yes, ARM loans can be refinanced. They can also be used to purchase a home or to refinance an existing mortgage.

The number to the left of the slash is the number of years the interest rate assigned at closing remains fixed. The number to the right of the slash is the number of years in between interest rate changes after the initial term expires. 

That means a 5/5 ARM is a loan where the initial interest rate remains the same for 5 years, and that for the rest of the life of the loan, the interest range will be subject to change every 5 years after the first 5.



These rate offers are effective 10/04/2023 and subject to change. Rates displayed are the "as low as" rates for purchase loans and refinances. Rates are based on creditworthiness, loan-to-value (LTV), occupancy, and loan purpose, so your rate and terms may differ. All loans subject to credit approval. Rates quoted require a loan origination fee of 1.00%, which may be waived for a 0.25% increase in the interest rate. Many of these programs carry discount points, which may impact your rate.


Adjustable Rate Mortgages are variable, and your Annual Percentage Rate (APR) may increase after the original fixed-rate period. The First Adjusted Payments displayed are based on the current Constant Maturity Treasury (CMT) index, plus the margin (fully indexed rate) as of the stated effective date rounded to nearest 1/8th of one percent. All loans subject to credit approval.


Customer satisfaction claims are based on 2021 Anywhere Leads Inc.’s surveys of customers who bought or sold a home using a program serviced by an Anywhere Leads Network agent or using an Anywhere Leads Network agent.


The cash-back bonus is offered in most states and is available for individual sales and purchases of property; offer limited to one cash-back bonus per property with no limit on the amount of times you may use the program. In some states, a gift card or commission credit at closing may be provided in lieu of the cash-back bonus. The program is not available in IA or outside the U.S. Cash-back bonus is not available in AK or OK. In KS and TN, a gift card with preloaded points that are ready for spending at specified retail establishments after closing will be issued. State regulations in KS limit the dollar amounts and the type of incentive. In MS, NJ, and OR, a commission reduction may be available at closing. Please check with the program coordinator for details. This is not a solicitation if you are already represented by a real estate broker. The cash-back bonus is only available with the purchase or sale of your home through the use of a program-referred and -approved real estate agent. The size of your cash-back award depends on the value of the property you are buying or selling. Obtaining the full $9,000 cash-back award requires transacting in a property valued at $3 million or greater. To calculate the size of your potential cash back, please visit the RealtyPlus website: All real estate transactions are negotiable. Contact RealtyPlus for terms and conditions. Standard listing fees apply. The program award is not available in certain transactions with restricted agent commissions (including many new construction, For Sale by Owner, or For Sale by iBuyer transactions). Your assigned agent can help you identify any transactions where the award would not be available. This program is offered, in part, by Realogy Lead Management Services, Inc. d/b/a Realogy Leads Group (RLG). RLG may receive a co-operative brokerage fee as a result of a referral to the real estate companies listed above. Program terms and conditions are subject to change at any time without notice. Additional terms, conditions, and restrictions apply.


Product features subject to approval. Available for purchase loans only. Loans are subject to an additional funding fee, which may be financed up to the maximum loan amount.