Purchase Loans
ARM (Adjustable-Rate)
Lower initial rate — smart for short-term ownership plans.
Adjustable-rate mortgages start with a lower rate that's fixed for an initial period — usually 5, 7, or 10 years — and then adjust based on a market index. They're a powerful tool when used strategically, especially in high-rate environments or for buyers with a clear medium-term horizon.
Key Features
- • Lower initial rate than 30-year fixed (often 0.25–0.75%)
- • Fixed for 5, 7, or 10 years before first adjustment
- • Rate caps limit how much the rate can move
- • Indexed to SOFR (most modern ARMs)
- • Available as conventional, jumbo, VA, and FHA
- • Refinanceable at any time
How ARMs really work
During the fixed period, you pay the introductory rate — same payment every month, just like a fixed-rate mortgage. After the fixed period ends, the rate resets to the current index (SOFR) plus your fixed margin (commonly 2.75%), subject to your caps. So if SOFR is 4.5% and your margin is 2.75%, your new rate would be 7.25% — unless that exceeds a cap, which would limit the adjustment. The rate continues to reset on the periodic schedule (every 6 months for most modern ARMs) for the remaining loan term.
ARMs in Washington's market
In Seattle, Bellevue, and the rest of King County, the median homeowner stays in a given home roughly 7–10 years before selling or refinancing. That's exactly the window where a 7/6 or 10/6 ARM saves serious money. For jumbo borrowers, ARM savings are even more pronounced — a 0.5% rate difference on a $1.5M loan is $625/month, or $52,500 over 7 years. Tech buyers with strong income and a clear plan to refinance when rates drop frequently land on the 7/6 ARM.
Pros
- • Lower rate and payment up front
- • Major savings if you sell/refi within the fixed period
- • Caps protect you from runaway adjustments
- • Always refinanceable into a fixed rate
Cons
- • Rate can rise after the fixed period
- • Less payment certainty long-term
- • Requires understanding the cap structure
- • Not ideal for buyers planning to stay 15+ years
Best for: Strategic buyers with a 5–10 year horizon, jumbo borrowers in Seattle/Eastside who want lower payments during the fixed period, or anyone buying in a high-rate environment who expects to refinance when rates drop.
Common Questions
Related Loan Types
Popular WA markets for ARM (Adjustable-Rate)
ARMs make the most sense in WA's high-value markets where buyers typically move or refinance within 7–10 years.