What Is an Adjustable-Rate Mortgage (ARM) and Should You Consider One in 2025?
If you’re exploring home financing this year, you’ve probably seen the term Adjustable-Rate Mortgage (ARM) in 2025. An ARM is a home loan with an interest rate that starts fixed, then adjusts after a set period. Most ARMs begin with a lower fixed rate for five, seven, or ten years. After that, the rate resets — usually once a year — based on market conditions.
For example, a 7-year fixed ARM keeps your rate fixed for seven years. After that, it can change every six months. The first number shows how long the fixed period lasts.
Why Buyers Are Considering ARMs in 2025
Mortgage rates remain higher than they were a few years ago. ARMs often start with lower rates than 30-year fixed loans. That lower rate can make monthly payments more affordable and help you qualify for a higher loan amount.
If you plan to move or refinance within five to ten years, an ARM can save thousands in interest during that fixed period. In Utah and across the country, buyers are using ARMs to increase buying power while waiting for rates to (hopefully) drop.
When an ARM Might Make Sense
- You’ll sell or refinance before the rate adjusts. If you know this isn’t your “forever home,” an ARM can be a smart short-term play.
- You want lower upfront payments. Helpful if your income will grow or you expect more cash flow soon.
- You’re comfortable with some risk. Rates can rise after the fixed period, so plan for possible payment increases.
When to Choose a Fixed Rate Instead
If you plan to stay in your home long-term or you want payment stability, a fixed-rate mortgage is safer. Also, avoid ARMs if higher payments later could strain your budget.
Bottom Line
An Adjustable-Rate Mortgage (ARM) in 2025 can be a powerful tool for the right buyer — especially if you want a lower starting payment or expect to move or refinance before the adjustable period begins. But it’s not one-size-fits-all. At Houzd Mortgage, we can review your goals, run payment scenarios, and help you decide if an ARM fits your long-term plan.
Written by Anthony VanDyke, Utah Mortgage Broker — NMLS #247102 — President at Houzd Mortgage in Draper, Utah.
A mortgage broker since 2006, Anthony has helped thousands of Utah families build a stronger financial future, one home at a time. He believes a mortgage isn’t just a loan — it’s a long-term financial strategy that can shape a family’s wealth and peace of mind.
👉 See what you qualify for with Anthony’s Purchase Qualifier Tool.