Conventional ARM Loans: 5/6, 7/6 & 10/6 SOFR ARMs
An adjustable-rate mortgage gives you a lower interest rate that is fixed for the first 5, 7, or 10 years, then adjusts. If you expect to sell, refinance, or pay down your loan before the fixed period ends, an ARM can mean a lower rate and payment than a 30-year fixed. As a wholesale broker, OnPoint shops your ARM across 20+ lenders for the best initial rate and terms.
Today’s Conventional ARM Rates
Initial fixed-period rates, synced from our daily rate board. These are the rate for the fixed period only — see the disclosures below for how the rate can change after.
5/6 SOFR ARM
Fixed 5 years, then adjusts every 6 months
6.125%
7.20% APR
7/6 SOFR ARM
Fixed 7 years, then adjusts every 6 months
6.25%
7.30% APR
10/6 SOFR ARM
Fixed 10 years, then adjusts every 6 months
6.375%
7.40% APR
Rates and APRs update daily and are illustrative (740 FICO, 75% LTV, single-family primary residence, CA). Not a commitment to lend or a locked rate.
What Is a Conventional ARM?
A conventional adjustable-rate mortgage (ARM) is a conforming loan whose interest rate is fixed for an initial period and then adjusts periodically for the rest of the term. The names describe the schedule: in a 5/6, 7/6, or 10/6 SOFR ARM, the first number is the years the rate is fixed (5, 7, or 10), and the “6” means the rate then adjusts every 6 months. All are 30-year loans — only the rate behavior changes after the fixed period.
Because the lender takes less long-term rate risk, the initial fixed rate on an ARM is usually lower than a 30-year fixed. That lower rate is the trade-off for accepting that the rate can change later.
The Three Conventional ARM Terms
5/6 SOFR ARM
Rate fixed for 5 years, then adjusts every 6 months. Lowest initial rate of the three. Best if you expect to sell or refinance within about 5 years.
7/6 SOFR ARM
Rate fixed for 7 years, then adjusts every 6 months. A middle ground — a longer runway of certainty with a rate still typically below a 30-year fixed.
10/6 SOFR ARM
Rate fixed for 10 years, then adjusts every 6 months. The most stability of the ARMs; fits buyers who want a long fixed window but a lower rate than a 30-year fixed.
How the Rate Adjusts After the Fixed Period
When the fixed period ends, your interest rate is recalculated as the index plus a margin — this is called the fully-indexed rate:
| Component | What it is | Typical value |
|---|---|---|
| Index | 30-Day Average SOFR (Secured Overnight Financing Rate), published by the New York Fed. It moves with the market. | Varies daily |
| Margin | A fixed number of percentage points the lender adds to the index. Set at closing and does not change. | ~2.75% – 3.00% |
| Fully-indexed rate | Index + margin, applied at each adjustment (subject to the caps below). | Index + margin |
| Initial cap | The most the rate can change at the first adjustment. | 2% (5/6) · 5% (7/6, 10/6) |
| Periodic cap | The most the rate can change at each adjustment after the first. | 1% per adjustment |
| Lifetime cap | The most the rate can ever rise above your initial rate. | 5% over initial |
| Floor | The lowest your rate can go. Usually equal to the margin. | = margin |
Caps are commonly written as three numbers — e.g. 2/1/5 or 5/1/5 (initial / periodic / lifetime). Exact index, margin, caps, and floor vary by lender and program and are stated in your ARM program disclosure and Loan Estimate.
Worked Example (Illustrative)
On a 5/6 SOFR ARM at a 6.125% initial rate with 2/1/5 caps: at the first adjustment your rate could rise by up to 2% to 8.125%, then by up to 1% at each later adjustment, but it can never exceed 11.125% (5% over your initial rate) for the life of the loan. Your monthly payment would rise with the rate. This is an illustration, not a prediction or a quote.
When a Conventional ARM Makes Sense
An ARM can be the right tool — or the wrong one — depending on your plans:
An ARM may fit if…
You expect to sell or refinance before the fixed period ends, you’re buying a starter or shorter-term home, you want a lower initial payment, or you expect rates to fall and plan to refinance.
A fixed rate may fit if…
You plan to keep the loan and home long-term, you want a payment that never changes, or you’d lose sleep over the possibility of a higher rate after the fixed period.
Either way…
We’ll run ARM vs fixed side by side on your actual numbers so you can see the real break-even and decide with eyes open. No pressure, no credit pull to start.
Important ARM Disclosures
An adjustable-rate mortgage (ARM) has an interest rate that is fixed for an initial period and then adjusts periodically — it is not a fixed-rate loan. On a 5/6, 7/6, or 10/6 SOFR ARM the rate is fixed for 5, 7, or 10 years, then adjusts every 6 months for the remaining term of the 30-year loan.
How your rate can change: After the fixed period your rate equals the index plus a margin (the fully-indexed rate). The index is the 30-Day Average SOFR, published by the Federal Reserve Bank of New York, and it changes over time; the margin is set by your lender (typically about 2.75%–3.00%) and is fixed for the life of the loan. If the index rises, your interest rate and monthly payment will increase.
Rate caps and floor: Your rate change is limited by an initial adjustment cap, a periodic (per-adjustment) cap, and a lifetime cap, and it will not fall below a floor (usually the margin). Typical caps are 2/1/5 on a 5/6 ARM and 5/1/5 on 7/6 and 10/6 ARMs. The exact index, margin, caps, and floor vary by lender and program and will be stated in the ARM loan program disclosure and the Loan Estimate you receive.
Worst-case illustration: On a 5/6 SOFR ARM with a 6.125% initial rate and 2/1/5 caps, the rate could rise to 8.125% at the first adjustment and up to 11.125% over the life of the loan, increasing your monthly payment. Illustrative only.
The rate shown on this page is the INITIAL fixed-period rate, not the rate for the full loan term. ARMs are not for everyone; if you plan to keep the loan and home well beyond the fixed period, a fixed-rate mortgage may cost less over time.
You will receive the CFPB’s “Consumer Handbook on Adjustable-Rate Mortgages” (the CHARM booklet) and a program disclosure for each ARM you apply for.
Rates and APRs shown are illustrative, assume a 740 FICO, 75% loan-to-value, single-family owner-occupied primary residence in California, and update daily; they are not a commitment to lend or a locked rate. Your actual rate, APR, margin, caps, and terms depend on your credit, loan amount, property type, occupancy, and the lender selected. OnPoint Mortgage Pro · NMLS #2134550 · Licensed in CA, CO, FL, ID, MD, NH, SC, TX & VA. Equal Housing Lender.
Conventional ARM FAQ
What does “5/6” mean on an ARM?
The first number is how many years the interest rate is fixed (5 years). The “6” means that after the fixed period, the rate adjusts every 6 months for the rest of the 30-year term. A 7/6 is fixed 7 years, a 10/6 is fixed 10 years.
What index do these ARMs use?
The 30-Day Average SOFR (Secured Overnight Financing Rate), published by the Federal Reserve Bank of New York. Your fully-indexed rate after the fixed period is that index plus your margin, subject to your caps.
How high can my rate go?
No higher than your lifetime cap above your initial rate — commonly 5%. For example, a 6.125% initial rate with a 5% lifetime cap can never exceed 11.125%. Your exact caps are in your ARM disclosure and Loan Estimate.
Is an ARM rate lower than a 30-year fixed?
Usually the initial fixed-period rate is lower, because the lender takes less long-term risk. Whether that saves you money depends on how long you keep the loan — we’ll compare ARM vs fixed on your numbers.
Can I refinance out of an ARM later?
Yes. Many borrowers choose an ARM expecting to refinance or sell before the fixed period ends. There’s no prepayment penalty on conforming conventional ARMs, so you can refinance when it makes sense.
Do you offer ARMs on jumbo or investment properties?
Yes — we broker ARMs beyond conforming conventional, including jumbo and investment-property scenarios, through our wholesale lender panel. Ask us for a scenario-specific quote.
Compare Your ARM vs Fixed Options
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Related Mortgage Resources
- Conventional Loans — fixed-rate conforming loans
- Today’s Mortgage Rates — our full daily rate board
- Refinance Calculator — if you plan to refinance out of your ARM
- Jumbo Loans — ARM and fixed options above the conforming limit
- Schedule a Consultation
OnPoint Mortgage Pro (NMLS #2134550) is a licensed mortgage broker. Adjustable-rate mortgage terms, indices, margins, and caps vary by lender and program and are disclosed in your ARM program disclosure and Loan Estimate. This page is educational and is not a loan commitment, an offer to lend, or financial advice. Equal Housing Lender.