Current 3/1 ARM rates

Today's 3/1 ARM loan rates

Lenders nationwide provide weekday mortgage rates to our comprehensive national survey to bring you the most current rates available. Here you can see the latest marketplace average rates for a wide variety of purchase loans. The interest rate table below is updated daily to give you the most current purchase rates when choosing a home loan. APRs and rates are based on no existing relationship or automatic payments. For these averages, the customer profile includes a 740 FICO score and a single-family residence. To learn more, see understanding Bankrate rate averages.

During the introductory period, ARM rates are typically lower than their fixed-rate counterparts. The following table compares ARM rates to rates on other types of loans.

National mortgage rates by loan type

What is a 3/1 ARM and how does it work?

A 3/1 ARM, or adjustable-rate mortgage, is a 30-year, fully-amortizing mortgage with a low, fixed introductory rate for the first three years. After this fixed period, the rate becomes variable, changing once per year.

The variable rate is tied to a benchmark, typically the Secured Overnight Financing Rate (SOFR). This rate moves based on what’s happening in the economy in the U.S. and abroad, and how the Federal Reserve and other central banks are responding to those trends.

Along with the variable rate, ARMs have rate caps that limit how much the rate can change. These often include:

• An initial rate cap: Limits how much the interest rate can change after the introductory period
• A periodic rate cap: Limits how much the interest rate can change from one year to the next
• A lifetime rate cap: Limits how much the interest rate can rise over the life of the loan
• A payment cap: Limits the amount the monthly payment can rise over the life of the loan in dollars, rather than how much the rate can change in percentage points

Here’s an example of how the payments during the initial period of a 3/1 ARM differ from those with a 30-year fixed mortgage:

When is it a good idea to get a 3/1 ARM?

In general, ARMs have lower interest rates initially compared to a fixed-rate mortgage, so they can be attractive to borrowers looking for lower monthly payments upfront.

Here are some scenarios when it might be a good idea to get a 3/1 ARM:

• If you plan to sell the home before the first rate adjustment
• If you plan to use the savings from the first three years for a higher-yield investment or other financial goal

A 3/1 ARM has both positives and negatives, however. Let’s break down the pros and cons further:

Pros of a 3/1 ARM

• Lower payments to start: The lower introductory rate on a 3/1 ARM makes the loan more affordable, at least initially, which frees up room in your budget month to month.
• More opportunities for your money: You could take those monthly savings and invest, or put the funds toward another financial goal.
• Significant savings if you plan to move: If you’re certain you’ll offload the mortgage before the fixed-rate period ends, you could save a bundle on interest.

Cons of a 3/1 ARM

• Risk of higher rate: No one can predict how interest rates will move. Even with caps in place, your rate and payment could rise considerably over the life of the ARM.
• More challenging to budget for: With a fixed-rate mortgage, you’ll have one set payment. With a 3/1 ARM, you’ll only have a set payment for three years. This can make future budgeting or financial planning much more difficult.

3/1 ARM loan FAQ

Additional 3/1 ARM loan resources

• ARM loan calculator
• Fixed vs. adjustable-rate mortgages
• Guide to FHA ARMs
• Refinancing an ARM to a fixed-rate mortgage

Meet our Bankrate experts

Written by: Andrew Dehan, Writer, Home Lending

I’ve covered mortgages, real estate and personal finance since 2020. At Bankrate, I’m focused on all of the factors that affect mortgage rates and home equity. I enjoy distilling data and expert advice into takeaways borrowers can use. Prior to Bankrate, I wrote and edited for Rocket Mortgage/Quicken Loans. My work has been published by Business Insider, Forbes Advisor, SmartAsset, Crain’s Business and more.

Read more from Andrew Dehan

Edited by: Suzanne De Vita, Senior Editor, Home Lending

I’ve covered the housing market, mortgages and real estate for the past 12 years. At Bankrate, my areas of focus include first-time homebuyers and mortgage rate trends, and I’m especially interested in the housing needs of baby boomers. In the past, I’ve reported on market indicators like home sales and supply, as well as the real estate brokerage business. My work has been recognized by the National Association of Real Estate Editors.

Read more from Suzanne De Vita