Compare Today's 3/1 ARM Rates

Weekly national mortgage interest rate trends

Current mortgage rates

	3/1 ARM	5.80%
	15 year fixed	5.98%
	30 year fixed	6.72%

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

Although they can be risky, there are some scenarios when it might be a good idea to get a 3/1 ARM:

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

Let’s break down the pros and cons of ARM loans further:

Pros of a 3/1 ARM

Lower payments to start: The lower introductory rate on a 3/1 ARM as compared to fixed-rate — and even other ARM — loans makes the monthly payment more affordable, at least initially, which frees up room in your budget.
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.

How to compare 3/1 ARM rates

When comparing 3/1 ARM loan offers, here are three key considerations:

Interest rate and annual percentage rate (APR): The APR includes the interest rate and fees, both of which vary widely among lenders. Using this figure helps you understand the full cost of your loan. Bankrate can help you shop for mortgage rates and receive tailored offers.
ARM terms: Compare 3/1 ARM rates and estimated payments to those on a 5/1 ARM and other ARM terms. The introductory rates are higher on longer-term ARMs, but the trade-off is that the fixed-rate period lasts longer.
Caps and other fine print: When comparing ARM loan offers, make sure you fully understand the rate caps and any other details about the structure and repayment of the loan.

3/1 ARM loan FAQ

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:
30-year fixed-rate mortgage 5/1 ARM

Loan principal $340,000 $340,000

Interest rate* 6.93% 6.56%

Initial monthly payment $2,246 $2,162

* Interest rates as of Feb. 12, 2025. Initial monthly payments do not include insurance or taxes.

The monthly payment on the ARM, however, will change after three years, either increasing or decreasing based on the new variable rate in the first adjustment.

Depending on your loan’s cap structure, your rate and payment could change significantly. One common cap arrangement: a 2/2/5 structure, in which the initial cap is 2 percentage points, the annual cap is 2 percentage points and the lifetime cap is 5 percentage points.
While 3/1 ARM structures can vary, they all usually have rate caps. These might include an initial rate cap, a periodic rate cap and a lifetime rate cap.
To qualify for a conventional ARM, you’ll generally need to meet these requirements:
- A minimum credit score of 620
- A debt-to-income (DTI) ratio of no more than 45 percent
- A minimum down payment of 5 percent
With ARMs, mortgage lenders take into account your ability to make a higher monthly payment if interest rates rise. This can make them more difficult to qualify for than a fixed-rate loan for the same amount.
Refinancing an ARM works like refinancing any other mortgage. There are two major reasons to refinance your ARM:
- Lower your rate and/or change your loan term length
- Take cash out of your equity
It might make sense to refinance your ARM before the first rate adjustment. You can refinance an ARM to another ARM or a fixed-rate mortgage.

Just remember that refinancing isn’t free. You’ll have to pay closing costs, either upfront or financed with the new mortgage.

	30-year fixed-rate mortgage	5/1 ARM
Loan principal	$340,000	$340,000
Interest rate*	6.93%	6.56%
Initial monthly payment	$2,246	$2,162

Additional 3/1 ARM loan resources

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.

Current 3/1 ARM rates

Weekly national mortgage interest rate trends

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

Pros of a 3/1 ARM

Cons of a 3/1 ARM

How to compare 3/1 ARM rates

3/1 ARM loan FAQ

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

Are there rate caps on 3/1 ARM loans?

What are the requirements to get a 3/1 ARM loan?

How does refinancing a 3/1 ARM work, and when is it a good idea?

Additional 3/1 ARM loan resources

Meet our Bankrate experts

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