Qualified Home Loans

10yr ARM: Definition And Today’s Rates

Program Benefits

  • Rate is fixed for the first 10 years
  • Loan amounts up to $2.0M
  • Get cash out with a low rate
  • Available for second homes and investment properties
  • Requires full doc income verification (pay stubs, or tax returns)

Sample Scenarios*

(The following scenarios assume 780+ FICO, Full Doc, 6-12 months reserve funds. Rates are as of February 3, 2022, contact your Loan Officer for more info and updated rates.)
  • Cash Out to $1.0M loan on $1.6M value: 2.75% (2.87% APR)
  • Purchase of primary home $1.5M with 40% down: 2.5% (2.62% APR)
  • Second Home purchase $1.1M with 20% down: 2.875% (2.95% APR)
  • Cash Out Investment property $651,000 on $1.0M value: 3.25% (3.37% APR)

What Is A 10yr ARM?

The 10yr ARM, specifically, a 10/6 ARM is an adjustable-rate mortgage. one in which your rate remains the same for a set period of time before adjusting to a new rate on a predetermined schedule. With the 10/6 ARM, your rate remains the same for the first 10 years of your loan. After the fixed period ends, your rate will adjust every 6 months for the remaining loan term.

If you don’t plan on living in your home for more than 10 years, a 10/1 might be right for you.

How Does A 10-Year ARM Work?

Adjustable-rate mortgages typically start with an interest rate lower than what you’d get with a standard fixed-rate loan. That rate, though, only remains at this level for a set number of years. After those years pass, the interest rate on an adjustable-rate mortgage, or ARM, rises or falls according to a an index level.

With the 10/6 ARM, your interest rate will remain fixed for 10 years. It will then adjust every 6 months for the remaining life of the loan. If you take out a 30-year 10/6 ARM, your rate will remain fixed for 10 years and then adjust every 6 months for the remaining 20 years.

Because the interest rate on a 10/6 ARM will be low during the first 10 years, this is a good choice if you know you don’t want to live in your new home for more than 10 years.

The Bottom Line

A 10/6 ARM makes the most sense if you plan to sell your home or refinance your mortgage before the 10-year fixed period ends. Considering today’s rising rate environment, you can take advantage of the low initial interest rate that comes with an ARM without worrying about your rate rising once the fixed period ends. Contact us with any questions.

*Mortgage rates and terms you may qualify for depend on your individual financial circumstances. The rates displayed in this blog may not reflect your actual situation and are for informational purposes only/are subject to change without notice. QHL offers a wide variety of loan options. To get more accurate and personalized results, please call to talk to one of our loan officers.