This special mortgage program utilizes the benefits of an adjustable rate conventional loan outlined previously, with increased loan amounts for higher priced properties. Based on county limits these loans can go above the traditional limits but stay below Jumbo loans, with a maximum of $625,500 in many counties.
Guidelines and Parameters
An ARM has two components—the first number represents how long the interest rate will remain fixed, or will not change for that period of time of the loan. The second number tells you the length of time and frequency the loan will adjust once the variable portion kicks in. ARMs use predetermined caps and margins that work in concert with monetary fund indexes to establish the interest rate when the loan adjusts.
- 10/1 ARM: Your interest rate is set for 10 years then adjusts for 20 years.
- 7/1 ARM: Your interest rate is set for 7 years then adjusts for 23 years.
- 5/1 ARM: Your interest rate is set for 5 years then adjusts for 25 years.
- 3/1 ARM: Your interest rate is set for 3 years then adjusts for 27 years.
High balance conforming adjustable rate mortgages generally have a maximum loan amount of $625,500 however this can vary by county. Like their fixed counter parts these loans can only go up to 90% loan to value by itself or with subordinate financing (or a second mortgage).