An adjustable-rate mortgage (ARM) offers lower initial interest rates and payments compared to fixed-rate loans but carries the risk of fluctuating rates after the initial fixed period. Commonly, a 5/1 ARM fixes rates for five years before annual adjustments. ARMs may require higher credit scores and down payments. They suit buyers planning to sell or refinance before rates adjust but can involve prepayment penalties. Use an ARM calculator to compare costs with fixed-rate loans.