Save up to $1,000 in closing costs and enjoy exclusive rate discounts as a BMO Customer. footnote dagger
What is an adjustable rate mortgage?
An adjustable rate mortgage footnote 1 (ARM) has a variable interest rate that adjusts periodically. Generally, it has a lower monthly principal and interest payments during the initial fixed interest rate period. footnote 2 Later, your interest rate will be variable and will adjust semi-annually if the index changes. An ARM may be the best way to go if you don't plan to live in your home for a long time.
Lower payments early on
Your monthly principal and interest payment may be less during the initial fixed interest rate period for an ARM versus a fixed rate mortgage.
Fixed-to-variable adjustment
Once the loan converts to a variable rate, interest rates and payments may vary. footnote 2
Initial fixed period
Your initial interest rate is fixed for a short period of time such as 5 or 7 years, after which it will convert to a variable rate and adjust semi-annually during the life of your loan if the index changes. footnote 2
Limit payment volatility
Rate caps restrict how much the rate can change at each adjustment during the term of your loan, providing protection during economic change.
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Save more on mortgage costs
You worked hard to save money to purchase your house. We'll help you save even more on mortgage footnote 1 costs.
Limited Time Offer
Save up to $1,000 in closing costs. footnote dagger
Relationship Discount
Starting at 0.125% on your mortgage with qualifying balances in BMO deposit accounts. footnote 3
Save with Auto Pay
Receive a 0.125% rate discount with Auto Pay from a BMO Checking account. footnote 4
Low down payment assistance
BMO provides low down payment assistance to qualified home buyers. Learn how to get a mortgage with a low down payment.
Calculators
Our calculators footnote 5 help you compare loans and crunch your numbers.
Get a quick estimate of what your initial payments could be with an adjustable rate mortgage.
Know your budget before you start house hunting.
Compare down payment options based on how long you expect to stay in your home.
Helpful tips and advice for homebuyers
Fixed vs adjustable rate mortgages: Which is right for you?
What’s the difference between a fixed and adjustable rate mortgage? And which is better for you? We’ve got those answers and more.
How does mortgage interest work?
Here’s everything you need to know about mortgage interest rates, including factors that impact your rate. Plus, get tips on how to score a lower interest rate.
What you need to know about your down payment on a house
How much money should you put down on a new home? Get our tips on saving for a down payment and calculate what your payments could be.
Frequently asked questions
An adjustable rate mortgage (ARM) starts as a fixed rate mortgage for a set amount of time between three and 10 years, depending on the terms of your loan. When that period is up, you’ll get switched over to a variable rate. With a variable rate, your interest rate will change periodically, resulting in a change to your monthly principal and interest payments. Throughout the life of your loan, your interest rate will go up or down based on something called the SOFR index. The index is a rate that’s determined by the market and set by a neutral third-party (your loan paperwork will specify which one exactly).
The Secured Overnight Financing Rate Index (SOFR) determines whether your interest rate goes up or down after the initial fixed-rate period. During the adjustable-rate period, the rate becomes variable based on the SOFR index and a margin set by the lender. While the margin does not change during the life of the loan, the index can vary. An ARM loan will set limits on how high or low the rate may go.
Yes. Ensure your extra payment is applied toward your principal balance and you’ll pay down your mortgage faster, saving you money in interest.
Yes, you can pay off an adjustable rate mortgage early by making sure that the extra payments are applied to the principal balance.
The main benefits of an adjustable rate mortgage (ARM) are lower rates and lower monthly payments. ARM loans normally have lower rates than 30-year fixed rate loans during the initial fixed rate period, resulting in lower monthly payments during the beginning stages of your loan. ARMs allow you to easily take advantage of falling rates, which can help you save money on interest, and they tend to be easier to qualify for because the initial payments are often lower.
The main difference between fixed and adjustable rate mortgages is whether your interest rate changes during the life of your loan. Adjustable rate mortgages have a locked-in rate for a pre-determined period, but once this period is over, it will change regularly based on the market (which means your payments will change too). A fixed rate mortgage comes with a locked-in rate, so your monthly principal and interest payments won’t change (unless you decide to refinance).
Yes! You can switch from an adjustable rate to a fixed rate mortgage by refinancing your mortgage. This is actually a very common reason to refinance. Homeowners may consider switching to a fixed rate mortgage when interest rates are low. This can help bring more stability to their monthly payments and lock in a low rate. However, if rates continue dropping, you’ll need to refinance again in order to take advantage of them.
Private Mortgage Insurance (PMI) protects lenders (i.e. the bank) if you stop making payments on your loan, and may be required if your down payment is less than 20% of the purchase price. Occasionally, lenders offer loans with small down payments that don’t require PMI if you pay a higher interest rate for these loans. A higher interest rate without the insurance might be less expensive than the PMI depending on how long you plan on staying in your home.
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S.A.F.E. Act
The Secure and Fair Enforcement (S.A.F.E.) for Mortgage Licensing Act protects consumers. This nationwide licensing and registration system provides accurate, accessible information about lenders and their employees.
BMO Bank N.A. fully complies with the S.A.F.E. Act. Learn more about how the S.A.F.E. Act (PDF, 409 KB) protects you.
For further information regarding your Mortgage Loan Originator or BMO Bank N.A., please visit www.nmlsconsumeraccess.org.
- Special offers are subject to change.
- Footnote dagger details The closing cost discount offer is available on applications received from April 1, 2026, through July 31, 2026. The closing cost discount consists of a $500 or $1,000 discount on closing costs, depending on loan amount, relationship segment, and eligible loan products. This offer is available subject to the following:
- Closing Cost Discount: A $500 closing cost discount may be applied at closing to eligible purchase or refinance mortgage loans. The discount is available for conforming loans (up to $832,750) secured by 1–4 unit properties used as primary residences, second homes, or investment properties. Premier Services and Private Bank (PB) clients may qualify for an additional $500 discount, for a total of up to $1,000.For purchase transactions, a $500 discount is available across all products; however, the additional $500 for Premier/PB clients is not available for Portfolio Conforming, Physicians, Gateway, One Close, or Interest-Only loan products.For refinance transactions, the $500 discount and any additional Premier/PB discount is not available for Portfolio Conforming, Physicians, Gateway, One Close, or Interest-Only loan products.
- Footnote 1 details Relationship Requirement: If the property is not located in the following locations; Arizona, California, Colorado, Florida, Idaho, Illinois, Indiana, IA, Kansas, Minnesota, Missouri, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Utah, Washington, Wisconsin, Wyoming, and EL Paso County, Texas (BMO does not offer Home Equity Products in Texas) in order to be eligible for our real estate secured lending products, you must be a pre-existing BMO customer for at least six months at the time of application; contact a Banker for details. A BMO customer relationship includes any consumer or small business deposit account, secured or unsecured loan, or investment account; Alto accounts are excluded. Not applicable to Physicians loans, Private Bank clients or BMO employees.
- Footnote 2 details Your initial interest rate is fixed for a short period of time, and then converts to a variable rate that adjusts during the life of your loan. The amount of your payments will change when the interest rate changes. Historical performance of Adjustable Rate Mortgage (ARM) indexes does not predict future performance and is only one factor to consider when choosing a mortgage loan. Certain restrictions and fees may apply.
- Footnote 3 details Relationship Pricing Discount
Applicant must meet the eligibility requirements to receive the relationship discount. The relationship discount is available to new or existing BMO clients with eligible loan products (Jumbo, Physicians, Gateway, or One Close loan programs) and is based on the loan amount and the balances in BMO deposit accounts (including trust accounts titled in the name of the Applicant) at the time of closing after all related closing costs have been applied. Physician Loans secured by properties located outside BMO’s footprint states (Arizona, California, Colorado, Florida, Idaho, Illinois, Indiana, IA, Kansas, Minnesota, Missouri, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Utah, Washington, Wisconsin, Wyoming, and EL Paso County, Texas) are not eligible.
Clients with an eligible conforming loan product (loan amounts up to $832,750) and at least $250,000 in BMO deposit accounts are eligible to receive the relationship discount of 0.125%.
Clients with a Jumbo loan (loan amounts over $832,750) and with $250,000 to $499,999 in BMO deposit accounts are eligible to receive the relationship discount of 0.250%.
Clients with a Jumbo loan (loan amounts over $832,750) and with $500,000 to $999,999 in BMO deposit accounts are eligible to receive the relationship discount of 0.375%.
Clients with a Jumbo loan (loan amounts over $832,750) and with at least $1,000,000 in BMO deposit accounts are eligible to receive the relationship discount of 0.500%.
Private Bank Clients with a Jumbo loan (loan amounts over $832,750) and with at least $2,000,000 in BMO deposit accounts are eligible to receive the relationship discount of 0.625%.
Eligible balances include all BMO Personal, Investment, Trust, Business Banking, and BMO Financial Group employee 401(k) accounts. Eligible balances exclude Alto Accounts and BMO Self-Directed Investment Accounts. For Business accounts, applicant must be an owner of, and an authorized signer on, the associated business account. Assets used for mortgage discount eligibility purposes must exclude any funds needed to close.Self-Directed Investment Accounts. For Business accounts, applicant must be an owner of, and an authorized signer on, the associated business account. Assets used for mortgage discount eligibility purposes must exclude any funds needed to close.
Footnote 4 details - Footnote 4 details Auto Pay Interest Rate Discount: To receive a 0.125% rate discount, you must authorize BMO at origination to withdraw your loan payment each month from a BMO consumer checking account. Housing Finance Agency, Federal Housing Administration, Department of Veterans Affairs, and State Bond Program loans are not eligible for the interest rate discount but will receive a $500 closing cost discount if eligible. Physician Loans secured by properties located outside BMO’s footprint states (Arizona, California, Colorado, Florida, Idaho, Illinois, Indiana, IA, Kansas, Minnesota, Missouri, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Utah, Washington, Wisconsin, Wyoming, and EL Paso County, Texas) are not eligible.
- Footnote 5 details Calculator is provided by Leadfusion Inc., which is not affiliated with BMO. The calculator provides estimates. We do not guarantee their accuracy or applicability to your circumstances. Results depend on many factors, including the assumptions you provide. Leadfusion may have different privacy and security standards than BMO. Visit its website at www.leadfusion.com to review its privacy policy.
- Accounts are subject to approval and are provided in the United States by BMO Bank N.A. Member FDIC.