A highly qualified borrower can apply for an ARM jumbo loan to buy a home that costs more than $417,000. ARM is an acronym for Adjustable Rate Mortgage. This type of loan features an adjustable interest rate and exceeds the conforming lending limits set by the federal government.
Mortgage interest rates can either be set at a fixed rate or an adjustable rate. With an adjustable rate mortgage, your interest rate is set at a fixed rate for an introductory period of time. Introductory interest rates are usually lower than the average for fixed rates loans. The typical introductory time periods are 3, 5, 7 or 10 years. After this period of time, the interest rate adjusts ever year. ARM loans are commonly referred to as 5/1 or 7/1 ARMs, depending on the length of your introductory period.