Overview

• Low interest rate for the first 5, 7, or 10 years. Following that initial term, your rate and monthly payment could fluctuate based on prevailing interest rates.

The requirements:

• Documentation verifying finances, income and employment
• Credit score of at least 620
• Debt-to-income ratio between 40%-50%
• Minimum down payment of at least 5% (requires mortgage insurance)

The benefits:

• Lower rates and payments in the initial term
• Rate caps to limit how much your interest rate can increase both yearly and over the life of the loan
• FAllows borrowers take advantage of falling rates without needing to refinance

Right for your situation if:

• You plan to move or refinance before the rate adjusts
• You’re expecting a boost in income soon