An adjustable-rate mortgage, known as ARM, is a type of home loan where the interest rate has the ability to vary at regular intervals. Consequently, the monthly payments have the potential to increase or decrease over the course of the loan. Typically, the initial interest rate for an ARM is lower than that of a similar fixed-rate mortgage at the start. Once the fixed-rate period concludes, the interest rate on an ARM loan adjusts based on the associated index.
This would be in contrast to a fixed-rate mortgage.