Fixed Rate vs. ARM — Jumbo Loans
Fixed rate vs. ARM — which is better for a jumbo loan?
Both options are available on jumbo loans. The right choice depends on how long you plan to stay, your risk tolerance, and your goals.
Fixed-rate jumbo loans
Fixed-rate jumbo loans are available in 15- and 30-year terms. Your rate and payment stay constant for the life of the loan — providing complete payment certainty and the most popular choice for long-term buyers.
Adjustable-rate jumbo loans (ARMs)
- 7/6 ARM: Fixed rate for the first 7 years, then adjusts every 6 months
- 10/6 ARM: Fixed rate for the first 10 years, then adjusts every 6 months
- Adjustment caps: 5% initial cap, 1% per adjustment, 5% lifetime cap (5/1/5)
- Qualifying rate: Must qualify at the greater of the fully indexed rate or the note rate
Key ARM restrictions on jumbo loans
- ARMs are not eligible on transactions above 80% LTV
- ARMs are not available on investment properties on most programs
Which should you choose?
| Your situation | Consider |
|---|---|
| Planning to stay 10+ years | 30-year fixed for payment certainty |
| Planning to sell or refinance within 7–10 years | 7/6 or 10/6 ARM for potential rate savings |
| Putting less than 20% down | Fixed rate only (ARM not available above 80% LTV) |
| Buying an investment property | Fixed rate (ARM restricted on most programs) |
On a $1.5M jumbo loan, even a 0.5% rate difference between a fixed and an ARM equals roughly $625/month. For buyers who know they’ll move within 10 years, the ARM math can be compelling.
Serving California homebuyers and investors — Orange County, Los Angeles, San Diego, the Inland Empire, and communities throughout Southern California including Irvine, Huntington Beach, Anaheim, Fullerton, Garden Grove, and Santa Ana.