A home loan with an interest rate that will adjust over time based on the market conditions. Adjustable-Rate Mortgages (ARMS) will typically start off with a lower interest rate then adjust after a set amount of time depending on how the loan was set up.

ARMS have fluctuating rates, but they will come with floors and caps. This means if interest rates ever climb very high you would still be capped at a set maximum interest rate to protect you. The flip side to that is if the interest rates ever get very low you will still pay a minimum interest rate that was agreed upon when the loan was being set up to protect the lender.