I wanted to share a quick story that might help you with your next buyer on the edge of qualifying…
A few weeks ago, I had a client who fell in love with a home—but when we ran the numbers, her debt-to-income ratio (DTI) was just a little too high. She was already approved with FHA, but the numbers didn’t work with a standard 30-year fixed.
Rather than walk away or try to find a lesser property, I looked deeper into options and found the solution:
👉 The FHA 5/1 ARM based on the CMT index.
This program allowed her to qualify off a lower fixed payment (still FHA-backed, still 3.5% down), and that small adjustment made all the difference. She closed on the home she really wanted—and we avoided any last-minute chaos.
The FHA 5/1 ARM isn’t for every buyer, but in the right situation? It’s a powerful tool to help clients get across the finish line.
In a market where 30-year fixed rates are still hanging around the high 6s and 7s, savvy buyers—and the agents who guide them—are looking for alternatives. One of the most underrated and powerful options available today? The FHA 5/1 ARM, tied to the CMT (Constant Maturity Treasury) index.
🔥 Why the FHA 5/1 ARM is a Game-Changer
Let’s break it down:
- 🔥 Low 5% Interest Rates – Fixed for the first 5 years. That’s right—not a typo.
- ✅ Qualify Off the Intro Rate – Borrowers qualify based on the initial fixed rate, not the fully indexed future rate.
- 💰 3.5% Down – Just like any standard FHA loan.
- 📉 Based on the 1-Year CMT Index – A more stable alternative to SOFR or LIBOR.
- 🔒 Rate Caps – Adjusts by max 1% per year after the fixed period, with a 5% lifetime cap.
- 📈 More Purchasing Power – Lower monthly payment = more home.
💡 Who Should Use It?
This loan isn’t for everyone—but it’s perfect for:
- First-time homebuyers who need every dollar of flexibility
- Buyers expecting a refinance opportunity within 5–7 years
- Clients who plan to sell or relocate before the adjustment period kicks in
- Anyone feeling priced out by today’s 30-year fixed rates
⚖️ FHA Flexibility with Strategic Benefits
Just like traditional FHA loans, this program still allows:
- Gift funds
- Non-occupant co-borrowers
- Seller credits toward closing costs
- Flexible credit score requirements
That means this program brings both affordability and accessibility—two things we desperately need in today’s high-price, high-rate market.
🧠 Real Strategy in a High-Rate Market
The truth is most buyers won’t keep their mortgage for 30 years. Whether it’s a job move, refinance opportunity, or life change, most will reset long before then. The FHA 5/1 ARM gives your clients a way to win now, without waiting for the market to cooperate.
🛠️ Let’s Put This Tool to Work
At Fresh Home Loan Inc., we specialize in solutions like this. As independent mortgage brokers, we have access to loan options that big banks and retail lenders don’t offer—including the FHA 5/1 ARM based on the CMT index.
If you’re a buyer looking to lower your payment—or a real estate agent looking to close more deals—we should talk.
Garrick Werdmuller
Independent Mortgage Broker
DRE BRKR 01368202 | NMLS 242952
📞 510.282.5456 | 📠 510.225.0382
✉️ garrick@freshhomeloan.com
🌐 freshhomeloan.com
🏢 1151 Harbor Bay Parkway, Suite 136, Alameda, CA 94502
All loan approvals are conditional and not guaranteed and subject to lender review of all information. Loan is conditionally approved when lender has issued approval in writing, but until all conditions are met, loan cannot be funded. Specified rates and [products may not be available to all borrowers. Rates subject to change according to market conditions and agreed upon lock times set by borrower. Fresh Home Loan Inc. is an Equal Opportunity Mortgage Broker in California. This licensee is performing acts for which a real estate license is required. Fresh Home Loan, Inc. is licensed by the California Department of Real Estate #02137513 NMLS # 2124104
