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|  Conventional |  FHA |  Veterans Admin (VA) |  5/1 & 7/1 ARM |  CalPERS |  Jumbo |  5/1 & 7/1 ARM The 5/1 ARM mortgage is a 5-year level payment program that guarantees the payments for the first 5 years and then it becomes a 1-year ARM for the remaining 25 years. The 7/1 ARM mortgage is a 7-year level payment program that guarantees the payments for the first 7 years and then it becomes a 1-year ARM for the remaining 23 years. The interest rate upon renewal is determined by an index out of the lender's control and may not be increased by more than 5% in interest. The prime advantage to the borrower is that the lender can offer a fixed rate level mortgage payment at interest rates .25% - .50% below 30 year fixed rate mortgages. This is because the lender is only locking in the interest rate for 5 or 7 years, rather than 30 years under the traditional 30-year fixed rate mortgage. The one disadvantage is the borrower may have to pay substantially higher interest rates and payments after the first 5 or 7 years, if interest rates go up over the first 5 or 7 years.