What is a floating interest rate?

Depending on the economy and market conditions, your rate of interest will either “float” up or down. In most cases, a floating rate will also be linked to a specific index or another type of benchmark. Mortgages with floating interest rates usually start with a fixed period, where the rate will stay the same for a few years.

Can you get a FHA loan with a floating rate?

You can receive an FHA loan with a floating rate with an initial fixed-rate period lasting 1, 3, 5, 7 or even 10 years. You can also qualify for a floating interest rate for a VA loan, but floating rates are unavailable for USDA loans. Floating interest rates change depending on economic conditions.

Do all home loans have a floating-rate option?

Consumers can apply for several types of home loans when they’re ready to finance the purchase of a house, but not all mortgages come with a floating-rate option. If you want to use one of these mortgages, you can expect the following: Conventional loans: This type of home loan comes in both forms: fixed and adjustable rate.