Real Estate Glossary

What is Variable Rate?

A variable rate is a type of interest rate that can change over time. This is in contrast to a fixed rate, which is a type of interest rate that remains the same over the life of the loan. Variable rates are often used in adjustable-rate mortgages (ARMs) or other types of loans where the interest rate is not fixed. With a variable rate, the interest rate can change based on a variety of factors, such as market conditions or changes in the lender's cost of funds. This means that the monthly payments on a loan with a variable rate can change over time, which can make budgeting for the loan more difficult.