A variable rate mortgage, also known as an adjustable-rate mortgage (ARM) or tracker mortgage, is a type of home loan where the interest rate is not fixed and periodically adjusted based on an index that reflects the cost to the lender of borrowing on the credit markets. The interest rate on a variable rate mortgage will most often utilize an index rate, such as the Prime Rate or the Fed funds rate, and then add a loan margin on top of it. The most common instance of a variable rate mortgage is an ARM, which will typically have an initial fixed-rate period of some years, followed by regular adjustable rates for the rest of the loan.

Variable rate mortgages are the most common form of loan for house purchase in the United Kingdom, Ireland, and Canada but are unpopular in some other countries such as Germany. They are very common in Australia and New Zealand. For those who plan to move within a relatively short period of time (three to seven years), variable rate mortgages may still be attractive because they often include a lower, fixed rate of interest for the first three, five, or seven years of the loan, after which the interest rate fluctuates.

The primary advantage of a variable rate mortgage is that the initial interest rate is often lower than the interest offered by fixed-rate mortgages, which means that you may be able to qualify for a larger mortgage than you would with a fixed-rate loan. However, the main disadvantage of a variable rate mortgage is that you may pay more interest over the life of the loan if you keep the variable rate mortgage for a long time.