ARM vs Fixed Rate in Pennsylvania
With Pennsylvania's median home at $240,000 and conforming limit at $726,200, choosing between an ARM and a fixed-rate mortgage comes down to your time horizon and risk tolerance. Philadelphia and Pittsburgh have seen strong appreciation since 2020 (25-35%). The suburbs of both cities — Chester, Delaware, Montgomery, and Bucks counties around Philadelphia; Allegheny and surrounding counties for Pittsburgh — remain in high demand.
When an ARM May Make Sense in Pennsylvania
- You plan to sell or refinance within 5-7 years
- You're buying in a high-cost Pennsylvania market where even a small rate reduction meaningfully lowers payments
- Rates are at cyclical highs and expected to fall — ARM initial rates can be 0.5-1% lower than fixed
When Fixed Rates Win in Pennsylvania
- You plan to stay long-term (10+ years)
- Payment certainty matters more than short-term savings
- Pennsylvania's property taxes (1.49%, avg $3,407/year) add enough payment variability without adding rate risk
Closing Costs
Either product incurs similar closing costs (~$4,100 in Pennsylvania). Frequent refinancing to escape an ARM adds these costs repeatedly.
Frequently Asked Questions
Is an ARM or fixed mortgage better in Pennsylvania?
It depends on how long you plan to stay. Pennsylvania's median home of $240,000 with a 5/1 ARM can save on initial payments, but fixed rates offer certainty — especially important given Pennsylvania's property tax rate of 1.49% adds its own payment variability.
What are conforming loan limits for ARMs in Pennsylvania?
ARMs and fixed-rate loans both have the same conforming limit in Pennsylvania: $726,200. All Pennsylvania counties are at the standard conforming limit.
How much can I save with an ARM in Pennsylvania?
ARM initial rates are typically 0.5-1% below 30-year fixed rates. On a $192,000 loan (20% down on Pennsylvania's median home), that's roughly $100-200/month in savings during the initial period.
What are closing costs for a mortgage in Pennsylvania?
Pennsylvania charges a 1% realty transfer tax at the state level, plus local transfer taxes that in Philadelphia and Pittsburgh add another 3-4%. Combined transfer taxes can reach 4% or more, significantly elevating closing costs. Budget approximately $4,100 in total closing costs for either an ARM or fixed-rate mortgage in Pennsylvania.